Piedmont Lithium Inc., Belmont, NC, United States, (Nasdaq: PLL) has entered into definitive agreements (the “Agreements”) to establish a strategic partnership with IronRidge Resources, Sysdney, Australia, (“IRR”) (AIM: IRR) through the purchase of an equity stake in IRR, staged project investments to earn a 50% interest in IRR’s Ghana-based lithium portfolio (“IRR Ghana”), and a binding supply agreement for 50% of IRR Ghana’s planned spodumene concentrate (“SC6”) production.
IRR Ghana has an impressive portfolio of spodumene prospects, anchored by the highly promising Ewoyaa Project (the “Ewoyaa Project”). The Ewoyaa Project has a current Mineral Resource of 14.5Mt @ 1.31% Li2O with vast exploration potential.[1] The Ewoyaa Project has the potential to be a large, low-cost spodumene concentrate (“SC6”) producer.
In January 2021, IRR published a scoping study for the Ewoyaa Project forecasting an average of 295,000 t/y of planned SC6 production, a $345 million after-tax net present value and an after-tax internal rate of return of 125%, for initial capital investment of $70 million.[2] The Ewoyaa Project capitalizes on its excellent location less than one mile from a major national highway and only 70 miles to the major port of Takoradi. The site is also directly adjacent to high voltage power and is expected to have a low environmental impact due to reliance on solar and hydroelectric generating capacity to power the facility. Piedmont conducted extensive due diligence over the past several months, including through site visits to Ghana, and believes that IRR Ghana has significant upside potential.
Piedmont will invest approximately $15 million (£10.8mm) to acquire a 9.47% equity interest in IRR (the “Subscription”) and will appoint one director to IRR’s Board of Directors. Piedmont will also have the opportunity to earn a 50% stake in IRR Ghana by investing (i) $17 million to fund ongoing exploration and a definitive feasibility study over the next 24 months to earn an initial 22.5% project interest, and (ii) a further $70 million in 2023-2025 to fund the construction of the Ewoyaa Project to earn an additional 27.5% project interest, which would bring the total to 50% ownership in IRR Ghana (together, the “Project Investment”). Piedmont and IRR have also entered into a binding SC6 supply agreement (the “Supply Agreement”), conditioned on Piedmont completing its earn-in obligations, pursuant to which IRR will supply Piedmont 50% of IRR Ghana’s planned SC6 production (currently estimated to be 147,500 t/y) at market prices on a life-of-mine basis.
The Subscription is expected to close in August 2021 subject to satisfaction of conditions precedent with the Project Investment expected to be staged over a three-to-four-year period leading to initial production in 2025. Material terms of the Agreements are included in the Summary of Transaction Terms at the end of this announcement.
Keith D. Phillips, President and Chief Executive Officer, commented: “We are very pleased to announce a partnership with IronRidge Resources to jointly develop their outstanding spodumene project portfolio in Ghana. We consider IRR’s Ewoyaa Project to be among the world’s most promising spodumene projects. The high-grade mineral resource is currently modest in scale but offers substantial exploration potential, and the project is very well-located, being only 70 miles from a major port. Ewoyaa builds on Piedmont’s strategic commitment to be a large-scale and low-cost producer of lithium hydroxide from spodumene concentrate sourced from diverse sustainable resources in favorable jurisdictions.
“Ghana is one of Africa’s most successful nations, with a strong mining tradition and an increasingly diverse economic base. In naming Ghana as the headquarters for its entire African business earlier this year, Twitter described Ghana as a ‘Champion for Democracy’. Euler-Hermes regularly rates Ghana among the lowest-risk jurisdictions in the region, and Transparency International rates Ghana ahead of other lithium-rich countries such as Argentina, China, Brazil, Mexico, Bolivia, Mali, and the DRC in its annual corruption perception rankings.
“2021 has been a transformative year for Piedmont. We have built the world’s premier lithium development leadership team, significantly expanded our world-class Carolina Lithium Project, and become a multi-asset company through strategic investments in Quebec and in Ghana. We raised sufficient capital in March 2021 to comfortably fund these strategic initiatives as well as our definitive feasibility study in North Carolina and should end 2021 with a robust cash balance. We will now evaluate plans to capitalize on our expanded spodumene resource base to become a larger producer of the battery-quality lithium hydroxide that America will require to power the ongoing transition to electric vehicles. Lithium has been called ‘the irreplaceable element of the electric era,’ and we will bring large-scale production of lithium hydroxide to America.”
Summary of Transaction Terms
| Subscription | |
| Subscriber | Piedmont Lithium Inc. (Nasdaq:PLL) |
| Issuer | IronRidge Resources (AIM:IRR) |
| No. of Securities | 54,000,000 shares |
| Subscription Price | 20p per share |
| Total Investment | £10,800,000 (approximately $15 million) |
| Board Representation | For so long as the Subscriber holds voting power of at least 9% in the Issuer, the Subscriber will have the right to appoint one person as a non-executive director of the Issuer |
| Conditions Precedent | Completion of the subscription for shares is subject to the following conditions precedent:
|
| Project Investment | |
| Project | IronRidge Resources Ghana and its Affiliates (“IRR Ghana”) |
| Initial Interest | 22.5% of IRR Ghana |
| Initial Interest Consideration | Piedmont will solely fund:
|
| Initial Interest Condition | Piedmont’s Initial Interest will be issued upon:
|
| Further Interest | 27.5% of IronRidge Resources Ghana and its Affiliates |
| Further Interest Consideration | Piedmont will solely fund the first $70 million of capital costs for the Ewoyaa Project |
| Further Interest Conditions | Commencement of funding of the Further Interest Consideration will occur upon:
|
| Other | The Parties will equally share any cost savings or overruns in the Initial or Further Interests
Customary representations, warranties, and pre-completion obligations |
| Conditions Precedent | The Initial and Further Interest are subject to the following Conditions Precedent
|
| Supply Agreement | |
| Buyer | Piedmont Lithium Inc. (or its nominee) |
| Seller | IronRidge Resources and its Affiliates |
| Product | Spodumene concentrate containing 6.0% Li2O grade (dry basis) |
| Quantity | 50% of Seller’s planned production |
| Term | Life-of-mine |
| Price | Market pricing (based on an average price for CIF China Price (US$) for 6.0% SC6 dry basis) |
| Conditions |
|
About IronRidge Resources
IronRidge Resources is an AIM-listed, Africa focused minerals exploration company with a lithium pegmatite discovery in Ghana, extensive grassroots gold portfolio in Côte d’Ivoire and a potential new gold province discovery in Chad. The Company holds legacy iron ore assets in Gabon and a bauxite resource in Australia. IronRidge’s strategy is to create and sustain shareholder value through the discovery and development of significant and globally demanded commodities.
About Piedmont Lithium
Piedmont Lithium (Nasdaq:PLL; ASX:PLL) is developing a world-class integrated lithium business in the United States, enabling the transition to a net zero world and the creation of a clean energy economy in America. Our location in the renowned Carolina Tin Spodumene Belt of North Carolina, the cradle of the lithium industry, positions us to be one of the world’s lowest cost producers of lithium hydroxide, and the most strategically located to serve the fast-growing US electric vehicle supply chain. The unique geographic proximity of our resources, production operations and prospective customers places us on the path to be among the most sustainable producers of lithium hydroxide in the world and should allow Piedmont to play a pivotal role in supporting America’s move to the electrification of transportation and energy storage.