Your'e spot on mate.
The agreement states that its 50% of production or 113,000 tons ' Whichever is the greater "
When we look at this agreement , we must also take into consideration of the ' start ' date of proposed Production ( ie commencing in first quarter 2023 ) to that of the agreement which also stated that deliveries of spodumene SC6 would commence on the basis of an agreed delivery date of " between July 2023 and July 2024 ).
So we know then there is this obviously ' overlap ' of time periods - ie Calendar Year versus Financial year aligning with the projected delivery date possibilities to Piedmont.
We also know from the more recent announcement by Sayona and the appointment of Mining Contractors Fournier & Fils , that 24 hour 7 day a week ramp of of production is commencing at least 2 months out from end of this Calendar Year as well - ie so BOTH Nov & Dec will be included in their ramp up to full scale operations and so lets assume that is inclusive in their 4 year contracted bid of C $200 million .
So lets then look to the NAL PFS in May for further information and at the same time make the assumption that the Canadian Dollar $50 million is contracted equally over each month of any given ' rolling ' 12 month period of the contract which is commencing in around mid October - November.
So when we look to the PFS , we can also confirm that 4 years is almost right around the same time as the proposed ' beginning of 2027 and where the following comments regarding Owner / Operator fleet actually reinforce and fits with this time period:-
" The ultimate pit ramp system has been designed to accommodate 90t‐class haul trucks even if in the near future 65t‐class haul trucks will be used by the mining contractor (for the first four years of operations). "
And ,
"The mine operating expenditures (“OPEX”) are estimated based on contract mining costs obtained from various mining contractors for the first four years of operations. In 2026, NAL will purchase a mining fleet to begin an owner/operator operation starting in 2027 for the remaining mine life. Final costs for the mining contract have not been negotiated yet with the mining contractor that will be retained for these operations. "
So while the PFS states that ' FINAL ' contractor cost had not been " negotiated yet " at the time of the PFS , it is assumed that reasonable estimates had been gathered and that economic cost sensitivities had been calculated at +/- 30% accordingly.
So knowing this , we can see in the following PFS tables that Contracted Mining costs in total had been conservatively estimated at C$19.43 per ton of mined product.
But we also know from recent comments made in press releases by Fournier & Fils that initially their work will NOT be accounting for removal of ' Overburden ' whereas the PFS assume some level of overburden removal right from the get go of 2022 as well POTENTIALLY over the course of the entire 2023 Calendar year. So at worst that would be C$14.875 dollars per ton versus most likely ONLY the C$10.43 per ton from now until June 2023 and before Authier open pit requires more ' overburden ' removal to get to the beginning of its ore body contributions. So using the C$10.43 as the ' Divisor ' into C$50 million per annum contracted cost per ton would be more the likely scenario on the cost from now until beginning of Authier. Then from their a more gradual move from C$14.875 to the C$19.43 contact mining unit cost per ton through the 20 months from NOW to June 2024..
So you can see by the attached table that the estimates of ' Overburden ' removal for 2022 would likely be NIL'd out and the 2023 overburden removal would most likely emanate from the Authier open pit operations.
O.K .....so because the whole point of this exercise is to in some way reconcile what has been estimated in those first four years of the NAL production ....but also with an emphasis on the FIRST TWO years in so far as how it relates to the interpretations of the offtake agreement with Piedmont.
So then if we assume then that the C$9.11 per ton Mining Contractor unit costs applied to the removal of the overburden , we are then left with more or less the other half for Ore & Waste Rock being represented by the C$10.94 per ton.
We can disregard more or less the additional summary table 10 , because I would think that most of these costs are accounted for in the first table which in the PFS was more reflective of the ' ALL UP ' cost from the Contractor units cost with table 11 being more representative of the overall NAL Contractors unit cost with table 10 just providing further breakdowns of these cost as well as those cost which are irrelevant to the purpose of this exercise - ie blasting costs , Salaries etc....or cost which have potentially been duplicated or overlap these two tables like the diesel cost and truck parts etc.... which may relate to Owner Operator costs further out beyond the 4 year Contracted period. So in other order words lets just look at the first couple of years which are significant to the distributions under the Piedmont Off-take terms.
It is interesting though that the Diesel prices in Canada are sitting at a current C$2.00 per litre rather than the C$1.10 average long term price over LOM. Even so , I would think that given that the ' negotiations ' on the mining services contract have only be finalized now , that the price in the PFS given the +/- 30% has more than absorbed the inflationary effects since May 2022 and therefore is still within economic defined parameter's .
We know also that the NAL PFS was based on an annual ore feed of 1.4 Mtpa for a total of 168,000 tonnes of spodumene concentrate grading 6.0%.
So then if we take the C$50,000,000 and divide this by C$10.32 per ton , we get a 12 month estimate of CALENDAR production of ORE ( including waste ) of around total 4,844,961 tons , 57.6% of this mined Ore contains Lithium processing at 6.0% for a total of 167,442.9 tons of SC6 in the FIRST 12 months. But the PFS is indicating roughly only 130,000 across 2022 and 2023 ( Calendar v financial year ???? ...we still don't really know. )
But if we assume the PFS is conservative and is still subject to 30% , 130,000 x 1.30% would be 169,000 which would be almost spot on to BOTH the PFS estimates as well as the assumed Contracted Costs which we now know as well as specific comments made within the PFS as the average over LOM from NAL which includes ore from Authier Pit commencing from Mid 2023 ....and as per PFS stated timelines.
But of course the BIG question here is how much will be actually produced in the FIRST 12 months from NOW based on certain expected relevancy's to the ramp of to 24 / 7 operations commencing from around mid October 202 and assuming ALL terms remain ' equal ' as they are in respects to the Piedmont off-take.
If the figure work above is then to be expected . if we use US$7,500 per ton as the expected top line sales per ton , Sayona could be earning around USD $408,321,740 ( currently around A$633.057 million ) on their share of 54,442 tons of SC6 with Piedmont gathering ( pre cost ) distributions of around , that would be approximately US$847,500,000 by this time next year.
So then if Sayona could manage to do a Quarter of the total of this expected 167, 443 tons of spodumene concnetrate , then that would mean we would earn a Top Line ' Early ' distribution @ USD$7,500 per ton on 41,860.75 tons of spodumene of around USD$313,955,625 ( A$486,752,907 ) ....and BEFORE the Piedmont Off-take even comes into play. That would then leave its remaining 12,582.25 tons of spodumene sales left to be invoiced and accounted for from the July 2023 - June 2024 after Piedmont then takes its 113,000 tons in the July 2023 to June 2024 period.
So its a clear Win Win in this scenario with Sayona potentially bringing forwards its receipts to THIS financial year while Piedmont gets its share commencing from the back half of the 2023 /2024 financial year.
Irrespective , we ( Sayona ) are still getting our $600 million ( before cost of overheads & salaries ) plus Australian equivalent in sales dollars between now and June 2024.
And this I would consider to be very conservative and pretty much aligns itself spot on with the PFS LOM production table whereby it shows around 30,000 tons in 2022 and another 90,000 tons in the full 12 month period ( CALENDAR ) of 2023. So it depends on how you interpret the PFS as to how it has translated and ' smoother ' the estimated forward production figures across Calendar Years versus Financial Years and which is also extremely relevant in so far as how it correlates to the Piedmont Off-take and how much they could expect before 2nd transformation is likely to kick in the back half of 2024 or early 2025 and which just happens to be Year 5 and within 1 year early of meeting the Quebec NAL sales agreement terms.
According to the PFS and in the back half 6 months of 2023 FINANCIAL year and where it is stated that Authier will commence. It therefore could be logically interpreted that in this 14- 20 month period to June 2024 a further total of 90,000 tons will be produced with some definite overburden expected initially from the Authier operations with a small portion coming from the expanded pit operations at NAL.
So for the purposes of ' Smoothing ' the calc's out , if we go longer take a linear figure of $C150 million in Contractors C$'s per ton over the period from NOW until June 2025 , divided by C$19.43 adjusted ramp'd average $C contractors cost per ton , we would then come to an average and conservative figure of 7,720.021 tons of ORE at 6.0% Li for a total tonnage of 463,201 over the 36 months ...with Sayona's share averaging 41,400 tons per annum or USD$310,502.5 million ( A$481,399 at current approximate exchange rates ) each and every year and assuming we DON'T get the first installment in the 8 months from now until June 2023 and before the Piedmont off-take comes into effect from an agreed delivery terms point of view.
But we also know that from around June 2023 , they would be mining Authier Ore Body as well and bringing in an additional approximate 17,179.5 million tons also at 6.0% ( with or without initial waste rock ) , and so this also needs to be taken into account from a Sale / Cost credit being charged against and received proportionately to Piedmont and Sayona's NAL output calc's.
So just briefly looking at the cost side of the ledgers , essentially if you look to the C$40 LOM operating cost estimated in the NAL table below , this could be roughly reconciled on the basis that the Mining operational portion - ie as established by the current 4 year contracted cost of C$19.43 whilst being understated in the cost per ton mined is roughly on target in the PFS LOM estimates and only out by $26 million ( 14.9% ) over the four years until taken over by ' Owner Operator ' from year 5 ( 2027 ). It's fair to say on top of ALL the operational cost , there would at least be another equivalent amount coming from the overheads - ie Salaries and Admin , Exploration and OTHER subcontracted mining or admin consultancies and engineering costs etc... in arriving at an appropriate ending EBITDA. But we'll leave that to another more scrutinizing analysis.
So by breaking down ALL of these costs , and depending on whether you NET OUT the next 8 months as being in Sayona's contractual advantage in terms of initial spodumene sales , you could then apportion these cost according to the JV split of 25 / 75% to arrive at an estimated EBITDA bottom line result.
Essentially though , if Sayona were to receive this first 8 months head start on the 41 odd thousand tons of sc6 and had an off-taker to confirm these accumulated month on month production figures , then it would still be coming at the cost to Piedmont and ONLY a 75% contribution to Sayona in achieving these first sales of spodumene. So in effect a discount for our first 8 months of production at Piedmont's expense and I guess a ' swings & round about's ' cliche being applied under the current terms in Sayona's favor.
So the main things to takeaway here are as follows :
> The current 4 year mining contract ramping immediately to 24/7 operation basically from now would indicate we will be well and truly producing from beginning of 2023.
> With no overburden from here being applied initially with the ' scraping ' would indicate tonnages will be being produced and / or ready to be processed from stockpiles sooner than later.
> based on the Contracted cost and the 24/7 ramp up , whether its gradual or linear , the C$50 million per annum would also suggest we will be producing sooner than later.
> Piedmont will still be wearing 25% of its share of ALL capital and operational cost until the agreed delivery date window of between July 2023 and July 2024 regardless of whether Sayona can produce 41 thousand odd tons of spodumene between now and end of June 2023.
> Looks as though the contracted 4 year period is in line with the stated expectations in the PFS to acquire its own ' owner operator ' mining fleet of trucks.
> ALL table and data within the PFS can be reconciled to the expected production levels , expected LOM costs , and production profiles specifically relating to...as well as earlier stated Piedmont off-take terms and timelines. Therefore the integrity of the PFS in intact , credible , and conservatively prepared and delivered.
> It is clear now based on these ' ACTUAL ' figures being finally agreed for mining contract that the PFS was certainly the way to go because it wasn't ' Definitive ' back in May 2022. So blasting and mining are now KNOWN factual costs rather than well prepared and perhaps anticipated estimates.
> It is clear in the terms of the off-take and the wording that should Sayona production be below the 113,000 tons per annum that any such production would be calculated and distributed at 50%. So ALL of this scare mongering by certain posters is clearly BOTH unnecessary and misrepresented.
> Looks like Sayona will be ' Profitable ' in the 2022 -2023 Financial & Tax Year , and will definitely be profitable in the 2023 - 2024 Financial & Tax Year.
(20min delay)
