North American Lithium ramp up continues with record quarterly production in Q4’23 Operating cost improvements expected upon completion of key capital projects Piedmont offtake agreement provides strong leverage to anticipated recovery in lithium prices Ewoyaa advancing through approvals process with Final Investment Decision anticipated in 2025 Piedmont and Atlantic currently co-funding modest project development costs in advance of FID Pursuing financing options non-dilutive to Piedmont’s shareholders to fund capex in 2025+ Permitting, partnering, and debt funding discussions progressing for domestic projects Large, strategic projects positioned for development in stronger markets Initiated cost savings plan in Q1’24 targeting ~$10 million in annual run rate savings Piedmont ended 2023 with $72 million in cash and currently holds marketable securities of ~$38 million
February 06, 2024 06:50 AM Eastern Standard Time
BELMONT, N.C.--(BUSINESS WIRE)--Piedmont Lithium (“Piedmont” or the “Company&rdquo (Nasdaq: PLL; ASX: PLL), a leading global supplier of lithium resources critical to the U.S. electric vehicle (“EV&rdquo supply chain, today provided an update on key business and portfolio activities.
Quebec – North American Lithium
Ramp up continues on target at North American Lithium (“NAL&rdquo, Piedmont’s joint-venture mining operation in Quebec. NAL produced 34,237 dry metric tons (“dmt&rdquo of spodumene concentrate in Q4’23, at an average grade of 5.5% Li2O, representing a 9% increase in production from the prior quarter. Operations achieved records in concentrate production (13,954 dmt), mill availability (80%), and global lithium recovery (66%) in December 2023.
Cash operating costs at NAL are expected to improve upon completion of important capital projects in mid-2024. In particular, completion of the crushed ore storage dome is expected to enable the operation to achieve full production rates and result in meaningfully lower unit production costs. Furthermore, mining costs are currently elevated with activity focused in the area of pre-existing underground mine works dating from the 1950s. Unit mining costs are expected to improve once operations have moved past the old mining works.
Inclement weather and port congestion resulted in the delay of one of Piedmont’s planned Q4’23 shipments, with 14,248 dmt of spodumene concentrate shipped during Q4’23 and 13,104 dmt being shipped in mid-January 2024. Piedmont expects to begin deliveries under its long-term contracts in 2024 and reduce reliance on volatile spot market sales.
Piedmont is working with its NAL joint-venture partner, Sayona Mining (ASX: SYA), to conduct a strategic review of NAL operations. The objective of the review is to continue improving NAL’s productivity and operating costs, with a view toward positioning NAL to continue to operate throughout the market cycle.
“We are very pleased with the progress at NAL and anticipate continued operating improvements through 2024," said Keith Phillips, President and Chief Executive Officer of Piedmont Lithium. “NAL is North America’s only operating spodumene mine, and as such, is quite strategic to the long-term customers we serve. As we complete our operational review with our partners at Sayona, our goal is to optimize production rates and operating costs and maintain leverage for the recovery in lithium prices that we anticipate based upon market dynamics and historical pricing trends.”
Ghana – Ewoyaa Lithium Project (“Ewoyaa&rdquo
Piedmont and its partner, Atlantic Lithium (AIM: ALL; ASX: A11) (“Atlantic&rdquo, continue to advance development of the Ewoyaa project in Ghana. Atlantic announced recently that the Minerals Income Investment Fund of Ghana (“MIIF&rdquo completed a $5 million investment in Atlantic and discussions continue regarding MIIF’s potential investment of $27.9 million directly into Ewoyaa for a 6% project stake, which would reduce funding requirements for Piedmont and the project’s other partners.
Construction at Ewoyaa is targeted to commence in 2025 following receipt of required permits and approvals, which are expected later in 2024. Piedmont expects Ewoyaa funding will be minimal in 2024 and is evaluating a range of options that would be non-dilutive to Piedmont shareholders to fund its share of project capital in 2025 and beyond. Piedmont expects to submit a formal application for the Ewoyaa project debt financing later this quarter to the U.S. International Development Finance Corporation. The size and terms of any such arrangement will be the subject of due diligence and negotiation, but customary project financing could account for a majority of project capital. Separately, Piedmont is exploring possible funding related to its 50% offtake interest in the project. Of note, Atlantic recently announced completion of Stage 1 of a competitive offtake partnering process for the 50% of the Ewoyaa material controlled by the joint venture.
“We are excited about the potential of the Ewoyaa project,” commented Mr. Phillips. “Based on technical studies, Ewoyaa is expected to be a large operation offering the potential of a high return on invested capital given its relatively low capex and opex profile. We expect 2024 project spending to be minimal with a focus on advancing the project through the environmental permitting and approvals processes to prepare for an ultimate investment decision in 2025.”
United States Projects
Piedmont’s projects in North Carolina and Tennessee are central to its long-term strategy of developing an integrated lithium hydroxide business in the United States. In the current lithium price environment, the Company is managing the pace of development and capital spending at both Carolina Lithium and Tennessee Lithium, including deferrals of property purchases, engineering expenses, and other development costs.
On January 18, the Company delivered its formal response to a third request for additional information (ADI #3) to the North Carolina Division of Energy, Minerals, and Land Resources (“DEMLR&rdquo. DEMLR is currently reviewing the response and a decision is possible in the coming weeks. In the event Piedmont receives a positive decision on the Carolina state mining permit, the Company would prepare for local project rezoning and permits while continuing to work with state agencies in North Carolina to obtain final air and industrial discharge permits.
Corporate
Piedmont finished 2023 with $72 million in cash and currently holds approximately $38 million in marketable securities. The Company intends to reduce its capital spending in 2024 and control operating expenses through expense management that the Company views as prudent, including a recently completed 27% reduction in force. The Company expects to complete the majority of its cost savings initiatives by the end of Q1’24 and is targeting approximately $10 million in annual run rate savings.
“These cost reduction actions, while difficult, are necessary to position the Company for the long-term. Lithium prices have fallen sharply, and the market consensus is currently negative. However, lithium has been a cyclical business over the past decade with trough markets in pricing generally followed by new record highs,” commented Mr. Phillips. “As they say in the mining business, ‘the solution to low prices is low prices,’ and announcements of capacity curtailments and new project deferrals have recently become commonplace with more likely to come. At today’s lithium prices and equity valuations, new project development is expected to be challenging for all, and if EV markets continue to grow, then another period of lithium shortages appears likely to follow.”
“We believe we are extremely well-positioned as a partner in North America’s only producing spodumene mine and in an exceptional low-capex development project in Africa, with tactical optionality to build downstream businesses in two locations in the United States. We have taken a series of measures we believe are judicious to protect shareholder value in this downturn, while remaining strategically positioned for the lithium market recovery that we foresee,” said Mr. Phillips.
Legal
On January 18, 2024, the U.S. District Court for the Eastern District of New York granted Piedmont’s motion to dismiss a securities class action lawsuit, originally filed in July 2021, against Piedmont and two of its executives.
PLL Price at posting:
18.5¢ Sentiment: Hold Disclosure: Held
(Nasdaq: PLL; ASX: PLL), a leading global supplier of lithium resources critical to the U.S. electric vehicle (“EV&rdquo
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