@Scollonby Sayona Quebec also always have the fallback option of toll converting to Hydroxide. Even with the cost of getting the SC to China this would still be lucrative. This is the route PLS took recently with their excess instead of selling through the BMX platform. My best guess right now is most of the spare product will go to the same destination as the PLL offtake.
In my opinion converting to Carbonate is bad business. Spodumene has now been demonstrated as the preferred feed for Hydroxide and that is why SC spot pricing is as high as it still is and holding. The current pricing numbers show this really clearly.
There are many low cost Carbonate players using other feed types, ie brine and lepidolite (mica). Demand in North America for Li2CO3 is low, is likely to remain that way compared to LiOH, and can be met by South American competitors, or even Albemarle within the US. I think the issue is the commitments of timing and that significant work had been undertaken previously by NAL to go down that path. It remains to be seen how much of that 50% will remain when Sayona Quebec go down that road. The permitting is a big plus. Potentially lower capex is also attractive. In short it is easier.
Probably needs pointing out that the DFS applied long term optimistic pricing for Spodumene Concentrate.
There was nothing conservative in any figures I could see in that DFS. It would be wrong to apply current pricing across a ~20 year period yet many are suggesting investors should recalculate based on current spot. The data used for the DFS was from forecasts made based on H2 2022. This was a peak period and in my view the numbers used are likely highly optimistic as a result- this combined with the decision to optimise recovery (increasing output at the same time) by dropping final grade were responsible for the major increase in NPV.
As for the shortened mine life, it makes basically no difference to the NPV. Income from these projects after around 15 years tends to have little to no positive impact on NPV due to the discount rate (8%), and certainly not past 20 years.
The most bizarre comments I've seen on the bird are related to the Authier NPV.
It is reasonable to have kept the NPV of Authier as low as possible without going negative. This ensured the headline NAL NPV was higher and is a clearer marketing strategy to investors than splitting NPV across 2 projects owned by the one entity. Makes much more sense the way they did it.
Within HC, an old "friend", apparent published financial education textbook writer and expert decided it is conservative to apply a multiple of 7x to the NPV. That was an interesting call to make... the word conservative has been used a lot for a bridging DFS that was anything but in all aspects.
Keep an eye on recovery rates. The nature of the deposit and variable nature of the feed will be very difficult to manage in reality. If Sayona Quebec can hit 70% recovery at any point post ramp up I'll eat my hat. By extension that means I do not believe Sayona Quebec will meet their new nameplate guidance.
The timing of when this dropped - after close on a Friday - has caused much speculation. The project has commenced commisioning, photos of saleable concentrate have been shared and there is a quarterly report not far away. Some might ask was there any point in dropping a DFS at all if funding isn't required and commissioning begun.
I recall someone once posed the question about A40 and Bald Hill, "without a DFS how did they know where to dig?". DFS are for investors and funders. The block modelling etc is done regardless as part of the mining plan.
While the headline NPV was a big leap, there was a lot not to like in it. For those wanting a list, you can start with the revised block model, higher opex and sustaining capex, investors expecting the highly publicised increase in nameplate was at a grade of SC6.0, the list goes on. Digging a little deeper, while capex to March 31st was treated as sunk (resulting in a staggering IRR) it is seems apparent that the initial years will be high AISC due to early "sustaining capex" and the inital very high strip ratios. Delaying Authier ore will be beneficial in initial years. It makes processing slightly less complicated and the cost of that ore is significant compared to feed from the existing NAL deposit. Not using Authier ore for some time will reduce NAL OPEX in the near term.
So why release the DFS now and what was the purpose? I would suggest it was released for retail investors as a bridging document to lessen the blow around costs and many other changes to what many would habe expected based on perviously released information.
These Li projects never meet feasibility study expectations and it had to be brought closer in line with reality. There is an upcoming quarterly that likely had to reveal many of the changes. It is also likely that much of the information about intended operating differences to the PFS were becoming common knowledge. Despite those changes being easily identified by those familiar in the industry, many retail holders would have still been taking the PFS as gospel. A Friday after trade release gives retail an entire weekend to read and seek advice.
Above all, it was necessary for continuous disclosure. Without this drop, in the space of weeks investors would be screaming why were we not informed? It is a very good question because Sayona Quebec have known the majority of the price sensitive aspects for many months.
The DFS is stamped and approved by competent persons. It has a range of accuracy. What remains to be seen is how far it went to bridge previous forecasts and what will eventuate with production.
Why am I posting. Firstly I hold a small amount of SYA as part of my larger portfolio (fortunately purchased a very long time ago) so I have an interest in the company. Secondly because some of you will know, I'm drawn to comment on companies that have an extreme amount of noise. 3rd and most importantly, I have been reading a lot of contributions on social media and felt some light needed to be shed on Sayona Quebec to add clarity. I don't post much on hotcopper anymore. Not since the abuse I got for posting in the year or more prior to AJM losing their project to PLS. I get I'll get some abuse for my comments here, but I remember the number of grateful people that reached out in the aftermath.
To be clear I am not calling for SYA to go under like I did with AJM and A40. I do not believe that to be the case. What I am saying is the situation is not as rosy as the flood of positive commentary and misinformation that dominates social media regarding SYA.
Please do your own research and question everything by seeking multiple unique sources of information. Always check yourself for signs of confirmation bias. I understand it is difficult in an echo chamber where those that don't toe the line are hounded away, and currently the number of pumpers and downrampers alike is astounding.
Best of luck.
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