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I'm ready for a drilling update!

Interesting that the IMF have just visited Ghana. IMF press release from y'day here:

https://www.imf.org/en/News/Articles/2022/10/07/pr22342-imf-staff-concludes-visit-to-ghana

This looks like the key statement from the IMF:

“We had constructive discussions on policies aimed at restoring macroeconomic stability and laying the foundation for stronger and more inclusive growth. KEY AREAS OF FOCUS INCLUDED ENSURING PUBLIC FINANCE SUSTAINABILITY while protecting the vulnerable, bolstering the credibility of monetary and exchange rate policies to reduce inflation and rebuild external buffers, preserving financial sector stability, AND STEPS TO ENCOURAGE PRIVATE INVESTMENT AND GROWTH, including by improving governance, transparency, and public sector efficiency."

Looks to me like Ewoyaa could play a role in this.

Hi Pastyhead,

Where do you get the US$7,350 / t price for 6% spod. from?

The last Pilbara auction that I saw on 20 September 2022 was US$7,708/t. Have I missed a recent auction?

The only reason I point this out is because the difference between US$7,708/t and US$7,350/t is US$358/t.

That's more than our C1 cash costs after by product credits of US$278/t!

Hi swest42,

I hear what you're saying and I agree that US$2-2.5k is more realistic currently. But in many ways, I don't think it matters too much what they used as the long-term spod. price because everyone can do their own maths by playing around with a calculator based on the cash flow sensitivities.

And then there's the other reality of the Pilbara digital auction of US$7,708/t. Running that through a calculator is remarkable. Is US$2-2.5K too low? And where does the next Pilbara digital auction go? Up or down? Fact is, it could go UP? I'm not saying it will go up. I don't know but it could.

Teddy-KGB2,

Thanks. I hadn't seen that news, which is interesting. Gangfeng have said "The decision to divest a portion of our Core shareholding was driven by portfolio weighting considerations and the opportunity to monetise a portion of the investment."

Well, they did invest A$34m at 33.8cents back in August 2021. Hard to criticise them for taking some profits after the share price has more than tripled and selling part of their stake at A$1.05. And they already have a 4 year off-take agreement with Core Lithium.

I wonder if they've found another lithium investment, close to production, at a far more reasonable investment price, into which they can reinvest their profits? My guess, they'd want a project with a PFS they could read.....

Interesting to see Core Lithium raising A$100m on Friday in Australia. This is to accelerate exploration, accelerate going underground, add a night shift to get the concentrator going earlier and a slug of spare working capital etc.

I'd been wondering why Core lithium had come off a bit. I can't blame them for wanting to take advantage of these spod. prices sooner rather than later.

Separately, mercedesman, good luck with your adventures in Mali but I prefer Ghana. I think Mali is still under military control since the last coup. And they've recently delayed a return to democratic elections until 2024. I wish you well with Kodal, but not for me.

Thanks for posting the link T-KGB2.

GK, FID from what I heard at 25: 29 "assuming that we receive a mining license and an EIA in Ghana by the end of next year, then very late next year we'll need to be making an election and cash commitments."

I understood FID as likely end of next year, which is 2023.

Agreed. Disappointing price action on Friday. But it's just one day.

On the PFS, I liked reading the CASH FLOW SENSITIVITIES of the project. This can be found on page 44.

'Project cash flows are most sensitive to changes in concentrate selling price where a 10% change in price resulted in a 17.0% change to the Post-Tax NPV.'

The price used for lithium concentrate (6%) was US$1,359/t and produced a post tax NPV (8%) of US$1,328million.

So, a price increase of 10% or US$135.9/t is forecast to produce an increase of 17% to post tax NPV, or an increase of US$226million.

Makes it interesting to consider the implications of the spot price achieved by Pilbara recently of US$7,708/t of 6% lithium concentrate.

Thanks GK,
Another 10% price increase in the spot market for spodumene concentrate. It just keeps going up!

Nice move up in some of the lithium shares in the US.

Piedmont +8%, Livent +5%, Albemarle +3%

MajorOak,

Some of the shares that were part of the ASX offering according to the lodgement prospectus were to be exercised from options:

"The ASX Offer is being undertaken by way of a sell-down by certain shareholders of the Company (as detailed below) ("Sell-Down"), rather than an issue of new Shares. A new, special purpose vehicle called Atlantic SaleCo Limited ACN 660 757 344 ("SaleCo") has been established to facilitate the Sell-Down. Atlantic Lithium and SaleCo have entered into agreements with those existing securityholders who wish to participate in the Sell-Down, INCLUDING A NUMBER OF OPTION HOLDERS who will exercise their options ("Sell-Down Options") and sell the resulting Shares as part of the ASX Offer."

The lodgement prospectus then went on to say:

"In the event the ASX Offer does not close by 31 August 2022, the Board of the Company, other than Len Kolff (who abstained from voting), has resolved to extend the expiry date of the 7,000,000 Sell Down Options (which expire on 31 August 2022), including 3,500,000 options held by a person closely associated with Len Kolff, to 30 September 2022 so that those Sell-Down Options do not lapse prior to completion of the ASX Offer (the "Sell Down Option Expiry Extension")."

Notice that of the options exercised today, that 7,000,000 had an expiry of 30 September 2022.

"Number of Options Strike Price Grant Date Expiry date

4,500,000 12 pence 24 June 2020 31 December 2022
7,000,000 12 pence 24 June 2020 30 September 2022
4,000,000 30 pence 17 August 2021 31 December 2022"

I think you might be double counting to some extent to get to a 7% new shares calculation.

Thanks GK. I also think it has a good chance of working as is and agree with swest42 that you're right to talk about risks.

Both ALL and PLL have much to gain.

Another lithium producer ALLKEM recently announced earnings on 25 August 2022. You can read them here: https://www.allkem.co/investors/asx-announcements
ALLKEM produced 200k tonnes of concentrate from their Mount Cattlin mine and sold at US$2,221 per tonne. Now this price is due to off take contracts previously struck with China's Yahua (120k tonnes) and others. But we also know that the Pilbara spot auction traded lithium 6% con at US$7,012/tonne recently.

But lets take the lower US$2,221 per tonne and deduct the C1 cash cost of US$249/t from the updated scoping study. That's an operating margin of US$1,972 per tonne of con produced. Ewoyaa is expected to produce 300,000 tonnes which equals US$591.6m operating profit per annum.

Since 50% would be to attributable to Atlantic, that's US$296m operating cashflow. If we convert to GBP at the current rate of 1.15 then that's GBP257m operating profit attributable to ALL.

Our market cap is only GBP252m! Much to gain for both ALL and PLL to make this happen.

Hi GaiasKidney,

I disagree with your assessment that 'the prospective development to production is DEPENDENT SOLELY on the decisions of another company who could decide to not prioritise the development at Ewoyaa.'

The 1 July 2021 RNS gives some details of the transaction between Atlantic Lithium (IronRidge back then) and Piedmont.

Piedmont have the ability to earn up to 50% of the Cape Coast Lithium Portfolio (CCLP). Currently Piedmont own 0% of CCLP is my understanding and ALL control 100% of CCLP. Piedmont will earn 22.5% by spending US$5m towards regional exploration AND US$12m towards completion of a DFS. We are currently awaiting PFS, so this hasn't happened yet.

Piedmont will then earn a further 27.5% of CCLP by spending US$70m towards capex of the project. My understanding is that only then will PIEDMONT own 50% of CCLP.

OTHER KEY TERMS in the announcement are also important.

"If the "DFS criteria" of Stage 2 is achieved and Piedmont elects by mutual agreement not to proceed to Stage 3, Piedmont will forfeit its Stage 2 interest back to IronRidge."

This stage 2 interest would be the 22.5% of CCLP.

Should this happen, then presumably ALL with 100% of CCLP can go and find funding itself. Which in this environment, I don't see difficulty.

Particularly with recent news stories that Glencore might be considering entering the lithium trading business. etc.

This is a very interesting article. If Glencore does enter the lithium trading market, it'll be interesting to see how they go about it.

https://www.reuters.com/markets/europe/glencore-looking-trade-lithium-soaring-ev-demand-sources-2022-09-16/

Thanks GaiasKidney,

Well that was someone with an itchy trigger finger. LOL!

Looks like whoever sold, read the tweet first, sold and did the thinking afterwards. Each to their own.

Yup! Alkemy's Tees Valley are another one of many looking to secure lithium feedstock.

Ghana across to the Gulf of Mexico for Tesla's proposed Lithium Hydroxide plant could work too. This application by Tesla to build a facility in Texas is big news!

Hi MajorOak,

Are you referring to the news on Friday that Tesla have applied to build a lithium hydroxide plant in Texas?

https://www.reuters.com/technology/tesla-considering-lithium-refinery-texas-2022-09-09/

I think this is huge news. I don't think it's been discussed much on this message board yet. If Tesla have the application in, I'd guess that next they'll need to secure a supply of feedstock. Maybe some 6% spodumene concentrate?

A couple of thoughts.

We were 66p in April and are now about 30% cheaper. But not only that, GBP is about 15% lower against the USD than back in April. In my opinion, we're still vulnerable to a take-over.

On the previous discussion on ALL compared to EMH. They're both hard rock (rather than brine, clays or DLE etc). But ALL's grade is about 1.3% LiO2 and EMH's is about 0.4% LiO2. Not only that, the lithium is hosted in spodumene at ALL and a mineral called zinnwaldite at EMH. Personally, I'd rather have spodumene to process than zinnwaldite. Also, the EMH project, I believe, is underground. ALL will start as an open pit operation.

I wish EMH shareholders well and it's a hard rock project which is a good start AND has a huge tonnage but I prefer ALL's hard rock spodumene project, with its relatively simple processing.

An interesting article that discusses the permanent magnet space, that seems relevant for Pensana:

https://tinyurl.com/yf4jkkhh

I just had a look at Piedmont's Quarterly Report Q2 2022, which they filed with the SEC. You can find it via their website. Piedmont have US$139m cash (30 June 2022 - Unaudited). And on page 15 under EQUITY it says:

'We are authorized to issue up to 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. We have no outstanding shares of preferred stock.'

Piedmont closed on Friday +19% at US$66.70 per share.

I'm interested to see what happens over the next few months, with our, Atlantic Lithium's PFS due and with more drill results released. I'm interested to see how Piedmont play this.

DG1, great to see you posting here. I remember you from the Solg board from 2017 / 2018. Always balanced / great posts. Good to hear from you!