Sayona Mining Limited is a publicly-listed Australian mining company focused on sourcing and developing lithium – the raw material critical to powering the batteries of everything from smart phones to electric cars. Founding Director Paul Crawford discusses how Nexia is helping Sayona Mining position itself in a market moving closer towards a battery-powered clean air future.
The lithium-ion battery has been around for decades, but the ever-increasing worldwide use of smart phones, electric bicycles, cars and household solar storage continues to drive up demand. As lithium became one of the world’s hottest commodities in recent years, no country moved faster and grabbed the opportunity more successfully than Australia, which has grown its market share of raw lithium production from about 13 per cent in 2000 to 50 per cent in 2017.
Based in Brisbane, Sayona Mining spent its early years focused on the exploration of diamonds and other commodities. When the Authier Project – a lithium resource in Quebec, Canada – became available in 2016, Sayona Mining saw its opportunity to claim a foothold in the booming market.
“We wanted a project that would see a strong return on investment, so we were looking around for a commodity that was going to be the next mineral in high demand. We identified Lithium’s potential as the best means to expand our company,” said Crawford.
“We just don’t know how big that demand could be.”
The company’s primary focus since acquiring the Authier Project was to complete a feasibility study and obtain the requisite permits required to begin production. Permit pending, Paul envisages mining to begin in 2020.
The feasibility study delivered promising results, indicating the project could produce around 87,500 tonnes of raw material per year and a projected total project EBIT (earnings before interest and tax) of CA$449 million. Coupled with low capital expenditure requirements and low operating costs, as well as the site’s close proximity to support services, the potential is hard to ignore.
Despite the positive prospects, ASX listed lithium companies have experienced their fair share of ups and down on the market.
“The market position now is fairly steady. It was booming at a fairly steep rate, peaking in late 2017,” Crawford said.
“Prices have come off a bit this year, and of course there is always uncertainty about how quickly the technology that relies on the commodity will advance. We think there is a still a lot of scale though.
The obvious challenges of going off-shore extend beyond the standard risks of mining operations. Crawford explained that the obstacles presented by being an Australian-based company operating in a foreign jurisdiction were numerous.
“A large portion of the Company’s time and efforts have been spent working with the local Canadian communities and first nations to ensure they remain engaged and consulted with respect to the development. This is a part of the challenge, but the company sees the benefits.”
He added that naturally Sayona take managing their finances as seriously as they take the potential of Lithium, and Nexia has been critical in ensuring a smooth sailing operation.
“Nexia has not just been a compliance and financial advisor, they always have something of value to add. Be it advice about industry trends, competitor activities and general market knowledge, they have gone above and beyond,” Crawford said.
While the lithium market shows no sign of slowing down, it remains highly competitive. Paul suggests that Nexia’s trusted advice is only going to prove more critical if the business is to take advantage of its Authier resource and realise a return on investment.
“We’re going to have to rely on Nexia’s advice and wealth of experience more than ever as we first raise funds to get the project moving, and then as we look to enter the market as a high-volume trader,” Crawford said.
“We’re at an advantage having had them with us for so long that they understand our business and where we’re headed. It’s a partnership we can really rely on.”
