TLG Discussion 2022

[WheresTheMonkey]

Interesting statement regarding China export bans drawn from a 6 November ASX announcement by Walkabout Resources ASX WKT

Graphite producers outside of China stand to benefit from these impending regulatory changes with Benchmark Minerals Intelligence reporting that since the announcement of the restrictions many traders and flake graphite mines outside of China are reporting that enquiries for material are flooding in.

 

[JNRB]

Interesting statement regarding China export bans drawn from a 6 November ASX announcement by Walkabout Resources ASX WKT

Graphite producers outside of China stand to benefit from these impending regulatory changes with Benchmark Minerals Intelligence reporting that since the announcement of the restrictions many traders and flake graphite mines outside of China are reporting that enquiries for material are flooding

That's great and all, but we don't need volume of inquiries. We just need to sort out the details of our offtake MoUs we already have. Mark keeps saying its just takes a long time because they're very complex agreements with long contracts and all sorts of clauses.... I suppose for Talga it's our first time having to go through that process so I have some understanding on the lack of a clear timeline but ffs at some point you gotta lock something in.

 

[Diogenese]

That's great and all, but we don't need volume of inquiries. We just need to sort out the details of our offtake MoUs we already have. Mark keeps saying its just takes a long time because they're very complex agreements with long contracts and all sorts of clauses.... I suppose for Talga it's our first time having to go through that process so I have some understanding on the lack of a clear timeline but ffs at some point you gotta lock something in.

But should we have locked something in before the China embargo?

 

[curiousmagpie]

offtakes are taking a long time to agree terms because they can’t agree on price. Simple as that. The China news is hopefully the incentive for offtakers to pay up or be left with no supply in 2025.

 

[JNRB]

offtakes are taking a long time to agree terms because they can’t agree on price. Simple as that. The China news is hopefully the incentive for offtakers to pay up or be left with no supply in 2025.

I don't think it is as simple as that, and that's not what MT has indicated. Price would have been broadly agreed on before committing even in just an MoU.

 

[cosors]

"The offtake term includes a floating price mechanism with a reference price to be agreed by the parties in the binding definitive agreement, which will be subject to standard conditions precedent for an offtake agreement of this nature."
https://www.talgagroup.com/news/acc-and-talga-sign-non-binding-offtake-for-anode-supply/

"The parties have a legally binding obligation to use commercially reasonable efforts to complete due diligence and finalise a binding definitive agreement by 30 November 2022."

 

[cosors]

Somehow that reminds me of Long Time Technologies. The only two news items on their page:

https://www.lttech.com.tw/en/news/

"Supply volumes will be co-ordinated with the progression and start up of Talga’s commercial anode production."

And everyone is waiting to see if mushrooms are more important to the supreme court than saving 1.316Mt of CO². I hope the knot bursts soon. And then out of the way -> national interest.

 

[cosors]

If you are interested in what we are actually facing.

Top 12 graphite anode manufacturers in China​

August 31, 2023
https://www.tycorun.com/blogs/news/top-12-graphite-anode-manufacturers-in-china

 

[curiousmagpie]

I don't think it is as simple as that, and that's not what MT has indicated. Price would have been broadly agreed on before committing even in just an MoU.

If not price, what is the hold up?
Most other options are worse.

And of course the MD is not going to say publicly that they can’t get anyone to agree to their pricing, that would be terrible for the share price. Instead “these things take time”.

Even Magnis got an offtake deal done to sell AAM, presumably because they took whatever Tesla were offering (ie very cheap). They had a very weak negotiating position and no realistic way of delivering. Talga is the realistically the ONLY option for natural graphite AAM supply in the EU within the next few years, so they can hold firm on demands and wait until the buyers are in a weaker position, which is now happening.

 

[BlackBeak]

If not price, what is the hold up?
Most other options are worse.

And of course the MD is not going to say publicly that they can’t get anyone to agree to their pricing, that would be terrible for the share price. Instead “these things take time”.

Even Magnis got an offtake deal done to sell AAM, presumably because they took whatever Tesla were offering (ie very cheap). They had a very weak negotiating position and no realistic way of delivering. Talga is the realistically the ONLY option for natural graphite AAM supply in the EU within the next few years, so they can hold firm on demands and wait until the buyers are in a weaker position, which is now happening.

It's been stated in announcements, they're waiting for the mine permits to be finalised which will allow financing and offtakes to be finalised.

 

[JNRB]

If not price, what is the hold up?
Most other options are worse.

And of course the MD is not going to say publicly that they can’t get anyone to agree to their pricing, that would be terrible for the share price. Instead “these things take time”.

Even Magnis got an offtake deal done to sell AAM, presumably because they took whatever Tesla were offering (ie very cheap). They had a very weak negotiating position and no realistic way of delivering. Talga is the realistically the ONLY option for natural graphite AAM supply in the EU within the next few years, so they can hold firm on demands and wait until the buyers are in a weaker position, which is now happening.

Signing an MoU would have clauses and constraints to negotiate in good faith and not engage in discussion with other parties for the same allocation of product while finalisation discussions are still ongoing. So nothing is binding, but there's still a level of commitment in there that you wouldn't agree having found a general agreement on pricing. I don't think it's anything so extreme, and have seen no evidence to suggest that.

I think it's much more mundane; these are multi-million dollar agreements, for a highly-technical highly-specced and tested/qualified product. Lots and lots and lots of little minutia and incidental clauses to be agreed upon to determine contractual obligations in every imaginable situation. And the fact that it's all so new - for both us and ACC/VERKOR - means it takes a lot of time.

 

[JNRB]

Signing an MoU would have clauses and constraints to negotiate in good faith and not engage in discussion with other parties for the same allocation of product while finalisation discussions are still ongoing. So nothing is binding, but there's still a level of commitment in there that you wouldn't agree having found a general agreement on pricing. I don't think it's anything so extreme, and have seen no evidence to suggest that.

I think it's much more mundane; these are multi-million dollar agreements, for a highly-technical highly-specced and tested/qualified product. Lots and lots and lots of little minutia and incidental clauses to be agreed upon to determine contractual obligations in every imaginable situation. And the fact that it's all so new - for both us and ACC/VERKOR - means it takes a lot of time.

I have no reason not to believe MT here

 

[curiousmagpie]

It's been stated in announcements, they're waiting for the mine permits to be finalised which will allow financing and offtakes to be finalised.

Signing an MoU would have clauses and constraints to negotiate in good faith and not engage in discussion with other parties for the same allocation of product while finalisation discussions are still ongoing. So nothing is binding, but there's still a level of commitment in there that you wouldn't agree having found a general agreement on pricing. I don't think it's anything so extreme, and have seen no evidence to suggest that.

I think it's much more mundane; these are multi-million dollar agreements, for a highly-technical highly-specced and tested/qualified product. Lots and lots and lots of little minutia and incidental clauses to be agreed upon to determine contractual obligations in every imaginable situation. And the fact that it's all so new - for both us and ACC/VERKOR - means it takes a lot of time.

Oh come on. I hate to say this but I think there is a bit of naivete creeping in here.

On trusting what MT says, well mostly yes, but let’s not forget messaging around LKAB, or Mitsui, or any of the other MOUs/LOIs that have been signed in the last 7-8 years and quietly dropped. Smedvig? Who knows.

You not only have to listen to what the company says, but what they don’t say. That part is often more illuminating.


Reasons mentioned so far for delays in getting the offtakes binding:
Permits: this does not stop a binding offtake. Plenty of companies in the battery material space have signed binding offtakes with a much less advanced project than Talga. Vulcan signed a binding deal with Stellantis and no one really knows whether their project is even feasible, let alone permitted, product qualification etc etc. The financing depends on permits, the offtakes do not. It’s not the permits.
Qualification: AAM has been sufficiently qualified for ACC & Verkor to agree to non-binding deals. If it’s qualification of the material that is stopping these deals becoming binding then there are some serious problems ahead way worse than price. It’s not the qualification.
European holidays: We’re past the one year anniversary of the ACC deal, and nearing a year on the Verkor deal. It’s not the holidays.


What else has been happing in the last year? Graphite and anode prices have taken a beating.



Reasons not mentioned, either as a problem or no problem:
It’s the price. It’s always been the price.



Syrah got a deal done with Tesla. Magnis got a deal done with Tesla. Tesla want all of the anode they can get their hands on. Why would Tesla not want to get a deal done with Talga? Of course they would, but they are extremely price driven and very tough negotiators who have had the balance of power in negotiations up until now. Talga have said no deal, because the price doesn’t stack up against the project economics in the DFS.
Syrah and Magnis said yes because they were desperate. Soon ACC and Verkor might be the desperate ones.


IT’S THE PRICE

 

[Monkeymandan]

offtakes are taking a long time to agree terms because they can’t agree on price. Simple as that. The China news is hopefully the incentive for offtakers to pay up or be left with no supply in 2025

Respectfully disagree. I imagine binding offtake/s will be required by financiers to underwrite debt finance, and debt finance agreements cannot be executed until the permit is finalised.

The permit unlocks everything else.

Price may continue to be subject to negotiation until offtakes are executed, but once the permit is announced and Talga need funds for capital works, I believe their hand will be forced to enter into agreements. Ie the permit come first, then everything else flows from there, on whatever terms can be agreed by that time.

 

[WheresTheMonkey]

Respectfully disagree. I imagine binding offtake/s will be required by financiers to underwrite debt finance, and debt finance agreements cannot be executed until the permit is finalised.

Absolutely correct

 

[Monkeymandan]

Another strong webinar today. Looking forward to a rewatch when it’s online.

Talnode Si sounds tantalising close, and I get the impression we’re going to see multiple sites aligned to customers.

By far the most significant thing for me however, was the glimpse he gave into how they might be able to expand beyond 19ktpa anode in the nearer term, ie under the auspices of the current permit. By going underground and tapping into the 10mt ore that sits beneath the 2mt ore earmarked for Vittangi, they could potentially ramp close to Niska volume. ‘Within the permitted land’ or something to that effect was his language, which implies the permit is more concerned with geography/the bounds of the mine site, than the tonnage of ore. I’ve no doubt it would be complex, permit modification applications and countless reports required, but this could be an absolute stroke of genius - enabling ramp up to multiples of 19ktpa well before Niska V2 would be permitted and live.

Opinions only.

Exciting times ahead.

 

[WheresTheMonkey]

Syrah got a deal done with Tesla. Magnis got a deal done with Tesla.

It wouldn't surprise me if Magnis sent Tesla someone else's anode material. They are as dodgy as a Cartier watch bought in a Bangkok street market.

They went into a trading halt............... now voluntary suspension................. and the Australian press are finally investigating them and "upturning rocks" with truly hideous things hidden beneath

Vulcan is ithium and the qualification is no where near as onerous as anode material

Syrah did its Tesla deal way before the price of graphite plunged but they probably were looking for a "name" to take their product at almost any price

 

[JNRB]

Oh come on. I hate to say this but I think there is a bit of naivete creeping in here.

On trusting what MT says, well mostly yes, but let’s not forget messaging around LKAB, or Mitsui, or any of the other MOUs/LOIs that have been signed in the last 7-8 years and quietly dropped. Smedvig? Who knows.

You not only have to listen to what the company says, but what they don’t say. That part is often more illuminating.


Reasons mentioned so far for delays in getting the offtakes binding:
Permits: this does not stop a binding offtake. Plenty of companies in the battery material space have signed binding offtakes with a much less advanced project than Talga. Vulcan signed a binding deal with Stellantis and no one really knows whether their project is even feasible, let alone permitted, product qualification etc etc. The financing depends on permits, the offtakes do not. It’s not the permits.
Qualification: AAM has been sufficiently qualified for ACC & Verkor to agree to non-binding deals. If it’s qualification of the material that is stopping these deals becoming binding then there are some serious problems ahead way worse than price. It’s not the qualification.
European holidays: We’re past the one year anniversary of the ACC deal, and nearing a year on the Verkor deal. It’s not the holidays.


What else has been happing in the last year? Graphite and anode prices have taken a beating.



Reasons not mentioned, either as a problem or no problem:
It’s the price. It’s always been the price.



Syrah got a deal done with Tesla. Magnis got a deal done with Tesla. Tesla want all of the anode they can get their hands on. Why would Tesla not want to get a deal done with Talga? Of course they would, but they are extremely price driven and very tough negotiators who have had the balance of power in negotiations up until now. Talga have said no deal, because the price doesn’t stack up against the project economics in the DFS.
Syrah and Magnis said yes because they were desperate. Soon ACC and Verkor might be the desperate ones.


IT’S THE PRICE

Did you actually watch the quote i linked?
In case you weren't clear yet Talga is selling ANODE.

Sarah and Magnis both supply PRECURSORS. Neither have a signed an offtake for a product comparable to Talnode-C. Tesla is the most mature EV company in the would with more in-hiuse tech than anyone else, so they can source raw-er materials from further down the supply chain. It also means they have more experience in exexuting supply contracts for these materials than newer entrants.

So based on YOUR examples it's entirely plausible that our contract agreements are more complex and take longer.

Mitsui - we outgrew
Lkab - had to focus on other projects
Smedvid - invests in helping companies GET STARTED and their withdrawal was in their eyes a success because of how much Talga had grown.
None of these ate mysteries.


If you can't agree on price, you leave the door open to other bidders that may offer a higher price.
You don't commit to negotiations with a single partner unless you have at least set the parameters for a price you can both agree on.


Also "...the reason not mentioned... the price..."
MT has discussed pricing in previous webinars prior to our agreements with acc/verkor. And yes he said that automakers push very very hard on pricing. So been in discussion for a long time.
Then we signed am MoU.

 

[JNRB]

C

Another strong webinar today. Looking forward to a rewatch when it’s online.

Talnode Si sounds tantalising close, and I get the impression we’re going to see multiple sites aligned to customers.

By far the most significant thing for me however, was the glimpse he gave into how they might be able to expand beyond 19ktpa anode in the nearer term, ie under the auspices of the current permit. By going underground and tapping into the 10mt ore that sits beneath the 2mt ore earmarked for Vittangi, they could potentially ramp close to Niska volume. ‘Within the permitted land’ or something to that effect was his language, which implies the permit is more concerned with geography/the bounds of the mine site, than the tonnage of ore. I’ve no doubt it would be complex, permit modification applications and countless reports required, but this could be an absolute stroke of genius - enabling ramp up to multiples of 19ktpa well before Niska V2 would be permitted and live.

Opinions only.

Exciting times ahead.

Couldn't watch, in EU so sleeping but thanks for the points

I'm super excited about Talnode-Si and increase of scale, so good to hear those things are both being actively/rapidly progressed!

 

[curiousmagpie]

Did you actually watch the quote i linked?
In case you weren't clear yet Talga is selling ANODE.

Sarah and Magnis both supply PRECURSORS. Neither have a signed an offtake for a product comparable to Talnode-C. Tesla is the most mature EV company in the would with more in-hiuse tech than anyone else, so they can source raw-er materials from further down the supply chain. It also means they have more experience in exexuting supply contracts for these materials than newer entrants.

Yes I watched. European holidays were mentioned.

Precursors?

Magnis:

Syrah: