Piedmont Completes Preliminary Economic Assessment for Second U.S. Lithium Hydroxide Plant
Study Demonstrates Positive Economics for a Second Plant Supplied with Spodumene Concentrate from Existing Partnerships
March 9, 2022 – Piedmont Lithium Inc. (NASDAQ:PLL; ASX:PLL ) (“Piedmont” or the “Company”) is pleased to report the results of a Preliminary Economic Assessment (“PEA” or “Study”) for a proposed merchant lithium hydroxide plant (“LHP-2”) to expand Piedmont’s planned U.S. manufacturing capacity to 60,000 t/y of lithium hydroxide. The LHP-2 PEA results demonstrate the potential for Piedmont Lithium to expand its lithium hydroxide manufacturing business using spodumene concentrate from market sources, including under existing offtake agreements with Sayona Quebec and Atlantic Lithium.
“2021 was a transformative year for electrification in the United States,” said Piedmont President and CEO Keith Phillips. “Current and forecasted battery manufacturing capacity now exceeds 500 gigawatt-hours (“GWh”) with public announcements of over $25 billion in capital investments to occur by 2025. The potential lithium volume these battery plants will require reinforces the importance of developing a domestic lithium supply chain and solidifies our decision to aggressively evaluate and pursue expansion opportunities for a second lithium hydroxide plant. The planned 2023 restart of North American Lithium in conjunction with our partner, Sayona Mining, and potential for spodumene production at Ewoyaa in partnership with Atlantic Lithium as early as 2024 ensures that our LHP-2 operations will have dedicated material supply from day one. With prevailing spot lithium prices at approximately triple the fixed pricing assumptions used in the PEA, Piedmont has substantial leverage relative to higher lithium prices across our entire portfolio of projects,” commented Phillips.
The planned LHP-2 project economics are shown alongside the Company’s flagship Carolina Lithium Project in the table below. Both projects are shown using fixed prices of $22,000 per tonne LiOH and $1,200 per tonne for spodumene concentrate. The economic model for LHP-2 was developed based on common physical and operating characteristics of multiple potential plant locations currently under evaluation for final site selection. LHP-2 development remains subject to, among other things, a final site selection and financing. Piedmont plans to advance Carolina Lithium, LHP-2, Ewoyaa, and NAL restart on the earliest practical timelines, subject to permitting and regulatory approvals for each project.
Table 1: Project Summary Outcomes
Unit
LHP-2
Carolina Lithium[i]
Operation life
years
30
30
Steady state annual lithium hydroxide production
t/y
30,000
30,000
Total initial capital cost
$mm
$572
$988
After tax Net Present Value @ 8% discount rate
$mm
$2,248
$2,843
After tax Internal Rate of Return
%
33%
34%
Steady-state LiOH production all in sustaining costs
$/t
$10,630
$4,377
Average annual steady state EBITDA
$mm/y
$346
$592
Average annual steady state after-tax cash flow
$mm/y
$269
$385
“We are very pleased with the results of the Preliminary Economic Assessment for our second planned U.S. lithium hydroxide plant. The Project’s economics are outstanding using a fixed price deck that is at a 66% discount to prevailing spot prices. With many analysts projecting lithium shortages to grow into the 2030s, the Project offers substantial leverage relative to possible higher lithium prices.
We aspire to be America’s leading producer of lithium hydroxide, and at 60,000 tonnes per year Piedmont’s planned capacity would be approximately quadruple the entire domestic installed base today, positioning us to be a critical supplier to the U.S. supply chain. With long-term supply agreements in place with our partners Atlantic Lithium and Sayona Mining, we have locked in the raw material we require for this expansion, enabling us to control our own destiny while capturing the economics of the integrated production process.
Our focus for the remainder of 2022 turns to ‘execution,’ with four major projects under development. Along with our partners, we are targeting first spodumene concentrate production at North American Lithium in 2023, and at the Ewoyaa Project in Ghana in 2024. U.S. lithium hydroxide production will follow, with our integrated Carolina Lithium Project and LHP-2 to be advanced on the earliest practical timelines. Lithium markets are strong, and we are fortunate to possess a strong project pipeline to capitalize on the generational opportunity presented by the electrification of the vehicle business.
Keith D. Phillips, President and Chief Executive Officer
For further information, contact:
Keith Phillips
President & CEO
T: +1 973 809 0505
E: kphillips@piedmontlithium.com
Brian Risinger
VP – Corporate Communications
T: +1 704 910 9688
E: brisinger@piedmontlithium.com
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Conclusions and Next Steps
The LHP-2 PEA Study results demonstrate the potential for Piedmont Lithium to expand its lithium hydroxide manufacturing business using imported spodumene concentrate from market sources, including existing offtake agreements which the Company secured in 2021. The Company will now concentrate on the following initiatives to drive the LHP-2 project forward:
- Finalize site selection for LHP-2 operations.
- Undertake further technical studies associated with LHP-2.
- Selection of a Front-End Engineering Design (“FEED”) and EPC contractor for execution of the LHP-2 project.
- Submit a second loan application to the Department of Energy’s Loan Program Office under the Advanced Technology Vehicle Manufacturing program for LHP-2.
- Incorporate LHP-2 into ongoing strategic discussions led by financial advisors Evercore and J.P. Morgan.
Forward Looking Statements
This announcement includes forward-looking statements within the meaning of applicable securities laws, including statements about LHP-2, the potential selection of a site for such plant, timing and expectations around any development and production of the plant and estimates and assumptions around permitting, revenues and costs of the plant. These forward-looking statements are based on Piedmont’s expectations and beliefs concerning future events. Such forward-looking statements concern Piedmont’s anticipated results and progress of its operations in future periods, planned exploration and, if warranted, development of its properties and plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. All statements contained herein that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “expect,” “estimate,” “may,” “might,” “will,” “could,” “can,” “shall,” “should,” “would,” “leading,” “objective,” “intend,” “contemplate,” “design,” “predict,” “potential,” “plan,” “target” and similar expressions are generally intended to identify forward-looking statements.
Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements. Such factors include, among others, risks related to:
- the risk that anticipated plans, development, production, revenues or costs are not attained;
- Piedmont’s operations being further disrupted and Piedmont’s financial results being adversely affected by public health threats, including the novel coronavirus pandemic;
- Piedmont’s limited operating history in the lithium industry;
- Piedmont’s status as a development stage company, including Piedmont’s ability to identify lithium mineralization and achieve commercial lithium mining;
- mining, exploration and mine construction, if warranted, on Piedmont’s properties, including timing and uncertainties related to acquiring and maintaining mining, exploration, environmental and other licenses, permits, access rights or approvals in Gaston County, North Carolina, the Province of Quebec, Canada and Cape Coast, Ghana as well as properties that Piedmont may acquire or obtain an equity interest in the future;
- completing required permitting activities required to commence processing operations for the LHP-2 Project;
- Piedmont’s ability to achieve and maintain profitability and to develop positive cash flows from Piedmont’s processing activities;
- Piedmont’s estimates of mineral reserves and resources and whether mineral resources will ever be developed into mineral reserves;
- investment risk and operational costs associated with Piedmont’s exploration activities;
- Piedmont’s ability to develop and achieve production on Piedmont’s properties;
- Piedmont’s ability to enter into and deliver products under supply agreements;
- the pace of adoption and cost of developing electric transportation and storage technologies dependent upon lithium batteries;
- Piedmont’s ability to access capital and the financial markets;
- recruiting, training and developing employees;
- possible defects in title of Piedmont’s properties;
- compliance with government regulations;
- environmental liabilities and reclamation costs;
- estimates of and volatility in lithium prices or demand for lithium;
- Piedmont’s common stock price and trading volume volatility;
- the development of an active trading market for Piedmont’s common stock;
- Piedmont’s failure to successfully execute our growth strategy, including any delays in Piedmont’s planned future growth; and
- other factors set forth in Piedmont’s most recent Annual Report on Form 10-K and subsequent reports, as filed with the U.S. Securities and Exchange Commission.
All forward-looking statements reflect Piedmont’s beliefs and assumptions based on information available at the time the assumption was made. These forward-looking statements are not based on historical facts but rather on management’s expectations regarding future activities, results of operations, performance, future capital and other expenditures, including the amount, nature and sources of funding thereof, competitive advantages, business prospects and opportunities. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, known and unknown, that contribute to the possibility that the predictions, forecasts, projections or other forward-looking statements will not occur. Although Piedmont have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated, or expected. Piedmont cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the securities laws of the United States, Piedmont disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Piedmont qualifies all the forward-looking statements contained in this release by the foregoing cautionary statements
[i] Illustrative financial outcomes for the Carolina Lithium Project when applying a fixed price of $22,000 per metric tonne of lithium hydroxide and $1,200 per metric tonne of spodumene concentrate to the Carolina Lithium financial model. Results are Company estimates and indicative only and are not independently verified by the Carolina Lithium BFS Qualified Persons.