425: Sayona Mining Announces FY25 Half-Year Results Amidst Piedmont Lithium Merger

Sayona Mining reports increased production and sales volumes for the first half of FY25, while progressing towards a merger with Piedmont Lithium.

Summary

• Sayona Mining Limited announced its FY25 half-year results, highlighting strong operational performance at North American Lithium (NAL).
• NAL's concentrate production increased by 57% to 103,063 dmt compared to the prior corresponding period (PCP).
• Spodumene concentrate sales rose by 59% to 115,027 dmt, delivered to customers in Asia.
• Lithium recoveries improved to 67%, a 7% increase from the PCP.
• Revenue reached $122 million, a 3% increase from PCP, driven by higher sales volumes but offset by a 35% decline in average realized selling prices.
• The Group reported an underlying EBITDA loss of $37 million, attributed to sales of high-cost inventory from the NAL ramp-up phase.
• A net loss after income tax of $64 million was recorded, reflecting higher depreciation expenses.
• Net cash inflows from operating activities were $19 million.
• The company invested $36 million in capital and exploration projects.
• The closing cash balance was $110 million, a 22% increase from June 2024.
• Extensive exploration programs were completed at NAL and Moblan, with 53,444 metres drilled at NAL and 76,202 metres drilled at Moblan.
• Sayona reaffirms its FY25 guidance for concentrate production between 190,000 and 210,000 dmt and concentrate sales between 200,000 and 230,000 dmt.
• A merger with Piedmont Lithium is expected to close mid-2025, pending regulatory and shareholder approval.
• A capital raise of $38 million was completed in the December 2024 quarter, with a conditional placement of $69 million planned upon completion of the merger.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While the company reports increased production and sales volumes, it also incurred a significant loss and faces challenges related to lithium price fluctuations and operational costs. The planned merger and capital raise provide a positive outlook, but the financial results temper the overall sentiment.

Positives

• NAL's concentrate production increased by 57% compared to the prior corresponding period.
• Spodumene concentrate sales increased by 59% compared to the prior corresponding period.
• Lithium recoveries improved by 7% compared to the prior corresponding period.
• Net cash flow from operating activities increased by 158% compared to the prior corresponding period.
• Closing cash balance increased by 22% from June 2024.
• The company completed a $38 million capital raise.
• Mill utilisation was a major driver of this performance, averaging 90% over the half despite weather-related challenges and a planned maintenance shutdown in October 2024.

Negatives

• The Group reported an underlying EBITDA loss of $37 million.
• The Group reported a loss after income tax of $64 million.
• Average realised selling prices decreased by 35% due to market conditions.
• Cash balance is down 30% compared to the prior corresponding period.

Risks

• The merger with Piedmont Lithium is subject to regulatory and shareholder approval.
• Lithium price fluctuations could impact revenue and profitability.
• Inherent risks in the Group's operating environment may impact the accuracy of production and sales estimates.
• The company is exposed to inflationary macroeconomic conditions.
• The company is exposed to risks associated with mining and project development including construction, commissioning and ramp up which may delay or impact production and have a flow on effect on sales.

Future Outlook

Sayona reaffirms its FY25 guidance for concentrate production between 190,000 and 210,000 dmt and concentrate sales between 200,000 and 230,000 dmt. The merger with Piedmont Lithium is expected to close mid-2025, pending regulatory and shareholder approval.

Management Comments

• Mr Lucas Dow, MD and CEO said, 'Sayona is on an exciting growth trajectory, and we are well-positioned to capitalise on the increasing global demand for lithium.'
• Mr Lucas Dow, MD and CEO said, 'Our strategic merger with Piedmont Lithium will create a leading North American lithium producer, unlocking growth opportunities and strengthening our financial position for long-term success.'
• Mr Lucas Dow, MD and CEO said, 'Our operations have delivered strong results over the past six months, with a 57% increase in production and a 59% increase in spodumene concentrate sales volumes compared to H1 FY24, which means we are well on track to deliver our full year guidance.'
• Mr Lucas Dow, MD and CEO said, 'With the Piedmont merger further strengthening our asset portfolio, a committed leadership team, and a clear strategy for expansion, we are confident in our ability to drive sustainable growth and cement our position as a key player in the global lithium industry.'

Industry Context

The announcement comes amid increasing global demand for lithium, a key component in electric vehicle batteries. The merger with Piedmont Lithium aims to create a leading North American lithium producer, positioning the combined entity to capitalize on this growing demand.

Comparison to Industry Standards

• Sayona's production costs of $1,303/dmt are higher than some of the lowest cost producers in Australia, such as Pilbara Minerals and Mineral Resources, which have production costs closer to $400-$600/dmt.
• However, Sayona's costs are in line with other North American producers, reflecting the higher operating costs in the region.
• The lithium recovery rate of 67% is comparable to industry averages, but there is potential for further improvement through operational optimization.
• The planned merger with Piedmont Lithium is similar to other consolidation activities in the lithium industry, as companies seek to build scale and secure access to resources.

Management Changes

Stakeholder Impact

• Shareholders will be impacted by the merger with Piedmont Lithium and the potential for increased shareholder value.
• Employees will be impacted by the integration of Sayona and Piedmont Lithium operations.
• Customers will benefit from the increased production capacity and security of supply.
• Suppliers will be impacted by the potential for increased demand for goods and services.
• Creditors will be impacted by the stronger financial position of the merged entity.

Next Steps

• Finalize the merger with Piedmont Lithium, pending regulatory and shareholder approval.
• Continue exploration activities at Tabba Tabba.
• Incorporate final assay results from NAL and Moblan into the review of resources and reserves during the 2025 Annual Reporting process.
• Expand exploration at the Morella Lithium Joint Venture Project.
• Focus on cost optimization and strategic growth initiatives.

Key Dates