SAYONA'S TOP 5 FOR 2023...Let's start with the latest fear and...

SAYONA'S TOP 5 FOR 2023...

Let's start with the latest fear and innuendo being spread-

OVERSUPPLY???

EV DEMAND STALLING???

LITHIUM PRICE CRASH???

WHAT HAS CHANGED TO WARRANT THIS OUTLOOK???

It seems every week, the narrative shifts to wherever the author is trying to steer it, depending on their motives.

We are not just talking minnow's here, we are talking about heavyweights in the financial sector.

So why do the facts, paint such a different story?

Experts in the lithium space, from Benchmark, fastmarkets, and LME, to producers to current buyers, are all telling a different story.

One of a continued shortage of BATTERY GRADE lithium, which will keep lithium pricing robust for the next few YEARS....

This is a long post. For those who have the time, please read on. For those that dont, I have summarised it below-

Sayona, and any current or near-term producer, will enjoy greater demand, volatile but robust pricing, extremely favourable contractual terms, government support and a strong outlook for the near to mid-term, AT A MINIMUM.

The fundamentals of the lithium market, that drove it so strongly earlier this year have not changed. According to the experts, they have only improved, particularly for producers.

Only the macro has changed, which affects the broader market.

Wars, pandemics, inflation and fears of a recession have dominated the markets. The bears have seized this opportunity to drive down multiple sectors of the market, as they were not yielding well with trading. So, the yields came by seizing the opportunity gifted by this negative sentiment, by shorting the market and feeding the fear.

Of course, the lithium sector was also affected, however the fundamentals and future outlook, have never looked better...

And with it, the future of Sayona...(any near/current term producer)

If you would like to read some facts to support this narrative, please read on....

But for now, lets just back track just a year, to late 2021, and the outlook for 2022

At the end of 2020, analysts were optimistic about pricing for lithium in the year ahead — but the speed and amount of the uptrend caught many by surprise.

The lithium market outperformed expectations in 2021, with prices traded on the Chinese and international spot market rising to well above US$30 per kilogram, George Miller of Benchmark Mineral Intelligence told INN.

“(They are) now above US$40 per kilogram in China, underscoring a rise of nearly 60 percent during the (fourth) quarter, and nearly 500 percent across 2021,” he said.

In the last quarter of 2020, a year that tested the supply chain resilience of every market, lithium prices in China started to recover. This was a pattern Fastmarkets expected other regional lithium prices to follow in 2021.

“The major surprise has been the extent to which they have rallied,” William Adams of Fastmarkets told INN.

As 2022 kicks off, Fastmarkets expects continued strong growth in all regions, especially in the US as the country plays catch up with Europe and China.

“Other reasons for expecting strong growth are there will be more EV models available, therefore more choice for consumers, and an easing of semiconductor shortages as 2022 progresses should mean supply constraints should not hold sales back,” Adams said. “But we also expect demand from energy storage applications to gather pace.”

In terms of lithium demand, Benchmark Mineral Intelligence anticipates burgeoning battery-grade demand from outside Asia as commissioning and first commercial production begins at some cathode facilities. “Yet demand is likely to grow fastest in China, which still dominates the cathode and cell production landscape,” Miller said.

Looking over to the supply side of the story, 2021 saw merger and acquisition activity pick up pace, as producers and developers prepared to meet the increasing demand for lithium.

“We expect a significant supply response, but it will be needed,” Adams explained to INN. “Additional production units will also take time to become commercially available given qualification times, and since stocks have been run down the supply chain will need to restock.”

Fastmarkets expects this supply response will alleviate some of the tightness, but will not lead to another oversupply selloff as seen in 2019 to 2020. In fact, all things considered, the firm expects a supply deficit in 2022.

“While by year-end 2022 the rate of production might be higher than actual consumption, production will have taken time to ramp up to that level, plus apparent demand will be higher than actual demand given the need to restock and build up working stock for the new manufacturing capacity being brought online,” Adams said.

Benchmark Mineral Intelligence is also forecasting that the market will be in deficit during 2022, which could impact output from the EV industry.

“We expect growth in supply to be outpaced by demand growth in 2022, which should provide beneficial pricing to the majority of current lithium producers,” Miller said.

Lithium outlook 2022: What’s ahead for prices

Following a strong 2021, investors and market watchers are wondering what's ahead for lithium prices.

“Given an extremely tight market balance last year, we expect demand to outpace incremental supply expansions in 2022, and in turn little to no downside in pricing,” Benchmark Mineral Intelligence’s Miller said.

Chart via Fastmarkets.

Fastmarkets is optimistic about prices in the first part of the year due to market tightness.

"A lot of new/additional supply will ramp up, some of it already has, which will help alleviate the immediate tightness, but this new supply will need to be qualified,” Adams explained to INN, adding that new production lines normally face some startup issues.

“(That’s why) we do not expect a surge in supply but a more gradual increase — enough to see prices flatten out and then pull back to some extent,” he said. “However, any extra supply is likely to be absorbed by restocking, given the destocking that has happened in 2021.”

Looking over at the price dynamics between carbonate and hydroxide, Miller said the price of lithium carbonate has now thoroughly surpassed the price of lithium hydroxide in the Chinese domestic market.

“(That’s) due to demand from LFP cathode manufacturers for carbonate, with the price differential now reaching US$6,000, in stark comparison to the historical price premium held by hydroxide,” he said. “We expect this price differential to be volatile throughout the year, prone to shift as each market tightens.”

Commenting specifically on the trends seen in lithium carbonate and hydroxide in 2021, Adams said both rallied aggressively. “Extra-strong demand for carbonate from LFP cathode producers led to it trading at a premium,” he noted. “But with carbonate at a premium to hydroxide, there was no incentive for Chinese convertors to produce hydroxide, so that also led to periods when hydroxide traded at a premium.”

Outside of China, prices traded more evenly, according to Fastmarkets data.

“We expect carbonate to remain at a premium (this year), especially as more hydroxide capacity is scheduled to ramp up in 2022,” Adams said.

But how will demand for different cathodes play out this year? Analysts agree that adoption of LFP is expected to continue, with market share growing in China.

“(LFP) will gradually see more adoption in Europe and US as a number of western OEMs have said they will use LFP in the entry range of vehicles or in their standard-range EVs,” Adams said. “Also given high battery raw material prices for cobalt and nickel as well as lithium, OEMs may well favor LFP chemistries for awhile.”

For Miller, the strong demand for LFP seen throughout 2021 will continue to tighten the lithium carbonate market at a faster rate than the hydroxide market and place upward price pressure on this product.

“The expiration of key patents for LFP may also see the cathode more widely produced outside of China, and in turn see the cathode chemistry capture further market share,” he added.

Lithium outlook 2022: Key factors to watch

Speaking about the challenges junior miners could face in 2022, Adams said the hurdle will be to get up and running as fast as they can. “The opportunities will be there should be a lot of willing buyers/offtakers, and not just from China, with financing being more readily available,” he added.

Adams said investors should expect more partnerships to be formed from downstream to upstream in 2022. “(That means) more securing of supply, more investment in the upstream market of the supply chain.”

Benchmark Mineral Intelligence’s Miller is also expecting far more attention to be paid to raw material supply by cell manufacturers and automakers, which may grow their engagement upstream in order to secure raw materials.

“I will (also) be watching the progress of projects currently under construction and those due to come online during 2022,” he added.

In terms of contracts, Fastmarkets is expecting to see long-term supply deals negotiated.

“Some may be fixed priced, but at these high prices consumers may be wary of locking in prices. I think we are more likely to see supply contracts based on unfixed prices,” Adams said.

There is a trend toward more frequent pricing breaks within contracting, said Benchmark Mineral Intelligence, as producers seek to capitalize on rising prices and increasingly link contracts to market-led price reporting.

“We have also seen more support for juniors in terms of offtake agreements, contracts and financing, which should improve financing opportunities and increase the likelihood of novel supply coming to market,” Miller said.

So, the outlook by the experts, was for a $30,000 carbonate price, and softening prices by the end of 2022.

As witnessed this year, we hit $80K and the price did soften very late, as witnessed by PLS's last BMX auction,

but only by 3%

PLS still sold it for US$8299 in December, vs the 8575 it received in November.

Yet the SP dipped 20%

Contracts to change to a more dynamic pricing, and tied ultimately to the spot market.

Now moving back to late 2022

BENCHMARK MINERALS

DECEMBER 2022

EV demand continued to surge

1. Lithium-ion battery supply grew the most ever in one year, surging towards 700GWh up from 450GWh in 2021
2. Gigafactories under planning or construction in Benchmark’s 10-year pipeline grew from 261 to 363 … of which over 150 are active making battery cells today
3. Benchmark’s 10-year battery cell capacity pipeline topped 8TWh / 8,000GWh for the first time ever, growing from 4.9TWh in 2021
4. Benchmark Lithium carbonate prices (EXW China) rocketed - doubled - in H1 2022 and stayed high and rising in H2 2022; prices began 2022 at $35,000/tonne and ended the year just shy of $80,000/tonne
5. In 2023, the move to scale up will see volatility - not just rising prices - take hold.

Those in the sector that can’t or don’t execute will suffer, those close to or in (quality) production should / will flourish.
At times, this may seem like demand is falling when it’s still high and volatile, much of which is due to macro global factors.

Much of EV demand cannot be fulfilled due to critical mineral shortages anyway.

A break in the euphoria and a moment of reality will buy the supply chain time to build out, from mine to battery cell.

2023 will see the beginning of this chapter in the electric vehicle and energy storage revolution.

So, one of the leading experts in lithium markets, Benchmark minerals, stating EV demand will not be fulfilled and that those in the sectorwith quality production will flourish.

A closer look at November's lithium pricing...

* DECEMBER 8TH

Lithium prices in China continued to climb in the first half of November before stabilising in the latter half, as rumours swirled that downstream battery supply chain players would limit production for the rest of 2022.

This resulted in an overall (and still very respectable) 4.9% month-on-month increase in Benchmark Mineral Intelligence’s Lithium Price Index.

Lithium carbonate prices averaged US$68,114/t ($101,517/t) in November, up 4.3% from the previous month, while lithium hydroxide retained a small premium with an average weighted price of US$71,565/t – a 5.8% increase.

Spodumene recorded the biggest increase in value, soaring 15.1% to US$5,903/t.

Benchmark added that some spodumene contract pricing mechanisms tied to the lithium chemicals spot market could have been successfully renegotiated, allowing for a shorter lag time for pricing movements in the chemicals market to be reflected in spodumene pricing.

This could have been behind the notable uptick on the lower end of pricing as these contracts moved closer in line with recent developments in the Chinese lithium chemical spot market.

Now, to the world's biggest lithium producer by market cap

ALBEMARLE

AUGUST 3

Albemarle Corp, the world’s largest producer of lithium for electric vehicle batteries, raised its annual forecast on Wednesday and reported a better-than-expected quarterly profit after it renegotiated supply contracts for the metal at higher prices.

The results reflect the rising demand for lithium as the auto industry begins to pivot its manufacturing base toward EVs, a shift that has given significant pricing power to mining companies.

Compared to last year, Albemarle now expects the price at which it sells its lithium to jump at least 225% in 2022 and adjusted profit in its lithium division to rise at least 500%.

“We have shifted our lithium contracting strategy to realize greater benefits from these strong market dynamics,” Albemarle Chief Executive Kent Masters said in a statement.

Adjusted profit in the company’s lithium division more than quadrupled,though adjusted profit in the catalyst division, which sells to the oil refining sector, fell more than 50%. The company’s bromine division, which sells chemicals used in fire extinguishers, saw a profit jump due to a jump in bromine prices.

Albemarle said its lithium production this year should rise at least 20% and that expansion projects in Chile, Australia, China and the United States are on track or ahead of schedule.

Now to one of our own leading producers of lithium-Pilbara Minerals.

PILBARA MINERALS

21 DECEMBER

Pilbara Minerals has achieved a significant improvement in pricing outcomes with its major offtake customers, following completion of the price reviews foreshadowed in the Company’s September 2022 Quarterly Activities Report. The revised offtake pricing applies for all shipments to the Company’s major offtake customers falling within December 2022 and onwards. Based on today’s market pricing reference data, average pricing across major offtake customers would equate to approximately US$6,300/DMT (CIF China) on an SC6.0 equivalent basis

CONTRACTED- SC6 US$6300CIF

Contract pricing has shifted, as witnessed by many, including the aformentioned Albemarle and Pilbara.

In more mature markets, there is negligible distinction between spot and market pricing. As lithium is an emerging market, the maturity of the markets are starting to catch up.

The agreement entered into by Sayona and Piedmont, will be a thing of the past. The market has already moved away from fixed price floor and ceiling contracts, to agreements tied much closer to spot pricing.

In this vein, expect the next offtake Sayona will sign , to be highly lucrative....

FASTMARKETS

DECEMBER 2

SPOT V CONTRACRT

Fundamentally, the supply side of this market hasn’t been able to keep pace with the acceleration in demand and the market is extremely tight. However, these price levels are a huge incentive for existing or potential producers to accelerate their path to market with new material. We can expect to see substantial increases in supply over the coming years. Whether that will be enough and how long it might take to meaningfully balance the market and result in a sustained downward price correction is difficult to say and only time will tell.

Beyond the price action itself, another key trend that we have observed is a change in approaches to pricing. The historical norms of negotiating fixed prices for long-term contracts has given way to a more dynamic pricing structure, where contracts for agreed durations and volumes are being linked directly to spot indices for their price settlement. Most prominently, the Fastmarkets cif China, Japan and Korea benchmarks for both carbonate and hydroxide

If you’re participating or looking to participate in this market, it’s important to recognize that the legacy practices and structures around pricing are fast changing. It’s also crucial to get to grips with the principles of the market-based, marginal tonne pricing mechanism, understand how indices work and how to apply them in contracts.

In the meantime, it is important to pay attention to all relevant price points in the market, including both spot and prevailing contract levels. Those looking at lithium equities or looking to value companies along the battery supply chain should be paying particular attention to the prices being realized under those supply contracts. However, if you are looking to interpret market conditions, then spot prices are a much more instructive reflection of market balance at a given point in time.

The spot market is where real, competitive price discovery takes place. In contrast, agreements that might have been made months or years ago are, from a price discovery perspective, essentially ancient history.

BENCHMARK MINERALS 2022 CONFERENCE

How high could lithium prices go?

Battery raw materials saw a spike in prices last year to a level that it was hard to imagine just a few years ago, as demand from the electric vehicle sector picked up pace. Lithium saw prices increase north of 400 percent, with prices up over 100 percent year-to-date.

But China's lockdown measures due to a surge in COVID-19 cases and a slowdown in demand from the EV sector have seen prices stabilize in the second quarter of the year. Last month, investment bank Goldman Sachs (NYSE:GS) called for a sharp correction in prices on the back of increasing supply flowing into the market, but not everyone agrees.

At the event, the team from Fastmarkets shared its insights on lithium pricing and mechanisms.

“We do not expect a major pullback in the prices,” Fastmarkets Head of Base and Battery Metals William Adams told the audience.

Lithium prices performance from January to April 2022. Chart via Fastmarkets.

Sharing his thoughts on sentiment in the lithium market, Jon Hykawy of Stormcrow Capital told INN it’s not difficult to find reasons to be excited about what prices have done in the past year.

“For a long period of time, we're going to see continued sales, we're going to see the banning of internal combustion vehicles, we're going to continue to see roses and sunshine across the entire industry,” he said. “And perhaps that's not quite as realistic, and maybe has never been as realistic as it's been portrayed.”

After reaching all-time highs, lithium prices are now starting to stabilize, but how high prices could go is yet to be seen.

“Never in my wildest dreams would I have thought we would see US$70,000 spot lithium prices, so I'm very happy to see it. I think there are a number of reasons behind it, whether or not it's speculation, stockpiling and, of course, just outrageous demand in China,” Chris Berry of House Mountain Partners told INN at the event in Phoenix.

“But I don't have much of a feel for if we go to $100,000 a tonne, or wherever we go; I'm just a lot more focused on when this cycle gets a little bit long in the tooth, and when we mean revert, where do we land?” he said.

"I think we will equilibrate between spot and contract pricing."

And this equilibrium has already begun....

So for 2023-

SAYONA'S TOP 5

NUMERO 1 ένα-

THE EXPERTS

So, from the experts in the industry.

From the Joe Lowry's, Rodney Hooper's, Simon Moores' , Howard Klein's to Benchmark Minerals and Fastmarkets, what they are currently seeing is a cyclic stabilisation of the price lithium. The market taking a breather... However, we will continue to see robust pricing, which will be volatile, but will continue at these or even greater levels. Levels which we may have not yet realised.

NUMERO 2 δύο

THE PRODUCERS

And from the current crop of top tier producers, nothing but expansion and upgraded profit guidance. With continued and forecast strong demand for their product, regardless of jurisdiction, these guys can't grow quick enough. Expect more JV's, acquisitions and mergers. Along those similar lines, expect to see the big miners actively become more present in this space. We will probably see the beginning of a consolidation at a much greater level.

Additionally, those lucky to qualify as IRA approved product will see greater demand and hence more attractive and premium pricing, as well as offers of equity stakes and all types of assistance, particularly in the refining space.

NUMERO 3 τρία

THE LITHIUM BUYERS

SECURITY OF SUPPLY.....SECURITY OF SUPPLY....SECURITY OF SUPPLY...... I cannot state this enough.

These guys are desperate.

Throwing literally billions of dollars around to secure supply, and in the meantime pushing the price of lithium to these record heights. Helping build refineries, interest free loans, equity stakes...the list goes on and on...These are the guys now compelled by Albemarle and Pilbara, and having to agree to these new contract terms which are tied closer to REAL WORLD MARKET PRICING. They understand that if they don't secure supply, the next customer will, and they will miss out.

The IRA has further complicated the equation, and now US free trade states will become sought after, if they want to build their batteries, or cars, or trucks etc...in North America.......particularly if you are situated in the US or Canada.

NUMERO 4 τέσσερα

THE ENVIRONMENTALS AND ESG

Isn't this WHAT ITS ALL ABOUT? The electrification of the planet to save our environment?

To be sought after, you dont just have to produce the product, you have to do it in an environmentally safe way.

Renewable power, recycling as much water as possible, containing any chemicals or leaching agents to not pollute the surrounding area, using battery powered equipment and minimising air borne pollutants.

Not only does your product need to be GREEN, the whole battery value chain does. IRA, carbon credits etc... will drive manufacturers carbon footprint to be as minimal as possible, and we will see the reduction of this transcontinental shipping of ore , concentrate and hydroxide/carbonate all over the world, to finally end up in a battery that goes into a car in the US , Asia or Europe.

As well as addressing concerns , accommodating requests and providing sustainable financial security to indigenous populations. This is now a bigger focus than ever for a buyer....

NUMERO 5 πέντε

THE GOVERNMENT/PUNTERS DRIVING BATTERY DEMAND

The electrification of the planet, namely the electrification of transport, is primarily driving demand.

Basically, every car, truck, bike, boat, train and plane manufacturer is either going full electric, or developing some form of electric transport in their fleets. Governments are mandating it and have mostly brought forward many of these mandates.

Buoyed by the public uptake of personal EV's, and witnessing the possibility of actually being able to shift sooner rather than later. The manufacturers have now all realised, get on board, or FAIL. So, it's a mad scramble to secure supply, or be left behind.

Additionally, storage of power is a massively growing market for home, commercial and grid stabilisation. There may be some shift in battery chemistry on this front to a cheaper alternative, as minimal size, weight and energy density are not a primary driver and prerequisite for the battery's construction.

Government grants and funding at generational high levels.

FORD- Tens of billion-dollar investments in various locations, 600,000 vehicles a year by late 2023 and more than 2 million by the end of 2026.

GM- Tens of billion-dollar investments in various locations,The automaker has an ambitious goal to sell one million EVs by 2025 in its North American and Chinese markets, which expects to generate around $50 billion in revenue annually.

STELLANTIS- Tens of billion-dollar investments in various locations, Plans to offer more than 75 battery electric vehicle models and reach global annual BEV sales of 5 million units by 2030

RENAULT- In bed with mitsubishi and Nissan,the accelerated investment could spawn up to 30 models across the three marques, underpinned by a handful of platforms. Renault is pushing for 65 per cent of its vehicles to feature some form of electric power before 2025, before all Alliance members transition to electric vehicles-only by 2030

VW- Tens of billion-dollar investments in various locations, From a global perspective, they will launch 10 new EV models by 2026, AND WANT TO OVERTAKE TESLA IN EV SALES....

HYUNDAI-Tens of billion-dollar investments in various locations, 17 new electric vehicles by 2030 across its Hyundai and Genesis brand and will invest 19.4 trillion Korean won ($AU22 billion) into electrification by the end of this decade – which will spawn 11 new battery-electric vehicles (EVs, or BEVs) for the Hyundai marque, and six for the Genesis luxury brand.

KIA- Under parent Hyundai, 14 dedicated vehicles expected to be launched by 2027 across multiple segments, including two new utes and a seven seat suv. Kia has previously told investors that it plans to sell 807,000 electric vehicles globally by 2026.

TOYOTA- Reportedly planning to adjust its 3-year electric vehicle plan, as it tries to catch up with global trends that appear to have run well ahead of its expectations. The Japanese automotive giant has purportedly been revising its $US30 billion, three-stage plan for developing and releasing EVs that it announced at the end of 2021. Reuters reports that Toyota is now looking to increase the adoption of performance-boosting technologies.

HONDA- In bed with GM, to introduce 30 new models and sell 2 million units by 2030

NISSAN- Nissan has 23 electrified models in the pipeline, including 15 new EVs, with ambitions of reaching a 50 per cent product mix by 2030.

AUDI- Pre-Christmas announcements include Audi's bold plan to go for all-electric production from 2029. The brand's intentions will see it launch only all-electric models from 2026, phasing out production of its fossil-fuelled models and PHEV variants between now and 2033. Expecting to have 20 EV models in its line-up by 2025, Audi will exclusively bring electric-powered vehicles to market from 2026, becoming a part of its wider plan to go carbon neutral by 2050.

BMW- Setting a target of 50 per cent electrification across the BMW and Mini model ranges by 2030, the biggest push for EVs is coming from the Chinese market, with at least 15 fully-electric vehicles planned to be on sale in the country by 2023.

As early as 2023, the BMW Group will offer around a dozen all-electric models that are ready to hit the road, thanks to intelligent vehicle architectures and a highly flexible production network. Thus, the BMW Group will offer at least one fully electric model in virtually all relevant series, from the compact segment to the ultra-luxury class. Following the BMW i3, the MINI Cooper SE and the BMW iX3, the BMW i4 and the BMW iX completed the all-electric range for customers in 2021. The company has also announced fully electric versions of the BMW 5 Series, 7 Series and BMW X1. Rolls-Royce and MINI are likewise resolutely charting a course to electromobility. In 2021, for instance, the fully electric MINI was the brand’s best-selling model.

BMW aims to have 2 million electric vehicles on global roads by 2025, and expects annual sales of BEVs to exceed 1.5 million as early as 2030.

MERCEDES- It plans to offer battery electric vehicles (BEV) in all segments where it competes by 2022. And, from 2025 onwards, all newly launched vehicle architectures will be electric-only, meaning customers will be able to choose an all-electric alternative for every Mercedes-Benz model.

VOLVO- full electric in Australia by 2026. Half of all Volvo sales will come from EVs by 2025 before the entire model line-up goes all-electric by 2030.

And I havent even mentioned Tesla.....

BATTERY MANUFACTURERES-

Global cumulative lithium-ion battery capacity could rise over five-fold to 5,500 gigawatt-hour (GWh) between 2021 and 2030,

The future of the automotive industry lies in electrification is not a topic for a debate anymore. However, what is being debated is how quickly the world will be able to let go of its century-long dependence on fossil fuels and embrace electric-powered vehicles. Several factors will play a role in determining this pace, including the availability of enough batteries to enable this transition.

Currently, there is an installed capacity of about 948 GWh for lithium-ion (Li-ion) batteries globally. Out of this, nearly 274 GWh was utilized to cater to the Li-ion battery demand from the automotive industry. If the electric vehicle (EV) sales in the last two years is anything to go by, the EV segment is set to become mainstream in the next couple of years. The addition of tens of millions of EVs every year will also require several thousand GWh of batteries.

According to S&P Global Mobility (formerly IHS Markit | Automotive), demand for Li-ion batteries from light vehicle between 2021 and 2027 will increase a compound annual growth rate (CAGR) of nearly 40% to about 2,050 GWh. Installed battery capacity in the same period will grow a 23.5% CAGR to 3,371 GWh in 2027.

The growth will not only be driven by established cell suppliers, such as CATL, LG Energy Solution, and Panasonic, but also some promising startups, including SVOLT, Automotive Cells Company (ACC), Northvolt, and Britishvolt.

While the automotive industry will continue to heavily rely on outsourcing, establishing partnerships with cell manufacturers to mitigate supply chain risk will be an important sourcing strategy for most OEMs in the years to come. From about 5% in 2021, cell sourcing from partnership companies will account for about 22% in 2027. There are some OEMs—such as Tesla and BYD-that are also betting big on in-house cell manufacturing. Nevertheless, in-house production is and most likely will remain the least-favored mode of battery sourcing among automakers.

LGES- South Korean battery maker LG Energy Solution aims to have a global production capacity of 520 GWh/year by 2025, a more than 2.6 time spike, the company said April 27, with 41% of the output based in North America.

CATL- Battery Capacity to Exceed 670GWh by 2025

POSCO- Will increase production capacity for cathode and anode materials from 115,000 tons to 930,000 tons by 2030, and secure world-class leading technologies led by the Future Technology Research Center as a global top-tier battery material producer. NEARLY 1 million tonnes...

PANASONIC- Plans to quadruple its production of electric vehicle batteries by fiscal 2028 as it expects increasing demand from American EV manufacturing giant Tesla. Panasonic Energy also said it is aiming for sales to hit ¥970 billion ($7.5 billion) by fiscal 2024, which ends in March 2025, up about ¥200 billion from fiscal 2021.

SK on- SK On co-CEO Jee Dong-seob has a simple but bold goal for his company: to become the world’s largest electric vehicle battery maker by output by 2030. The Korean battery maker now has seven factories across Europe, China and the U.S. Its first plants outside Korea opened in 2020 in China, situated in Changzhou and Huizhou. SK On has two more plants slated to start operating in 2024, including one in Iváncsa, Hungary, and another in Yancheng, China. Some $3.5 billion has been earmarked for two more plants in China due to open by 2025.

ETC...ETC...ETC....

I could just keep going on and on about JV's, expansion plans, a gigafactory here, a gigafactory there....but I think you all get the picture.

WHERE WILL ALL THIS LITHIUM COME FROM???

(rom memory, it just Sayona nad Whabouchi coming online in 2023....)

THERE CURRENTLY IS NO-WHERE NEAR ENOUGH BATTERY GRADE LITHIUM SUPPLY, COMING ON STREAM IN THE NEXT 3-4 YEARS....

So, the fundamentals of what is ACTUALLY happening in the market, has NOT changed, but rather just gained momentum and speed,. Announcements like these, have become a weekly or sometimes even daily occurence.

To listen to the daily noise, the fear and misinformation that has been spread is foolish, as it does not reflect the true nature of what is actually happening IN THE LITHIUM SPACE, as reported by those IN THE INDUSTRY.

So where does all this misinformation come from?

Financial institutions who want in and lost control of the lithium market. They are regaining that control with massive increases in their investments in the sector. They want in and will try every means to do it.

SO HOW DOES THIS ALL RELATE TO SAYONA?

NUMBER 1

Lithium prices so remain robust and elevated. Yes, it will be volatile, but next to no possibility of a price crash....

SAYONA TO RECEIVE RECORD PRICING IN THE FORSEEABLE FUTURE

NUMBER 2

Producers, which shall include us in a couple of months, phones ringing off the hook, expansion plans and increased profit forecasts. DEMAND is greater than ever....to the point they have been able to upgrade contracts with existing offtakers to an average spot price.

SAYONA'S NEXT OFFTAKE TO HAVE THIS RECORD PRICING. EXPECT AN ANNOUNCEMENT WITHIN 60 DAYS.

NUMBER 3

Lithium buyers scrambling to secure supply. Entering into higher priced contracts to ensure producer still supplies to them. Massive expansion plans and battery and car gigafactories being built around the world.

Would they do this if they forecast a lithium price crash? No....all they see is increased demand, and they are willing to pay to secure supply.

CONTRACTS RESTRUCTURED.

Buyers now paying spot prices in contracts to secure supply.

SAYONA SHOULD SECURE EXCELLENT CONTRACTUAL OFFTAKE TERMS...

NUMBER 4

ESG and Environmental now a pre requisite.

SAYONA MOSTLY HYDRO POWER AND SOLID RELATIONSHIP WITH LOCAL COMMUNITY. OVER AND ABOVE IN ENVIRONMENTALS AND LOCAL COMMUNITY SUPPORT PROGRAMS. IDEALLY SITUATED IN NORTH AMERICA TO REDUCE SUPPLY CHAIN CARBON FOOTPRINT.

NUMBER 5

Demand to continue to increase until at least 2030.

EV revolution accelerating, to eliminate dependance on fossil fuels.

EV uptake greater and earlier than expected, which has caught some manufacturers, including Toyota by surprise.

Home and commercial storage accelerating.

Grid stabilisation batteries being planned and installed worldwide.

SAYONA TO BENEFIT FROM ELEVATED PRICING FOR THE SHORT TO MID TERM. FAVOURABLE TERMS FOR FUTURE FUNDING AND JV'S. GOVERNMENTS, BOTH FEDERAL AND PROVINCIAL EAGER TO SUPPORT FROM THE US AND CANADA. IDEALLY SITUATED IN NORTH AMERICA, THE FASTEST GROWING EV MARKET WITH MINIMAL LITHIUM PRODUCTION, AND IRA ELIGIBLE.

SO, my fellow holders, the future has never looked brighter.

The electrification of the planet will continue, and for the fortunate few currently in the battery chemical space, an extremely lucrative tailwind.

2023 should see our little company shine...

There will still be fear and inuendo fed by the naysayers. The shorters will probably hang around, possibly until will make profit....who knows? Thet still hammer PLS with any remotely negative news.

If the market sentiment changes in 2023, they may have to close positions in every sector, as the market shifts to optimism and 'risk on'.

I still do have a feeling that the last couple of months of 2022, was the big boys last chance in the lithium space, to drive down near term and current producers, to build substantial positions. They clearly had missed the boat and were trying to get in at the levels we entered at. If you noticed, the sector moved in lock step. What happened to us, mirrored CXO, LKE, VUL and even the mighty PLS.

So, hopefully with a brighter market outlook for 2023, and all the activity and milestones we have left to achieve, we should have a great year with Sayona.

Thank you to my extended Sayona family!

I have learnt a lot in 2022, particularly about the darker side of markets....

Thank you- SB, Split, Wallaby, TT15, Scrollonby, Mollaj, Shagz, Rupfel, JytteHilden, Grafiks,CaptnJohn, Ord, ARF, YK84, Alech, Whiskey, Veritas, Nikos, Lordaga, Outatime, Moonrocket, crosby, Jeuji, Takeoff, Jasen, Shawn, Wolf, Superior, breakout, startatrix, lanwill, able77, kenjen, Paidup , Kombumerri, Megafauna, Zinc, Miroshka, busted, under8ted, Jockr, Y4ukik, Dazza, kiwi, padiwagen, Yowie......and to everyone else-

A HEALTHY, HAPPY AND PROSPEROUS 2023....