Piedmont Lithium invests in Sayona Mining and inks supply deal
On site at Sayona Mining’s Authier lithium project in Canada.
Piedmont Lithium (ASX: PLL) has entered into a strategic partnership with emerging lithium miner Sayona Mining (ASX: SYA) that includes buying equity stakes in the company and inking a supply deal for at least half of its spodumene concentrate from Quebec.
US-focused Piedmont today announced it will acquire a 19.9% interest in Sayona, as well as a 25% stake in its 100% owned subsidiary Sayona Quebec for a total investment worth US$12 million (A$15.5 million).
It has also entered into a binding offtake deal in which Sayona Quebec will supply the greater of 60,000 tonnes per year or 50% of its planned spodumene concentrate production from its Quebec lithium projects to Piedmont.
Piedmont president and chief executive officer Keith Phillips said the partnership will provide “multiple benefits”.
“Sayona has high quality assets in a favourable location, and the investments are being made at an attractive valuation.”
“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,” he said.
Sayona is also pursuing a bid to acquire Quebec-based North American Lithium’s (NAL) brownfield assets – another attribute that Mr Phillips has called a “unique regional consolidation opportunity”.
Strategic investment
Piedmont will acquire an initial 9.9% equity interest in Sayona for about US$3.1 million (A$4 million) and two unsecured convertible notes for about US$3.9 million (A$5.05 million), which upon conversion would result in Piedmont holding an additional 10% stake in Sayona. Piedmont will also appoint a director to Sayona’s board.
In addition, Piedmont will buy a 25% stake in Sayona Quebec for about US$5 million (A$6.45 million) in cash, taking the total investment to US$12 million (A$15.5 million).
The share placement and convertible notes issue are expected to close this week and the investment in Sayona Quebec is expected to close in February.
Sayona Quebec owns the Authier lithium project, where a definitive feasibility study (DFS) has already been completed, as well as the nearby Tansim lithium project in Quebec.
Mr Phillips called Piedmont’s investment a “very exciting step” for the company.
“Sayona’s core Authier lithium 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,” he said.
Offtake deal
The binding supply agreement is for Sayona Quebec’s life-of-mine operations and is based on market pricing with a minimum price of US$500 per tonne and maximum of US$900/t on a delivered basis to Piedmont’s planned lithium hydroxide plant in North Carolina, United States.
Under the arrangement, Piedmont will take up to 60,000tpa of spodumene concentrate or 50% of Sayona Quebec’s production, whichever is greater.
The deal is 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.
Piedmont’s namesake project in North Carolina is targeting production of 160,000tpa of spodumene concentrate and the manufacture of 22,700tpa of battery-quality lithium hydroxide to support electric vehicle and battery supply chains in the US and globally.
A month ago, the company commenced definitive feasibility work on the 160,000tpa spodumene concentrator and said it aimed to deliver the DFS in mid-2021.
It also received a permit to construct and operate the planned 22,700tpa lithium hydroxide chemical plant at Kings Mountain in North Carolina.
Mr Phillips said the company’s 2021 plans for the Piedmont lithium project included expanding its mineral resources, finalising permitting, executing additional lithium offtake deals, completing an integrated DFS and securing 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,” he said.