Piedmont Lithium seeks advisors to evaluate options for lithium project – CEO

14 May 2019 - 03:36 pm UTC

by Christel Thunell in Sydney

Piedmont Lithium, an Australian-American lithium mine developer, is seeking financial and legal advisors to assist with strategic and financing options for its Piedmont lithium project in North Carolina, President and CEO Keith D. Phillips said.

 

The company is speaking to global firms in New York, Australia and elsewhere, and aims to hire an advisor by June/July, Phillips said.

 

Piedmont Lithium is in talks with potential joint venture, offtake and financing partners, including mining companies, chemical companies, battery companies, car companies and private equity firms, Phillips said. The company wants a strategic partner in place by 4Q19, as the project will be shovel-ready with definitive feasibility study (DFS) and permitting approvals in December, he said.

 

Capex for building the mine and spodumene concentrate plant is USD 130m, and Piedmont expects to be in production in 2021, Phillips said. It will likely sell the spodumene to a Chinese buyer, he said. Once the mine is up and running and the company is generating cash, it plans to build a chemical plant with estimated capex of USD 340m to produce lithium hydroxide, for which it will also look for a partner, he said.

 

Piedmont is looking for partners globally and has good relationships in China, South Korea, and Japan, but partners could also be American and German groups, among others, he said.

 

Lithium M&A activity

A 50/50 joint venture (JV) partnership could be an interesting arrangement, Phillips said, pointing to Albemarle’s 50% stake acquisition in the Wodgina lithium project in Western Australia last year from Mineral Resources for USD 1.15bn.

 

Livent Corp and Albemarle both have lithium plants in Piedmont’s area in North Carolina, Phillips said. These run at full capacity, so they could not process Piedmont’s product, but as the companies have the know-how they could make interesting partners, the CEO said.

 

Piedmont Lithium considers the Wodgina project and Kidman Resources, which recently received an acquisition proposal from Wesfarmers, as its key comparables, Phillips said. Other examples of M&A activity in the sector include Pilbara Minerals recently hiring Macquarie for a minority stake sale in its Pilgangoora lithium-tantalum project in Western Australia, he said.

 

Piedmont considers itself undervalued compared to its peers, so a takeover is not currently of interest, Phillips said. Its market cap stands at AUD 107m (USD 74m).

 

Few companies globally are integrated with spodumene mining and production of lithium hydroxide, which is used in battery manufacturing, under the same roof, according to Phillips. Integrated players include Wodgina and Kidman, while Nemaska Lithium is planning a spodumene to hydroxide plant in connection with its Whabouchi project in Quebec, Canada and has hired advisors to fund the project, he pointed out. Piedmont is set to be the fourth player, and the only US-based one, which could be highly strategic to some parties, he said. Volkswagen, for example, has announced it will build electric vehicles in Tennessee, he pointed out.

 

Piedmont lithium project

The Piedmont lithium project has a current mineral resource estimate of 16.2 million tonnes @ 1.12% Li2O and 13-year mine life. A resource and mine life update is expected in June – the company expects to extend the mine life to at least 20 years, Phillips said. The company is also working on further land acquisitions in the area.

 

The project has a USD 888m net present value on its 13-year initial mine life and is expected to generate EBITDA of USD 235m, according to a company presentation.

 

Meanwhile, Piedmont Lithium has been approached with suggestions of acquisitions it could make, but is not looking to acquire at the moment, as it does not want to be distracted from its main project, the CEO said.

 

The company’s registered office is in Perth, and it also has offices in New York and North Carolina.