Why did Sayona Mining's (ASX:SYA) shares close in red today?

3 min read | May 02, 2022 06:52 PM AEST | By Bhawna Gupta

Why did Sayona Mining's (ASX:SYA) shares close in red today? — Image source: © Max5128 | Megapixl.com

Highlights

Sayona announced that the resource base at its two projects- NAL and Authier- has been doubled.

In March, the company struck an agreement with Acuity Capital to raise its ATM (at-the-market) facility from AU$15 million to AU$50 million in standby equity capital.

Sayona Mining’s shares closed at AU$0.32 apiece, down 1.56%.

Sayona Mining Limited (ASX:SYA), an emerging lithium producer, shared its March quarter update on Friday (29 March 2022).

The company said that it has grown its Québec lithium asset base while progressing its Western Australian projects, resulting in another positive quarter of increasing market value for the company in the quarter ending 31 March 2022.

While the overall equity markets in Australia closed lower today (2 May 2022), Sayona Mining, which closed 1.56% lower at AU$0.32 apiece, was in-line with the broader ASX 200 Index, which fell 1.18%.

March 2022 quarter update

Sayona announced during the quarter that the resource base at its two flagship projects, NAL and Authier, has been doubled.

NAL consists of 19 contiguous claims totalling 582.31 hectares in the township of La Corne in the Abitibi Témiscamingue province of Québec. The project is located 60 kilometres north of Val d'Or, a significant mining service centre, and close to the Authier Project in Sayona.

Authier is a spodumene lithium hard rock deposit. The two projects work together to form a crucial component of the company's multi-project Abitibi lithium hub.

Also Read: Major milestones in battery space light up Lithium Australia’s (ASX:LIT) March quarter

Source: © Christof14 | Megapixl.com

Sayona Mining declared in March 2022 that it had a total JORC combined measured, indicated, and inferred mineral resource of 119.1 million tonnes (Mt) @ 1.05% Li2O.

The company aims to restart its spodumene concentrate production at NAL from the first quarter 2023. From its Abitibi lithium hub, Sayona plans to produce 220kt of spodumene 6% or 30kt lithium carbonate equivalent (LCE).

Pilbara Region – Sayona Lithium Tenure

Sayona owns the lithium rights to three leases, the Deep Well, Tabba, and Red Rock projects, totalling 334km2. During the quarter, Sayona reclaimed 100% lithium rights to the Red Rock Project, E45/4716, after its release from the Morella earn-in agreement.

Data Source- Company announcement dated 24 February 2022

What is Sayona Mining?

Sayona Mining is a lithium producer with projects in Québec, Canada, and Western Australia.

The company's holdings in Québec include North American Lithium, the Authier Lithium Project, and the Tansim Lithium Project, all of which are backed by a strategic collaboration with American lithium developer Piedmont Lithium Inc (ASX:PLL). In addition, Sayona owns a 60% share in the Moblan Lithium Project.

The company owns a substantial tenement portfolio in Western Australia's Pilbara region, which is rich in gold and lithium. Sayona is looking for gold prospects in the Hemi style, and its lithium projects are covered by an earn-in arrangement with Morella Corporation (ASX:1MC) (previously Altura Corporation).

Also Read: Which countries are the world's top lithium producers?

Bottom Line

Despite positive quarterly updates, Sayona Mining shares ended lower today. This could be because of profit booking as the stock has already gained over 125% in this year so far (YTD basis). Also, there has been significant equity dilution as the company has raised fresh equity capital. This will result in lower earnings per shares despite the company’s overall profits rising in the coming quarters.

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