Refresh interview.
Sayona Mining (ASX:SYA) to produce first vertically integrated lithium plant in North America
Tim McGowen
Sayona Mining Limited (ASX:SYA) Finance Manager Dougal Elder provides an update on the company, discussing commercial production, the offtake agreement with Piedmont, the PFS for the lithium carbonate refinery, the upgrade of the Moblan resource, and the timeline for lithium hydroxide production.
Tim McGowen: We're talking today with Sayona Mining (ASX:SYA), who is an emerging leader in the supply of lithium for North America's electrification. We have with us Dougal Elder, who is the Finance Manager for the company. It's got an ASX code of "SYA" and a market cap of around $1.8bn.
Dougal, thanks for your time.
Dougal Elder: Thanks, Tim.
Tim McGowen: Now, when we're talking lithium, investors always have an opinion on the lithium price, and obviously in regards to the global macro situation recently, we've seen quite a serious pullback on the lithium price. What's your view on the lithium price?
Dougal Elder: Yeah, it's an interesting question, Tim, and I think it's something that a lot of the market is very interested in. I think probably what we saw over the last 18 months or so was a bit of an overshoot to the upside. So, the fact that the price has corrected a little bit is probably not really a surprise. What's driven that, there's probably a number of factors impacting it, but a lot of the commentary from the market experts seems to be the price is being driven by lower domestic prices in China, and that's recognisable because the export pricing hasn't fallen as far versus the peak. So, I think that's something to point to. The other interesting point to point to is that there's a bit of a floor price emerging in the CME futures price, which hopefully gives investors hope that the prices won't fall too much further.
Tim McGowen: Dougal, so can we get an operational update on your North American Lithium project, now that production's kind of ramping up, you're ramping up commercial production in early second half of 2023, and also we note that the project did produce 6 per cent spodumene concentrate last quarter. Was that expected for an early production, or was that above expectations?
Dougal Elder: Yeah, absolutely. So, NAL kicked off the start of production in March. So, about a month ago. We produced around 3,500 tonnes to the end of March. So, well ahead of our internal budget. In March, NAL produced 6 per cent over 6 per cent concentrate over a number of days during that month. And that was really around demonstrating that NAL is capable of that 6 per cent standard. But what we are going to pursue is a 5.4 per cent grade product to produce and sell. And that's really around generating the best margins for the joint venture, where the additional tonnes that we can produce by lowering the grade offsets the lower price. So, we think that that's in the best interest of the joint venture to drive for those additional margins.
In terms of the ramp profile, it's a very aggressive ramp. We think that NAL will be at the nameplate capacity of around 226,000 tonnes run rate by October of this year. To the end of April, we're ahead of budget for the cumulative two months. So, everything's on track so far, and we look forward to providing a further update at the end of June.
Tim McGowen: Dougal, now you touched on that 5.4 per cent spodumene concentrate, but your contract with Piedmont Lithium (ASX:PLL) has a reference cap price of $900 a tonne for 6 per cent spodumene concentrate. So, how does that discounted concentrate grade affect contract pricing?
Dougal Elder: Yeah, that's right. So, the NAL will target to produce and sell 5.4 per cent grade product. The existing offtake agreement with Piedmont and likely any future additional offtake agreements that we're in the process of finalising will be based on an SC6 standard. So, there'll be a quality adjustment for any grade lower than that. But obviously the only reason we would do that is that there is an additional margin benefit to the joint venture for selling at a lower grade. So, NAL would receive a lower price than the SC6 standard equivalent, but the extra tonnage benefit that we get for producing at a lower grade far outweighs the price discount that we get. So, all in all, a great outcome for NAL.
Tim McGowen: Now, Dougal, you previously mentioned that the PFS to complete the already partially built lithium carbonate refinery is due soon. How will this refinery change the nature of your business? And which market is the refined lithium product likely to be sold into?
Dougal Elder: That's right. So, when Sayona and Piedmont purchased North American Lithium from Investment Quebec, the government of Quebec, in 2021, they acquired a plant that had a partially constructed lithium carbonate facility already on site. We are undertaking a process to complete a feasibility study into the completion of that partially constructed plant. That's currently going through internal management and board reviews at present, and will be released to the market very soon. But that provides a very unique opportunity to both Sayona and Piedmont, as well as the government of Quebec, to be the first and only integrated plant in North America to produce from mine to concentrate to downstream chemicals, all within the same site, for delivery into the US. So, a very unique opportunity presents itself, given that that plant is already partially constructed, and we would anticipate a very low capital cost to complete that construction versus a greenfield site.