Low-Cost Lithium Hydroxide Project in North Carolina’s Lithium Hub
This Piedmont Lithium Limited profile is part of a paid investor education campaign.*
Piedmont Lithium Limited (ASX:PLL,NASDAQ:PLL) is a lithium exploration and development company focused on the growing need for domestically sourced lithium supplies for the US electric vehicle market. The company’s flagship lithium project is strategically located in North Carolina, the heart of America’s “Auto Alley” and host to the world-class Carolina Tin-Spodumene Belt (TSB). The TSB is home to the Kings Mountain district, which is considered one of the three largest lithium-bearing pegmatite deposits in the world. Major mining companies such as Livent Corporation (NYSE:LTHM) and Albemarle Corporation (NYSE:ALB) have long-standing operations in this region.
This premier location offers Piedmont Lithium the ability to develop a fully-integrated, low-cost spodumene to lithium hydroxide operation as North Carolina has all of the necessary infrastructure including power, R&D centers for lithium and battery storage, major high-tech population centers and downstream lithium processing facilities.
EV battery makers are increasingly looking to lithium hydroxide over lithium carbonate for battery cathode formulations as they seek to increase battery range with higher nickel content. Higher nickel content also raises thermal stability, for which lithium hydroxide is better suited to reducing versus lithium carbonate. Bart Vanden Bossche, lithium giant SQM’s (NYSE:SQM) sales director, told the audience at the 2019 Advanced Automotive Batteries Conference that over the next decade demand for lithium carbonate is likely to grow at a compound annual growth rate (CAGR) of 10 to 14 percent alongside versus a CAGR of 25 to 29 percent for lithium hydroxide.
Piedmont Lithium’s 2019 scoping study for the project includes a mine and concentrator capable of producing 160,000 tonnes per year of spodumene concentrate and a steady-state 22,700 tonnes per year lithium hydroxide chemical plant. The study outlined positive economics including an after-tax NPV of US$1.45 billion, an after-tax IRR of 34 percent and a run-rate EBITDA of US$298 million. Piedmont is on track to deliver a pre-feasibility study in Q2 2020.
Piedmont Lithium’s management team has decades of experience in all facets of mining, from raising capital to mine engineering. Members of the team have held positions with companies such as JPMorgan Chase & Co. (NYSE:JPM), Merrill Lynch, BHP Billiton (LSE:BHP), FMC and Albemarle. Officers and directors hold 10 percent of the company’s shares. Piedmont has attracted institutional investors such as Australian Superannuation Fund (AusSuper) and Fidelity.
Piedmont Lithium’s Company Highlights
- Piedmont Lithium’s Piedmont project is located in the world-class Carolina TSB in North Carolina, US.
- North Carolina offers favorable geology, proven metallurgy, easy access to infrastructure, power, R&D centers for lithium and battery storage, major high-tech population centers and downstream lithium processing facilities.
- Livent and Albemarle have long-standing operations in the area and control the region’s processing facilities.
- The Piedmont project has a project-wide resource of 27.9 million tonnes grading 1.11 percent lithium oxide.
- The project also has a by-product resource of 16.19 million tonnes of ore grading 30.1 percent quartz, 43.9 percent feldspar and 4.5 percent mica, three by-products which are expected to provide significant revenue for Piedmont.
- The 2019 scoping study includes a steady-state 22,700 tonnes per year lithium hydroxide chemical plant that is supported by a mine and concentrator capable of producing 160,000 tonnes per year of spodumene concentrate.
- The Piedmont project has a 25-year mine life and positive project economics, including an after-tax NPV of US$1.45 billion, an after-tax IRR of 34 percent and a run-rate EBITDA of US$298 million.
- Piedmont Lithium is working with world-class technical consultants like Primero, SGS Lakefield, HDR Engineering and Hatch.
- Institutional investors include AusSuper and Fidelity.
- Officers and directors hold 10 percent of the company’s shares.
Piedmont Lithium Project
Piedmont Lithium is ready to leverage its position as a first-mover in restarting lithium production in North Carolina’s prolific, past-producing TSB. The project is comprised of three sub-properties: Core, Central and Sunnyside. The TSB historically produced most of the western world’s lithium between the 1950s and 1980s and has been described as one of the largest lithium regions in the world. The Piedmont project is one of only four projects in the world focused on converting spodumene into battery-grade lithium hydroxide.
Location, location, location
The Piedmont project has been explored for lithium since the 1950s. Lithium Corporation of America originally had control of the area and was subsequently acquired by FMC Corporation, before spinning off their lithium activities into Livent Corporation. Another big player in the area is Albemarle, who together with Livent operate two lithium processing facilities in the TSB, which are among the world’s most important sources of lithium chemicals. FMC maintains the Center for Lithium Energy Advanced Research lab in Bessemer City as well as its processing facility, which is 14 kilometers from the project. Albemarle’s King Mountain processing facility is located approximately 17 kilometers from the project.
North Carolina also provides Piedmont Lithium a premier jurisdiction to work within given its favorable geology and easy access to infrastructure, power, R&D centers for lithium and battery storage, high-tech population centers and downstream lithium processing facilities. State-maintained paved secondary roads intersect the Piedmont project, and Interstate I-85 lies 13 kilometers to the south, providing access to the city of Charlotte and the Charlotte-Douglas international airport. Approximately four million people reside within the Charlotte metropolitan area, which is home to multiple universities with a skilled pool of labor.
Electrical power infrastructure is first-rate and low-cost, and is derived from diverse sources including renewables; North Carolina has the second-biggest commitment to solar energy in the US, after California. Piedmont Lithium also has access to a railway line located five kilometers south of the project. The Charlotte region has significant expertise in mining as many quarries and industrial mineral mining operations are active within 50 kilometers of the project. Once the company commences production, Piedmont Lithium expects to benefit from the low cost of labor, power and natural gas in the area.
2019 Resource Estimates
Piedmont Lithium has developed three resource estimates to date for the Piedmont project in North Carolina. The company has released reports for the Central and Core properties in addition to reports on by-product material found on the Core property.
In addition to the resources, Piedmont Lithium has conducted mineralogical test work using semi-quantitative and quantitative x-ray diffraction (XRD) analysis on samples from the Core, Central and Sunnyside properties. To date, the company has been able to demonstrate that lithium occurs almost exclusively in spodumene in Piedmont’s mineral resource. While this is unusual, the company believes that spodumene-hosted lithium can have a positive impact on lithium recovery.
Core Property Resource
In June 2019, Piedmont Lithium released an updated mineral resource estimate on its Core property. The report outlined a project-wide mineral resource of 29.1 million tonnes grading 1.11 percent lithium oxide with approximately 13.9 million tonnes in the indicated category. Most of the mineralization at the Core deposit is located within 100 meters from the surface.
“We are very pleased with the resource update at our Core property, bringing our total project-wide resources to 27.9 million tonnes at 1.11 percent lithium oxide. As we expand our land holdings and drill out other highly prospective targets, we are optimistic that we will ultimately identify North America’s largest spodumene ore body. This scale, combined with high grade, strong mineralogy and metallurgy and our superior location in North Carolina, all support the unique strategic nature of the Piedmont lithium project,” said Phillips.
Central Property Resource
In April 2019, Piedmont Lithium released an initial resource estimate for the Central property. The report outlined a resource of 2.8 million tonnes grading 1.34 percent lithium oxide with approximately 50 percent in the indicated category. The deposit, however, remains open in all directions.
“This is a property with great potential and the mineral resource estimate is based on only 18 drill holes, 16 of which encountered thick, high-grade mineralization. We hope to expand our landholdings in this area and ultimately drill out a substantially larger resource at Central,” said Piedmont Lithium CEO Keith Phillips.
The resource is comprised of two subparallel, northeast-trending, spodumene-bearing pegmatite dikes. The western dike has a strike length of 370 meters, a depth of 230 meters and remains open in all directions. The eastern dike has been traced for 220 meters and is nearly vertical in its orientation while also remaining open in all directions. The dike is also high-grade, having returned a drill intercept of 43.2 meters grading 1.73 percent lithium oxide.
In September 2018, Piedmont Lithium released a by-product mineral resource estimate for the by-product quartz, feldspar and mica mineral products from the spodumene-bearing pegmatite the Core property. The report outlined a total resource of 16.19 million tonnes of ore grading 30.1 percent quartz, 43.9 percent feldspar and 4.5 percent mica.
The industrial minerals included in the resource could potentially provide an additional revenue stream for the company due to its proximity to the mid-Atlantic industrial corridor located in Charlotte. Piedmont Lithium is currently in initial offtake conversations with leading market participants for its by-product offerings. To date, Piedmont Lithium has signed an LOI with Ion Carbon & Minerals LLC, a division of AMCI Group, to market the by-products Piedmont plans to offer to end-users.
Drilling at Sunnyside in 2018 tested a variety of surface outcrop, subcrop and float block trends on the property, which returned spodumene-bearing pegmatite in five out of the seven holes drilled. Before drilling, the company completed surface mapping on three that indicated the presence of a shallow-to-moderate west-to-southwest-dipping band of mineralized outcrop blocks. Three holes were dedicated to testing the area and returned intersects of 20.9 meters grading 1.42 percent lithium oxide, three meters grading 1.94 percent lithium oxide and 9.1 meters grading 1.11 percent lithium oxide.
The Path to Production
In preparation for production, Piedmont Lithium has completed several scoping studies for the project. The 2019 scoping study includes a steady-state 22,700 tonnes per year lithium hydroxide chemical plant that is supported by a mine and concentrator capable of producing 160,000 tonnes per year of spodumene concentrate grading six percent lithium oxide. By-products of quartz, feldspar and mica have also been incorporated into the report to provide credits to the cost of producing lithium. With the incorporation of the June 2019 resource estimate, the project now has an overall lifespan of 25 years.
“We are very pleased with the results of the updated scoping study, which reflect the benefits of a 25-year mine life, a refined concentrator flow sheet and PFS-level engineering and metallurgy. The economic benefit of developing an integrated lithium chemical business in North Carolina, US is clear, driven by the exceptional infrastructure and human resource advantages of our location, as well as the competitive royalty and tax regime offered in the US,” said Phillips.
Piedmont Lithium has retained Hatch, a global leader in the development of lithium conversion projects, to complete a PFS for the chemical plant. The company expects to release the results of the PFS in Q2 2020. Based on the outcome of the PFS, the company then plans to complete an FS and begin signing offtake agreements with end-users.
In addition to its PFS work, Piedmont Lithium is also working with SGS Lakefield on bench-scale lithium hydroxide conversion test work. Test results are currently pending but are expected to be released in the near-term and incorporated into the PFS.
In November 2019, Piedmont Lithium received its Section 404 permit by the US Army Corps of Engineers. The permit is the only one required for the development of the Piedmont Lithium mine and concentrator. With the permit in hand, the company plans to accelerate its development activities for the vertically-integrated project.
Piedmont Lithium’s Management Team
Keith D. Phillips — Managing Director, CEO and Director
Appointed on July 6, 2017, Keith Phillips has a career on Wall Street spanning 30 years during which he has worked on strategic and financing transactions representing over $100 billion in aggregate value. He was most recently a Senior Advisor with merchant banker Maxit Capital, after leading the mining investment banking teams for Merrill Lynch, Bear Stearns, JPMorgan and Dahlman Rose. Phillips has worked with numerous mining companies, including many established global leaders, and has dedicated most of the past decade to advising exploration and development-stage companies in achieving their strategic objectives, with a particular focus on obtaining relevance in the US capital markets. He received his Master of Business Administration from the University of Chicago and a Bachelor of Commerce from Laurentian University in Canada.
Patrick H. Brindle — VP Project Management
Patrick Brindle has over 18 years of experience in the development of US and global mining operations, minerals processing plants and materials handling projects. He has expertise in all phases of project development from concept design, pre-feasibility and feasibility study, detailed design engineering, construction and commissioning, including EPC projects in North and South Carolina. He most recently worked as Vice President of Engineering for DRA Taggart in Pittsburgh, Pennsylvania, and has a B.S. in Environmental Science and a B.S. in Civil Engineering from Virginia Tech.
Lamont Leatherman — Chief Geologist
Lamont Leatherman is an exploration geologist with over 25 years of experience. He is the former project geologist for BHP Minerals and Noranda. He has extensive experience in numerous styles of mineralization including lithium bearing pegmatite systems.
David Buckley — VP and Chief Process Engineer
David Buckley is a 25-year veteran of the lithium business, having worked most recently as Chief Process Engineer of Quebec-based Critical Elements Corporation after senior positions with FMC’s Lithium Division and Albemarle (former Rockwood Lithium). He has extensive experience in lithium extraction from both hard rock resources and lithium bearing brines. He also brings experience in converting the extracted lithium into lithium carbonate, lithium hydroxide and other downstream lithium chemicals. He has a B.S. in Chemical Engineering from Virginia Tech.
Bruce Czachor — VP and General Counsel
Bruce Czachor is a former partner of major international law firm Shearman & Sterling, and brings almost 30 years of experience in corporate governance, securities, M&A and commercial transactions. He has represented a range of clients from start-ups to Fortune 500 companies, and he has extensive experience in the mining industry and with initial US listings. He earned his B.A. from Binghamton University and his Juris Doctor from New York Law School.
Gregory (Greg) Swan — Corporate Secretary
Gregory Swan is a Chartered Accountant and Chartered Secretary. He commenced his career at a large international Chartered Accounting firm and has since worked in the corporate office of a number of listed companies that operate in the resources sector. He was appointed Corporate Secretary of the company on October 31, 2012.
Ian Middlemas — Non-Executive Chairman
Ian Middlemas is a Chartered Accountant, a member of the Financial Services Institute of Australasia and holds a Bachelor of Commerce degree. He worked for a large international Chartered Accounting firm before joining the Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive corporate and management experience and is currently a director with a number of publicly-listed companies in the resources sector. Middlemas was appointed a Director of the company on September 14, 2009.
Anastasios (Taso) Arima — Executive Director
Anastasios Arima is a resource company executive with a strong history of identifying company-making resource projects. He has extensive experience in the formation and development of resource projects in North America. He is currently Executive Director of Paringa Resources Ltd., which is developing a coal project in the US, formerly Executive Director of Coalspur Mines Ltd., which is developing a coal project in Canada, and Prairie Mining Ltd., which is developing a coal project in Poland. He was instrumental in the identification and acquisition of all of Paringa’s and Coalspur’s projects, as well as the corporate strategy and marketing of the companies.
Arima began his career as a resources analyst for a Perth-based boutique investment banking firm where he specialized in assessing the technical and financial aspects of resource companies and their projects. He has previously worked in the hydrocarbon division at WorleyParsons Limited. He attended the University of Western Australia where he earned a Bachelor of Commerce and a Bachelor of Engineering. He was appointed a Director of the company on October 1, 2016.
Jeff Armstrong — Director
Jeff Armstrong resides in Charlotte, North Carolina where he is actively engaged in the community and has extensive relationships with major corporations and entrepreneurs alike. He serves as CEO and Managing Partner of North Inlet Advisors LLC, a firm providing strategic and financial advice to companies on capital formation, mergers, acquisitions, divestitures, restructurings and other corporate transactions.
Armstrong was previously a senior leader in what is now Wells Fargo’s Investment Bank for nearly a decade, where his leadership roles included the Head of Corporate Finance, mergers and acquisitions, private equity coverage and leveraged capital groups. He also worked as an investment banker for Citigroup from 1994 to 1999, and for Morgan Stanley from 1987 to 1994. Armstrong graduated from the University of Virginia with a B.S. in finance and marketing from the McIntire School of Commerce and an MBA from the Darden School of Business.
Jorge M. Beristain — Director
Jorge Beristain recently accepted a new position as CFO with CS&W, a wholly-owned subsidiary of Ryerson Corp (RYI.N). RYI is the second-largest service center with over 100 locations in the US, Canada and Mexico supplying carbon and stainless steel, aluminum, red metals and semi-fabricated products to the machinery, transport, consumer durables, food processing, construction and energy sectors. Beristain retired as Managing Director and Head of Deutsche Bank’s Americas Metals & Mining equity research, where he was consistently ranked by institutional investors as one of the top analysts in the US.
During his over 20-year career on Wall Street, Beristain has lived and worked in the US, Latin America and Canada and has visited hundreds of industrial companies worldwide. He is a proven strategic thinker with extensive international experience in the valuation of mining projects and metals operations and downstream metal uses. He holds a Bachelor of Commerce degree from the University of Alberta and is a Chartered Financial Analyst.
Levi Mochkin — Director
Levi Mochkin has been an executive director and key leader of the Ledger Holdings Pty Ltd. Group (the Ledger Group), located in Melbourne, Australia. He has been in the resources sector for over 30 years advising companies, identifying projects and raising capital of over $800 million for mining projects. Ledger Holdings PTY LTD assists PLL with business development. Mochkin was appointed a Director on April 3, 2006.
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