Why are Sayona Mining shares getting thumped today?

Should this miner have put its lithium operation on care and maintenance?

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Sayona Mining Ltd (ASX: SYA) shares are on course to end the week in the red.

At the time of writing, the lithium miner's shares are down 3% to 3.3 cents.

This leaves the company's shares trading a fraction above their record low of 3.2 cents.

Why are Sayona Mining shares falling again today?

The miner's shares have come under pressure today after it revealed just how badly weak lithium prices are impacting its operations.

In fact, the damage is so bad the market may be questioning why it hasn't put its operations on care and maintenance like Core Lithium Ltd (ASX: CXO).

According to its quarterly update, Sayona Mining's production increased 18% quarter on quarter to 40,439 dry metric tonnes (dmt). This was achieved with a unit operating cost of A$1,536 of dmt, which was up 10% quarter on quarter.

Over the three months, the company reported a sizeable 142% quarter on quarter increase in concentrate sales volumes to 58,055 per dmt.

However, this was achieved with an average realised selling price of A$999 per dmt.

This means that the company is selling its lithium for over A$500 less than it costs to dig it out of the ground. That is clearly not sustainable and explains why Sayona Mining's cash balance dropped from A$158 million at the end of December to A$99 million at the end of March.

In other news, this morning the company has appointed its new chief financial officer.

Tasked with turning around this sinking ship is Dougal Elder, who has more than 15 years experience in large private and publicly owned companies in both Australia and the United Kingdom. This includes group finance and financial planning and analysis roles across a range of industries.

Management commentary

Commenting on the quarter, executive director and interim CEO, James Brown, said:

It was another quarter of strong operational performance for Sayona, with concentrate production at NAL increasing 18% Quarter on Quarter (QoQ) to 40,439 dmt. Concentrate sales were up 142% Quarter on Quarter which included some catch up from the December 2023 Quarter and the commencement of rail shipments to Tesla.

Following the completion of an operational review that confirmed on going production ramp-up at NAL, the team continues to optimise mining and production processes, with significant improvements in ore production and future ore availability (ore in sight up 53% Quarter on Quarter). Mill utilisation dipped to 73% (from 75% in the prior quarter) as both adverse weather conditions and blockage issues in the tailings line adversely impacted overall utilisation. Despite these challenges, recovery throughout the quarter continued to improve, successfully meeting the ramp-up target of 67%. In March, the mill performance was particularly strong exceeding the ramp-up recovery target with a recovery rate of 69%.

Sayona Mining shares are down 84% over the last 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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