General Discussion Topics, page-1743

4. Sayona-Piedmont Deal Explained

PLL invested $12M for a joint partnership with Sayona in Quebec Canada in January 2021. PLL now owns 19.9% in equity at the parent company level and 25% as a business partner at the asset level in Sayona Quebec, the subsidiary. Sayona plans to produce SC6 like PLL. Sayona could have 3 separate mining locations/projects all in the same general vicinity in Quebec.

The first is Authier (French “o-thee-A”) their flagship mine: 14 year life, plans to produce 114,000 tonnes SC6 per year. For comparison, PLL is 25 year life, 160,000 tonnes per year SC6.

Authier is smaller than PLL’s announced ore body today in North Carolina but SYA can at least resupply PLL back what they’re selling to Tesla so PLL can at least keep their currently announced lithium hydroxide (LiOH) plant size of 22,700 tonnes per year instead of having to potentially downsize due to the Tesla deal that ships 1/3 of PLL SC6 to Austin, Texas.

This is the announced PLL offtake deal base case 60,000 tonnes per year for the life of the Authier mine in the announcement which is about 50% of Authier expected output.

What gets interesting is the two additional Sayona mining projects: a bid for currently in bankrupt NAL (North American Lithium) and the not so explored Tansim Project.

Sayona is currently a bidder for NAL (North American Lithium). NAL mine is literally adjacent to Authier (60km/36 mi West) also in Quebec but NAL went bankrupt in 2019. NAL was producing SC6 which means they have a running mine plus a 180,000 tonne per year nameplate capacity spodumene concentrator already working but it turned out their mined ore was not as good as hoped and therefore needed a lot more sifting/filtering to get to a decent concentration which ultimately means higher costs. They were also shipping this exclusively to China which is expensive from Quebec. But mostly due to plummeting SC6 prices the past few years this basically crushed them into bankruptcy. Just poor timing since we’re at the beginning of what looks to be a raging bull market for lithium and EV battery metals in general.

Should Sayona win the bid, they want to mix their good ore from Authier with NAL’s not-as-good-as-hoped-for ore and together the plant should run with lower operating expenses. If Sayona wins the bid, they’ll get NAL mine, ore body, and essentially a brand new 180,000 tonne per year concentrator plant already built.

All NAL bids were due January 15 2021, which is probably why the $12 million investment from PLL was timely (the week of) to hopefully ensure Sayona wins. This was supposed to close last July 2020 but Covid delayed the sale. An announcement is expected any day now as of February 15.

The third Sayona mining project nearby Authier and NAL where Sayona has land rights and are exploring an area called Tansim and this alone could be the size of the current PLL in North Carolina at 25 million tonnes. Range estimate for Tansim is 5 to 25Mt at 1.2% – 1.3% Li2O. This is in exploration phase.

If Tansim mine pans out, Sayona will probably need to expand or build another concentrator to increase throughput of SC6.

Sayona could go from 180,000 tonnes per year (from NAL) to +300,000 tonnes per year.

And therefore, if all 3 mines pan out, PLL could have first dibs to get 50% of all Sayona output: Authier + NAL + Tansim.

This is a great deal for PLL and they’re starting to lay the foundation to show how they could be a lot bigger, as PLL’s CEO Keith Phillips said in a recent interview with S&P Global.