425: Sayona Mining Achieves Record Lithium Production and Advances Transformational Merger with Piedmont Lithium

Sayona Mining Limited reported record quarterly spodumene production and reduced operating costs at North American Lithium, while progressing its proposed merger with Piedmont Lithium Inc. to form Elevra Lithium.

Summary

• North American Lithium (NAL) delivered record quarterly spodumene production of 58,533 dry metric tonnes (dmt) in the June 2025 quarter, a 35% increase quarter-on-quarter (QoQ).
• Process plant utilisation reached a new record of 93%, and lithium recovery was a record 73%, up 4% QoQ.
• Spodumene sales totaled 66,980 dmt for the quarter, reflecting a strategy to skew sales to H2FY25 to capture higher forward prices.
• NAL revenue was $71 million, driven by higher sales volumes, partially offset by an 8% decrease in average realised selling price (FOB) to $1,054/dmt (US$682/dmt), which still outperformed spot market prices that fell 15-20% QoQ.
• Unit operating costs (FOB, per tonne sold) for NAL decreased 10% QoQ to $1,232/dmt (US$791/dmt), with the unit cost of production falling to US$737/dmt.
• All FY25 guidance metrics were successfully achieved, with annual concentrate sales up 32% and unit operating cost sold (FOB) down 9% for the full year.
• The proposed merger with Piedmont Lithium Inc. is targeted to complete on August 12, 2025, subject to shareholder approval from both companies at meetings scheduled for July 31, 2025.
• Cash and cash equivalents at the end of the June 2025 quarter stood at $72.3 million, a $16.6 million decrease from the prior quarter, primarily due to a $12 million loss from NAL operations, $5 million loss from Group operations, $4 million in NAL sustaining capital expenditure, and $4 million in merger transaction costs, partially offset by $8 million in JV partner contributions.
• The company plans a conditional placement of Sayona shares to Resource Capital Fund VIII, L.P. to raise approximately $69 million (~US$45M) at $0.032 per share, subject to merger completion.
• A share consolidation (150 Sayona shares into 1 Sayona share) and a name change to Elevra Lithium are also subject to shareholder approval, with the consolidation expected to occur after the merger and capital raise, effective September 1, 2025, and completed by September 11, 2025.

Sentiment

Score: 8

Explanation: The filing indicates strong operational performance with record production and reduced costs, successfully meeting FY25 guidance. The impending merger with Piedmont Lithium is a significant strategic positive, positioning the company for future growth and scale. While cash decreased due to operational losses and merger costs, the planned capital raise and positive lithium price trends post-quarter-end provide optimism.

Positives

• Record quarterly spodumene production of 58,533 dmt, up 35% QoQ.
• New record process plant utilisation at 93% and record lithium recovery at 73%.
• Unit operating costs decreased 10% QoQ to $1,232/dmt (US$791/dmt), demonstrating improved efficiency and operating leverage.
• Average realised selling price of $1,054/dmt significantly outperformed lithium index spot prices, which fell 15-20% QoQ, validating the forward sales strategy.
• All FY25 guidance metrics were successfully achieved, including a 31% growth in annual production and a 9% reduction in unit costs compared to FY24.
• Significant progress on the proposed merger with Piedmont Lithium, with all regulatory approvals secured and shareholder meetings scheduled.
• Improved safety performance with a further decrease in Total Recordable Injury Frequency Rate (TRIFR) and no lost time injuries in May or June 2025.
• Encouraging exploration results at Mt Edon in Western Australia, identifying significant pegmatite hosted rubidium mineralisation with assays up to 0.59% Rb2O and 0.63% Li2O.

Negatives

• Average realised selling price decreased by 8% QoQ to $1,054/dmt (4% decrease to US$682/dmt) due to weak market price conditions.
• NAL operations incurred a $12 million loss, contributing to a $16.6 million decrease in cash balance QoQ.
• Group operations incurred a $5 million loss, further impacting the cash balance.
• Cash balance decreased to $72.3 million from $88.9 million in the prior quarter.

Risks

• The proposed merger with Piedmont Lithium is subject to shareholder approval by both Sayona shareholders and Piedmont Lithium stockholders, meaning it is not yet guaranteed to complete.
• The company's cash balance decreased by $16.6 million due to operational losses and merger transaction costs, indicating ongoing cash burn.
• Realised lithium prices were negatively impacted by seaborne freight charges on international sales, which could continue to affect profitability.
• The forward curve for lithium products declined during the quarter, limiting additions to the forward sales program, which could impact future revenue if not recovered.

Future Outlook

The company expects to complete its proposed merger with Piedmont Lithium Inc. by August 12, 2025, forming Elevra Lithium, which is anticipated to become a premier North American lithium producer with global scale. Updated Mineral Resource Estimates for NAL and Moblan projects are expected by the end of August 2025. FY26 guidance will be provided with the FY25 Full Year Results in late August 2025. Exploration efforts will focus on evaluation of drilling results and reviewing Resources and Reserves, with further development drilling planned at Mt Edon for a potential maiden mineral resource and a ground gravity geophysical survey scheduled at Mallina in July 2025.

Management Comments

• Improved safety performance, record production, lower costs, and a transformational merger set the stage for Sayona's next growth chapter.
• The June 2025 quarter marked a significant step forward for Sayona, with North American Lithium delivering record-breaking operational results that highlight the momentum and resilience of our team and operations.
• Spodumene concentrate production hit a new high of 58,533 dmt up 35% quarter-on-quarter while mill utilisation and lithium recovery both set new benchmarks at 93% and 73%, respectively.
• These impressive results reflect the cumulative benefits of ongoing process improvements and disciplined execution across the site.
• Sales totalled 66,980 dmt for the quarter, in line with our strategy to skew shipments to Q4FY25 to deliver against stronger forward pricing.
• Despite a softer spot pricing environment related to market conditions, our realised average selling price of $1,054/dmt (FOB) significantly outperformed lithium price index benchmarks, demonstrating the effectiveness of our forward sales strategy.
• Importantly, unit operating costs fell 10% to $1,232/dmt (US$791/dmt), while the unit cost of production decreased to US$737/dmt, highlighting the operating leverage from increased throughput and efficiency initiatives.
• The record performance at NAL capped off a year of 31% growth in annual production and a 9% reduction in unit costs compared to FY24.
• While realised prices declined due to weak market conditions, we are encouraged by the recent uptick in lithium index pricing, which has improved by over US$150/t since quarter-end.
• On the ESG front, we continued to progress studies supporting the permitting of NAL expansion.
• Our TRIFR improved further this quarter, bolstered by strong hazard reporting and consistent field leadership, with no lost time injuries recorded in either May or June 2025 the best safety performance since the September 2024 quarter.
• Exploration efforts transitioned from drilling to evaluation and planning, following the completion of more than 129,000 metres of drilling at NAL and Moblan during CY2024.
• Updated Mineral Resource Estimates are expected by the end of August 2025.
• In Western Australia, we made encouraging progress at Mt Edon and the Pilbara tenements, including a new research collaboration to investigate rubidium extraction and refinement.
• Finally, we are rapidly advancing our proposed merger with Piedmont Lithium to form Elevra Lithium. With all regulatory approvals now secured and shareholder meetings scheduled for 31 July, we continue to work towards the completion of the transaction in early August 2025.
• The merged business will emerge as a premier North American lithium producer with global scale, a balanced leadership team, and a strong foundation for long-term shareholder value creation.

Industry Context

The lithium industry has experienced significant price volatility, with spot prices declining 15-20% QoQ. Sayona's ability to outperform these spot prices through forward sales highlights a strategic advantage in navigating market downturns. The proposed merger to create Elevra Lithium positions the combined entity as a major North American player, aligning with the broader trend of consolidation and regional supply chain development in the critical minerals sector, particularly given the increasing demand for battery materials in North America.

Comparison to Industry Standards

• Sayona's average realised selling price of US$682/dmt significantly outperformed lithium index prices, which fell 15-20% QoQ. This indicates a strong forward sales strategy compared to companies heavily exposed to volatile spot markets.
• The unit operating cost of production at NAL fell to US$737/dmt, which is competitive within the global spodumene market, especially for a North American producer, though direct comparisons to specific projects like Greenbushes (Australia) or other North American projects (e.g., Lithium Americas' Thacker Pass, Albemarle's Silver Peak) would require more detailed cost breakdowns from those operations.
• NAL's mill utilisation at 93% and lithium recovery at 73% are strong operational metrics, indicating efficient processing compared to industry averages which can vary widely based on ore body complexity and plant design, but generally, high utilisation and recovery rates are benchmarks of operational excellence.

Corporate Governance

Related Party Transactions

• Two marine cargoes departed port during the quarter for sale to both Piedmont Lithium and international markets, indicating ongoing sales to the merger partner.

Stakeholder Impact

• Shareholders: Will vote on a transformational merger, share consolidation, and capital raise, which could significantly alter their equity holding and the company's future trajectory. The merger is expected to create long-term shareholder value.
• Employees: The merger aims to create a 'balanced leadership team' and a 'premier North American lithium producer,' potentially offering new opportunities and stability.
• Customers: Continued supply of spodumene concentrate, with a strategy to capture higher forward prices, ensuring supply chain stability.
• Creditors: The company's cash balance decreased, but a planned capital raise could strengthen the balance sheet post-merger.
• Local Communities: Ongoing engagement through the NAL Monitoring Committee, addressing environmental and community results, and progressing studies for NAL expansion permitting.

Next Steps

• Sayona Extraordinary General Meeting (EGM) and Piedmont Lithium stockholder meetings on July 31, 2025, for merger approval.
• Target completion of the proposed merger with Piedmont Lithium Inc. on August 12, 2025.
• Provision of FY26 guidance with the FY25 Full Year Results in late August 2025.
• Release of Updated Mineral Resource Estimates for NAL and Moblan by the end of August 2025.
• Share consolidation (150:1) expected to commence on September 1, 2025, and be completed by September 11, 2025.
• Further development drilling planned at Mt Edon for potential maiden mineral resource.
• Ground gravity geophysical survey scheduled to commence at Mallina in July 2025.
• Continued studies supporting the permitting of NAL expansion.

Key Dates

Recommendation

The filing presents a compelling case for a 'strong buy' recommendation. Sayona has demonstrated exceptional operational performance, achieving record production and significant cost reductions at NAL, while successfully meeting all FY25 guidance metrics. This indicates strong underlying business fundamentals and efficient management. The impending merger with Piedmont Lithium is a highly strategic move, poised to create a globally scaled, premier North American lithium producer, Elevra Lithium, which is expected to unlock substantial long-term shareholder value. While there was a cash burn in the quarter, the planned $69 million capital raise, contingent on the merger, will bolster the balance sheet. The company's ability to outperform spot lithium prices through its forward sales strategy, coupled with the recent uptick in lithium index pricing, suggests a favorable market position. The combination of operational excellence, strategic growth through merger, and a clear path for future development makes this an attractive investment.

Keywords

Lithium, Spodumene, Mining, North American Lithium, NAL, Piedmont Lithium, Merger, Elevra Lithium, Quarterly Report, Production, Operating Costs, Exploration, Canada, Australia, SEC Filing