Keith has been busy
CEO @PLLKeith at @BloorStreetCap's Virtual EV/Battery Metals Conf. discusses the future of
#NAL,
domestic #CarolinaLithium &
#TennesseeLithium projects,
how the #IRA could benefit $PLL
and the industry, & more:
https://t.co/R4wK5Srq53
Nothing really new in terms of projects but the discussion on offtakes and balance sheet is interesting.
(JC) So, that's a great overview of your current operations. Why don'twe move on and discuss your balance sheet. You have a lot going on, all ofwhich will require a lot of capital. How much cash do you currently have onhand and how will you allocate that cash in the coming year.
(KP) Yes, we had, at September 30th our last quarterly, we had US$118Millionof cash, this is all U.S dollars. We also own around US$200Million worth of stockin Sayona Mining and Atlantic Lithium. Those are important partners of ours. Ourequity positions are nice, but they're not raison d’etre. We have operatingjoint ventures that are why we're in those projects.
So, from a fundingperspective, that's, we always have the option to fund our development bymonetizing some of that stock. It'd be less diluted for our shareholders, and thenwe have a series of other ways to raise money. So, we did receive the grant fromthe US government for Tennessee. $142Million. We are in conversations with theDepartment of Energy for loans for Tennessee and Carolina. They have a programcalled the ATVM program – advanced technology vehicle manufacturing. It's a low-costlending program that's been in place for over a decade. Tesla, Ford, Nissan allused it back, I guess, 10, 12, 15 years ago and it provides loans on attractive,with attractive terms, and it's focused on electrification of the vehicle business.Lithium hydroxide qualifies as something we helped accomplish and we hope toget loans from those guys and we're also very focused on really two other areasof cash generation to fund our development.
One is it's increasingly common tohave greenfield lithium producers like us, talking to car companies and batterycompanies about off-take agreements including prepayments. So, if we're goingto sign in Tennessee for instance, an agreement to sell somebody 10,000 tons ayear of hydroxide for five years that's 50,000 tons. Spot hydroxide price is US$80,000/ton.That's potentially a US$4Billion dollar contract. We think it'd be great ifsomebody might pay 5% or 10% of that up front. That would be a reallyattractive way for us to fund the development . So those are conversations thatare going on,
We’re having similar conversations with respect to the spodumeneconcentrate from NAL that will you know, will be marketing, and we also hope tohave cash flow from NAL. You know we think we'll be in first production in thefirst half of next year sometime between March and June – time will tell andwe'll have our first shipment as soon as we can we're assuming that'll be Q3next year, it might be sooner, but let's say Q3 and if we can ship $30,000 tonshipments you know 6 times a year that's 180,000 tons. We can generate somereally strong cash flow. So we have an off-take agreement with the Sayona Quebecjoint venture this is how the whole conversation was found started was for themto be a supplier to Piedmont. So we have an offtake agreement to buy the greaterof half of production or 113,000 tons a year of spodumene concentrate. We havea floor price in that agreement and a ceiling. We're now in a position where thespot price is higher than the ceiling, so our purchase price will be theceiling of US$900/ton, and we'll then on sell that to customers at whatever pricewe can achieve. Spot’s over US$8,000. You know that, you know, we may not getspot but we're talking to people about that now and we would hope to have ourfirst shipment next year, and if you do the math we're shipping 30,000 tons andwe're receiving you know, the kind of margins we're talking about we could havevery substantial cash flow every quarter for every shipment and that can reallyhelp fund a lot of development and we'll see how things go. We're not ,you know,the market needs lithium fast. We've got a schedule that's ambitious. Meaningit's achievable, but it's ambitious. If at the end of the day the best way tofund some of the development is to slow down a quarter or two or three andgenerate more cash from our offtake agreement in Quebec, that might be what wedo so that we minimize any dilution to shareholders.
But if things go well,it's possible we won't ever go back to raise money from shareholders, dependingon the timing of the projects.
(20min delay)
