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Piedmont Lithium makes US$12 million strategic investment in Quebec hard-rock lithium developer Sayona Mining

The company is set to acquire 19.9% of Sayona Mining and 25% of Sayona Quebec and has entered a binding supply agreement for 50% of Sayona Quebec’s spodumene concentration production.

Piedmont Lithium Ltd - Piedmont Lithium makes strategic investment in Quebec hard-rock lithium developer Sayona Mining
Quebec is poised to become an important lithium hydroxide production centre

Piedmont Lithium Ltd (ASX:PLL) (NASDAQ:PLL) (OTCMKTS:PDDTF) has established a strategic partnership with Sayona Mining Ltd (ASX:SYA) (OTCMKTS:DMNXF) (FRA:DML) by purchasing equity stakes in Sayona and its Quebec subsidiary Sayona Quebec Inc, as well as a binding supply agreement for at least 50% of Sayona Quebec’s planned spodumene concentrate production.

The company will acquire an initial 9.9% equity interest for around US$3.1 million via a share placement and two unsecured convertible notes for around US$3.9 million that, upon conversion, would result in Piedmont acquiring an additional 10% equity interest in Sayona.

PLL will also purchase a 25% stake in Sayona Quebec for around US$5 million in cash and will appoint one director to Sayona’s board of directors.

“High-quality asset in favourable location”

Sayona Quebec owns the DFS-level Authier Lithium Project, the highly prospective Tansim Lithium Project, and is pursuing a bid to acquire Quebec-based North American Lithium’s (NAL) assets.

Piedmont president and CEO Keith D Phillips said: “Piedmont’s partnership with Sayona will provide multiple benefits. 

“Sayona has high-quality assets in a favourable location and the investments are being made at an attractive valuation.

“Quebec is poised to become an important lithium hydroxide production centre given its abundant mineral resources, low-cost, sustainable hydro-electric power, proximity to major US and European electric vehicle markets and pro-electrification stance of provincial leaders. 

“Sayona’s assets are favourably located in the Val-d’Or region of central Quebec, home to major mining concerns and proximate to first-class infrastructure. 

“Sayona’s core Authier project is well-advanced, with reserves declared and DFS complete, the nearby Tansim project offers strong exploration potential, and the regional consolidation opportunities including NAL are intriguing.”

Agreement supports long-term growth

Piedmont and Sayona Quebec have also entered into a binding spodumene concentrate (SC6) supply agreement where Sayona Quebec will supply to Piedmont the greater of 60,000 tonnes per year or 50% of Sayona Quebec’s SC6 production at life‐of‐mine market pricing with a minimum price of US$500/tonne and maximum price of US$900/tonne.

Phillips said: “The investments are additive to Piedmont from a resources and reserves perspective, and the spodumene supply agreement will offset our Tesla commitments in the near term and position us for longer-term growth in lithium hydroxide production.” 

The supply agreement is also conditional upon Piedmont and Sayona agreeing to a start date for spodumene concentrate deliveries between July 2023 and July 2024, based on the development schedules of both parties.

“Advancing development for both companies”

Sayona managing director Brett Lynch said the partnership with Piedmont would advance the development plans of both companies in North America.

He said: “I am delighted to welcome Piedmont as a strategic partner.

“Piedmont has shown tremendous vision in creating a base in North Carolina, a centre of lithium hydroxide production in the United States, and has secured significant supply agreements with leading EV makers. 

“This agreement will underwrite the future of our Authier project, expedite our growth plans in Québec including our bid for North American Lithium, and enhance access to the U.S. market and investors.”

Looking forward

Phillips said: “We look forward to supporting Sayona’s team as they drive day-to-day activities in Quebec, while Piedmont’s team focuses on its core interests in North Carolina. 

“2021 will be an important year for our Piedmont Lithium Project, as we plan to expand our mineral resources, finalise permitting, execute additional lithium offtake agreements, complete an integrated definitive feasibility study and secure strategic project financing.

“We are fortunate to have a strong balance sheet to comfortably fund the Sayona investments without compromising our aggressive plans in North Carolina.”

The share placement and issue of the convertible notes are expected to close the week of January 11, 2021, with the project investment expected to close in February 2021.

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Price: 0.845 AUD

ASX:PLL
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Market Cap: $1.17 billion
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