Ground Breakers: Can these short seller targets get Ghana’s lithium industry off the ground?
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Piedmont Lithium (ASX:PLL) says it will put US$70 million in development capital into the Ewoyaa lithium project in Ghana to up its stake to 50% after exercising an option to take a 22.5% share from Atlantic Lithium (ASX:A11).
The Ewoyaa development will be a key step in the development of a planned 30,000tpa lithium hydroxide chemical conversion facility in Tennessee, the subject of a conditional US$141.7m grant from the US Department of Energy.
Piedmont says it expects to share costs equally with Atlantic over the development, where it is the offtaker for 50% of the planned spodumene concentrate.
The mine is expected to be open in 2025, with Piedmont committing to US$128m of the estimated US$185m of the project’s capital costs, including the development capital it will spend, to up its stake to 50%.
PLL also owns 25% of Sayona Mining’s (ASX:SYA) operating North American Lithium project in Quebec, where it is an offtaker.
A DFS in June by Atlantic projected the Ewoyaa project in West Africa would produce 3.6Mt of spodumene concentrate over a 12-year mine life at all in sustaining costs of US$610/t, paying back its costs in 19 months.
The mine would be based off a mineral resource of 35.3Mt at 1.25% Li2O, at a concentrate price of US$1587/t.
“We are pleased to help advance the progression of Ewoyaa as a key part of Piedmont Lithium’s global portfolio and the expected feedstock for our planned lithium hydroxide conversion facility in Tennessee,” PLL CEO Keith Phillips said.
“Our partners at Atlantic Lithium have made tremendous progress with positive Project economics recently published in a definitive feasibility study and minerals lease discussions that are progressing with Ghana’s Minerals Commission.
“We look forward to continuing our work with Atlantic Lithium to support the Project toward first production, currently targeted for 2025.”
The Ewoyaa project’s recent history has been far from smooth on the investment front, largely because of a report from activist short seller Blue Orca Capital.
Back in March the shorter released a report on Piedmont accusing Atlantic of “textbook corruption” in its dealings over the lithium mining rights at Ewoyaa.
Both Piedmont and Atlantic criticised the report at the time and said they were considering their legal options, and it should be noted shorters aren’t always on the money. Given they bet on the price of a stock going down, they typically stand to benefit from the hit to a company’s share price that normally comes after a critical research report.
Speaking after the report’s release in March, Piedmont said it would utilise other sources of feed if Ewoyaa could not be developed.
“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.”
For more detail on the drama a few months back check out our summary here.
Australian companies have had a chequered history looking for lithium in Africa.
Prospect Resources (ASX:PSC) made a fortune and returned millions to shareholders after selling its stake in the Arcadia mine in Zimbabwe to China’s Zhejiang Huayou Cobalt Co.
But AVZ Minerals (ASX:AVZ) remains in a trading halt over a year since China’s Zijin made a large and disputed claim to part of its share in the Manono lithium project in the DRC.
Leo Lithium (ASX:LLL) intends to open its 500,000tpa Goulamina mine in Mali in partnership with Chinese lithium giant Ganfeng next year, but has been in a trading halt since mid-July pending correspondence on its plans to monetise early DSO shipments from the Malian Government.
Back to the markets and the materials sector is set to end a poor week on a high.
It is up 0.84%, powered by diversified and iron ore miners running hot as investors bet on Chinese stimulus measures reinvigorating demand for commodities.
Iron ore swaps rose almost 5% yesterday.