Ground Breakers: And you just knew Piedmont and Atlantic were going to clap back at short seller Blue Orca

Atlantic Lithium and Piedmont hit back at short seller’s report that accused the Ghanaian lithium play of “textbook corruption”
Gold miners post recovery
Everyone else may as well pack up and go home

Atlantic Lithium (ASX:A11) shares gained 15% in London overnight after the Ghanaian lithium explorer clapped back at a short seller’s report that accused it of “textbook corruption”.

The report focused on a payment made for access to lithium mining rights in the West African nation, alleging the Ghanaian Parliament was likely to refuse to ratify the mining licence at the Ewoyaa lithium mine because of a payment worth “tens of millions of dollar” to a company owned by the son of Ghanaian politician Asiedu Nketiah.

Even in the Blue Orca report that wasn’t quite accurate, given it amounted to a payment alongside a royalty.

But Atlantic has refuted the claim, saying the licences acquired “after appropriate due diligence” on January 17 2018 from Joy Transporters don’t hold any of the Ewoyaa resource and are only part of its wider portfolio.

The consideration, according to Atlantic, came in at 2.36 million shares valued at the time at US$330,000 plus a 2.5% net smelter return. If nothing ever gets produced none of that gets paid.

Atlantic says it expects its mining licence application for Ewoyaa, its 90% owned Mankessim and Mankessim South licences, to be ratified having made its submission on October 13.

If that is the case it’s good news for Piedmont Lithium (ASX:PLL), which is contributing US$103m through a funding agreement to Atlantic and wants the feed from Ewoyaa to support the development of a US Government-backed lithium hydroxide plant in Tennessee from 2025.

Piedmont has the right to purchase 50% of Atlantic’s production of spodumene concentrate at market prices and earn a 50% interest in the projects.

While Atlantic is the owner of the Ewoyaa development, it was Piedmont that was the target of the short report.

The Piedmont strikes back

Other claims in the Blue Orca report, not commented on by PLL in its response, centred on the viability of its Carolina lithium project, which has faced permitting delays.

Piedmont, which also stands to claim offtake from Sayona’s (ASX:SYA) recently opened North American Lithium operations in Quebec, where it has a 25% stake, says it will have back-up options for Tennessee if it chooses not to exercise its offtake rights for Ewoyaa.

“Piedmont currently contemplates utilizing spodumene concentrate from this offtake agreement as partial feed for its proposed Tennessee Lithium hydroxide plant,” the company said in a statement.

“However, if for any reason Piedmont does not exercise its right to this offtake supply, the Company is confident that alternative sources of spodumene concentrate would be available to feed the Tennessee facility, as current and future spodumene producers seek to feed the growing U.S. electric vehicle market and qualify for the benefits available under the Inflation Reduction Act of 2022.”

PLL and A11 are, unsurprisingly, seeking legal advice.

Shorters aren’t always successful and it’s important to note they typically stand to benefit from falls in the share prices of companies they target. It’s a point normally driven home by the subjects of their assaults. Doesn’t mean they’re right or wrong. Just that they have investment in the outcome.

Notably, a recent short attack by Hindenburg Research on the Indian business empire of Gautam Adani prompted a major fall in its share price, wiping billions off is market cap.

Piedmont was down around 5% this morning after reopening for trade on the ASX, while Atlantic shares fell 19.23%, having fallen 32% in London on Wednesday after the Blue Orca report’s release.

Piedmont Lithium (ASX:PLL) and Atlantic Lithium (ASX:A11) share price today:

And what are we looking at on the markets?

Gold miners are looking up after a tough week in which Fed Reserve Chair Jerome Powell revealed the US economy was doing an Inflation Not Reducing Act, prefacing a slower exit to rate hikes than the market wanted.

But a higher than expected number of US jobless claims has raised hopes tonight’s non-farm payroll could be less tight than recent months.

No one wants to see anyone out of a job, except gold producers, who basically feed off misery.

Prices were up 1% to US$1831/oz overnight, around $2778/oz Australian.

Accordingly the top movers in the large cap space were the big three gold miners. Northern Star (ASX:NST) lifted 3.76%, with Evolution (ASX:EVN) up 2.92% and Newcrest Mining (ASX:NCM) bounding 1.68%.

Yancoal (ASX:YAL) was up there as well. But the rest of the market was a bit desperate.

Lithium stocks plunged with Chinese prices continuing to decline, while other coal and battery metals companies struggled and the big iron ore miners failed to pick up the slack.