Piedmont Lithium Inc. Price & Performance (PLL)

Any references to EBITDA mean adjusted EBITDA references to shipments or shipments of spodumene concentrate, and tons or dry metric tons. Copies of our earnings release and presentation in addition to a replay of this call we'll be available on our website at piedmontlithium.com. With that, I'll turn the call over to Keith Phillips. Keith, Thanks, John, and thank you all for joining us today. In summary, Q4 was a good quarter for Piedmont. Operations at North American Lithium performed well with another quarter of strong production and impressive operating metrics. For Piedmont, the strong operational performance allowed us to make record deliveries in the fourth quarter our commercial strategy of delivering under our long term offtakes selectively hedging against the contango and the lithium futures market and making larger combined shipments resulted in another quarter of strong price realizations and improved profitability. On the corporate side of the business, we successfully reduced our corporate expenses as cost savings plan and announced a merger with our joint venture partner at NAL, Siona Mining. We'll cover each of these topics in more detail later in the call, Now let's move on to Slide four. NAL achieved another strong quarter with nearly 51,000 tons produced in Q4 twenty twenty four and over 190,000 produced in the full year 2024.

Following the restart of production in March of twenty twenty three, operations have shown continual improvement with strong lithium recoveries and increasing mill utilization. You can see in the chart the uptick in mill utilization beginning in Q2 twenty a direct result of the capital invested in the crushed ore storage stone earlier in the year. Increased production has led to improved operating costs with unit costs per ton declining sequentially and a total decline of near from the start of the year. Importantly, when excluding the impact of inventory movements, cash operating costs at NAL were $7.00 $9 tonne in Q4 twenty twenty four the new low further improvement is targeted through continued process improvement and with the ultimate move through the old underground workings in the mine which has led to temporarily elevated mining costs. In January, Diana announced some outstanding results from the large exploration program that was undertaken at NAL in 2024 and I will speak more about the implications of these results later in the presentation. The performance validates the strategy we undertook with purchase [indiscernible] in a premier location back into production in an expeditious manner at a significantly lower cost than developing greenfield project.

NAL is North America's largest lithium operation and it offers direct leverage to an ultimate recovery in lithium prices Now let's turn to Slide five for an update on our development projects. There has been much focus on the energy transition following November's election as investors grapple with possible changes to domestic policy. While many have assumed the Trump administration would be a negative for the industry, we have always had a different view. On January 20, his first day in office, President Trump signed an executive order declaring a national energy emergency. Central to this EO is the reinforcement of the President's earlier commentary on the importance of domestic critical minerals production to avoid overreliance in China and indeed to quote the President national energy dominance. National energy dominance cannot be achieved without domestic sources of lithium like Carolina Lithium. Our focus in North Carolina remains on advancing through the permitting process We received our state mining permit in 2024 withdrawn by petitioners earlier this month. We are optimistic that air and water permits will be achieved during this calendar year and we continue to assess the timeline for rezoning of our land package with the Gaston County Board commissioners.

We will of course need their approval to proceed and we look forward to entering that process in due course. For our joint venture, Awoyo Lithium project, we were pleased to receive a mine operating permit from the Minerals Commission of Ghana in October. Bouoyah's mining lease remains subject to parliamentary ratification This process was paused around Ghana's election in Q4 but we anticipate a positive outcome during 2025. Ratification is the final step in the approvals process but any final investment decision will be subject to market conditions and the completion of funding. At TDMA, we are obviously focused on developing our projects at a measured pace given current market conditions. Now I'll turn the call over to Michael to discuss our financial results.

Thanks, Keith, and good morning.

We shipped approximately 55,700 dry metric tons for the quarter, which is a quarterly record for Piedmont and approximately 117,000 dry metric tons in 2024 also a record. For the quarter, we recognized $45,600,000 in revenue compared to $27,700,000 in the previous quarter The increase in revenue was due to increased volume. Our realized price per metric ton was $8.00 $818 for the quarter, On an ST6 equivalent basis, our realized price per metric ton equated to $9.00 $9 We are pleased to achieve these price realizations given current market conditions and our commercial strategy led to a second consecutive quarter of industry leading price realizations. Our fourth quarter GAAP net loss was $11,100,000 or a loss of $0.55 per share and adjusted net loss of $3,600,000 or a loss of $0.17 on an adjusted per share basis. Included in our GAAP results were $5,500,000 of transaction costs related to our proposed merger with Cyano Mining, dollars 3,200,000.0 in restructuring charges associated with our 2024 cost savings plan and other items including realized and unrealized gains on equity securities holdings. We ended the year with $87,800,000 in cash compared to $64,400,000 in cash at the September 2024 and $71,700,000 at the start of twenty twenty four.

Now moving to Slide eight to discuss our sources and uses of cash.

Operating cash flows for the fourth quarter and full year were negative $6,000,000 and negative $43,000,000 respectively. Included in the full year amount were payments totaling $21,000,000 in the first half of twenty twenty four to settle prior year spot sales for the final price settlement in 2024 was less than the provisional payments we received in 2023.

Separately, we achieved a $14,000,000 reduction in annual run rate cost savings which I'll detail more shortly. We're pleased to report that cash outflows for our joint ventures as well as capital expenditures were less than $1,000,000 in the fourth quarter. And favorable in terms of outperforming our guidance. I'll stress that we are laser focused on cost containment and overall cash management especially during this lithium down cycle. For the full year, we contributed $26,000,000 to advance our joint venture projects and $11,000,000 in capital expenditures as compared to $43,000,000 in joint venture spending and 57,000,000 in capital expenditures in 2023. Contributing to the year over year decline in joint venture spending was the completion of restart CapEx at NAL in the first half of twenty twenty four. Overall, we planned and successfully leading to these significant reductions in our investing cash outflows on a year over year basis.

As part of our proposed merger, we raised net proceeds of $25,000,000 through the issuance of new ASX listed CHEST depository interests, and drew an additional $7,000,000 in borrowings from our working capital credit facility. Now let's turn to Slide nine. We introduced our 2024 cost savings plan in February 2024 with an initial target to reduce annual run rate spending by approximately $10,000,000 We took immediate action to control our operating expenses and reduce CapEx and joint venture spending early in the year as the lithium market retreated. These actions were difficult but prudent as we position the company for the long term. Based on prevailing market conditions, we further expanded our cost savings plan in October 2024 and achieved $14,000,000 in total annual cost savings for the year. As a result of our cost savings plan, we recorded $10,000,000 in restructuring and impairment charges in 2024 of which $3,000,000 was recorded in the fourth quarter. Included in our full year restructuring and impairment charges were cash charges of $4,000,000 primarily related to severance and employee benefit costs, and non cash charges of 6,000,000 which includes $4,000,000 of impairment charges related to the conversion capacity of Tennessee Lithium to Carolina Lithium and $2,000,000 related to accelerated stock compensation as part of our reduction in workforce.

We continue to maintain our cost and investment discipline in 2025. Through detailed expense management.

Let's move to Slide 10 where we provide our 2025 outlook [indiscernible] CapEx and investments in and advances to affiliates. We expect to ship 25,000 to 30,000 dry metric tons in the first quarter of twenty twenty five. This does not include tons which were sold as part of an ex work sale at the port in December but shipped earlier this year. For the full year, we anticipate making shipments to customers totaling 113,000 to 130,000 dry metric tons with full year shipments including tons which were shifted to 2025, as a result of a customer request to move a shipment from the fourth quarter into 2025. As always, certain factors including shipping constraints and customer requirements may impact the timing of future shipments. For our CapEx and investments outlook, we continue to reduce our project related expenditures.

We expect less than $2,000,000 in CapEx in the first quarter and $6,000,000 to $9,000,000 in CapEx for the full year. Joint venture investments and advances are also expected to be less than $2,000,000 in the first quarter and approximately $7,000,000 to $13,000,000 for the full year 2025. This compares to $26,000,000 in 2024. Our outlook is subject to changes in market conditions and may vary materially. With that, I'll turn the presentation back over to Keith.

Thank you, Michael. Turning to Slide 12, I'd like to share some thoughts on the lithium market. We are pleased to report another quarter of strong price realizations against the backdrop of Esophilithia market Our realized price of $9.00 $9 on an SE6 equivalent basis once again led the industry.

During the quarter, we saw a benefit from contractual wags embedded in customer contracts, in the contango and lithium futures market. While our commercial strategy has been highly successful, the narrowing contango in the forward markets and the pricing lags in our longer term contracts means that our comparatively strong price realizations may not always be achievable on a go forward basis. As for the lithium market, Slide 13 shows that end market demand for lithium continues to grow very strongly. 2024 was another record year for EV sales with approximately 17,000,000 EVs sold globally. While demand growth in The U. S. And Europe was modest last year, the dominant Chinese market grew by 3,100,000 units in 2024. The largest year over year growth on record and roughly equivalent to the total number of these sold globally in 2020. And there are new avenues of demand growth for lithium within the stationary storage market. Energy storage systems are growing rapidly to help modernize power grids manage intermittency in power generation from renewable sources, and evolve to meet growing power demand from sources like data centers. As a matter of fact, CATL, the world's leading lithium ion battery producer, is expecting ESS demand to represent 34% of total lithium demand by 02/1930.

A massively positive outlook for our markets. I'd like to conclude this morning's call with some brief comments on our planned merger with Siona Mining. On November, Piedmont and Siona announced the intention to merge in an all stock transaction with an ownership split of roughly fifty-fifty on a fully diluted basis. The merger brings together two complementary businesses which will be the largest current lithium producer in North America with an exciting development pipeline in The United States, Canada and Ghana. Under our current operational structure, NAL's production potential growth is limited by competing priorities between owners. Piedmont receives the benefit of its unique Opticay agreement Wassiana is the operator and majority partner. By joining forces, the combined company is positioned to evaluate expansion opportunities resulting from the depressive drill results earlier this year at North American Lithium. We think NAL is the best located lithium project in Canada and the opportunity for a brownfield expansion with possible low CapEx per ton and improvement to operating cost per ton is one of the key reasons we are so excited about the merger. MergeCo is also able to share technical and operating experience across in a large portfolio of growth projects in Avoya, [indiscernible] For those less familiar with Mobaland, this is a high grade project located in Quebec that boasts one of the largest spodumene resource bases in North America.

The project is in the James Bay region and the 2024 definitive feasibility study demonstrated the post tax internal rate of return of 34% or 3,000 tons per year spodumene concentrate, at a low strip ratio of 2.3:one. On the corporate side, MergeCo expects to realize synergies of $15,000,000 to $20,000,000 annually through a combination of consolidated corporate functions and improved logistics. The merger secured the backing of resource capital funds, the mining industry leading private equity source with RCF committed to funding approximately $45,000,000 into the merged entity upon completion of the deal. This capital on top of the financing is completed at the time of the merger announcement would provide important capital to enable MergeCo to advance projects to our development during the current down market. Slide 16 shows the planned North American spodumene production of Piedmont and Syana versus several preproduction peers. NAL is the largest current producer of spodumene concentrate in North America and MergeCo has the potential to maintain its leadership position as other assets are developed Importantly, this chart is purely focused on North American peers and ignores the significant potential for production at Awoya.

Scale is crucial in this business. Increasing scale can make a business more relevant to customers to reduce unit operating costs and improve downstream optionality.

All while appealing to a broader investor community.

With that, we can turn the call over to Q and A. Thank you. We will now begin the question and answer session. Please pick up your handset Your first question comes from the line of Bill Peterson of JPMorgan. Your line is now open.

Yes. Hi, Keith and Mike Thanks for all the information. Actually, Mike, my two questions are actually more related to the industry environment. I was hoping you could touch on the potential impacts of tariffs if they do come to fruition. Towards Canada, how that may impact your planned shipment profile? I guess maybe that underline there is how much was assumed for U. S. Domestic refiners versus China and other regions? Hey, Bill, thanks. Good question. Yes, the tariffs that were announced that were supposed to take effect think February 1 were deferred thirty days. We'll see if they come into effect. The headline number for tariffs was 25%. For Critical Minerals the number would be 10% and the tariff would be paid by the importer, which would be an American we They would be liable for those tariffs. I think in the overall scheme of things and we've talked to them about that In the overall scheme of things at these price levels at 10% tariff, may or may not impact their decision making.

It were to come to pass. That's a customer with global operations who could take the material and divert it elsewhere if they wanted to. To avoid them. But and we've shipped to that customer in other locations before. So that could happen if they chose to do that. For broader joint venture shipments and for shipments we make through trading companies or to our other international customer, none of that goes to The U. S. So the tariffs wouldn't apply.

Yes. Thanks for that. That, Keith. And you and I have discussed sort of supply demand over the past few years and still appears fairly challenged based off of market environment. I guess based off your own experience and taking into account prior curtailments, maybe some project delays, What is your expectations around supply demand for this year and over the next few years? And I guess underlying that too, especially from a U. S. [indiscernible] may or may not still remain and maybe the company is also working on that behind the scenes as well? Yes, again, good question. I would say our crystal ball is cloudy as other people's. I think in the near term, I don't have any particularly aggressive expectations for 2025. I do think lithium remains a very young industry. I think we're probably in the second third inning of the evolution of this business.

Over the next twenty or thirty years and I think it will remain volatile. I will say I've now been in the industry eight years and I joined in a bull market. We went through a difficult bear market that had a fantastic bull market and we're in the middle here hopefully the tail end of the difficult bear market. Nobody really projected any of these developments. I fully expect there'll be another rip roaring bull market here at some point and it will be it will catch everybody by surprise and I don't know exactly what will cause it. It might be energy storage demand like we talked about in the call, it could be other things. So So I'm medium and long term bullish, but I do expect the industry to remain volatile And we're not counting we do our internal cash flow budgeting us spot price basis. So we're counting on we're planning for a challenging 2025 and hoping to be pleasantly surprised. In terms of policy support, I think it's a mixed bag. I think the 30 D credits may disappear, maybe Aiden will likely disappear. Really don't see that as that big an issue. I think The U. S. Market continues to be relatively small.

EV market today. I think the solution for the EV market in The U. S. Is people continue to bring on new vehicles. That are interesting that to the market, which every year new vehicles come on. We've gone from really one or two cars people might buy five or six years ago Tesla Model S and Model three and now we've got multiple vehicles. I think that will help But in terms of the global the commodities price on a global base China continues to grow with a fantastic rate And again, energy storage is becoming a really important part of the story. We have some analysts projecting it will be over 30% of total demand by 02/1930. That's up from the 2% or 3% or 4% in people's minds a few years ago. So that's a real pleasant surprise. So long term bullish, medium term, short term, uncertain. I should add though on policy. I think Trump will pound the table really hard on this whole kind of national energy security theme, I think that could very well include support we can't anticipate yet for projects like Carolina in particular. He's clearly very focused on USA USA and we think that's a good thing for us.

Thanks, Heath.

Thanks.

Your next question comes from the line of Joe Arrigar of ROTH Capital. Please go ahead.

Hey, Keith and team. Thanks for taking the questions. Thanks, Joe.

So, I guess, first thing, do you have like an update on timing of when you guys expect the merger to what's left for hurdles to get there? Yes. In the release, I think we said mid-twenty twenty five.

It's really going to be SEC determinant. We should be filing we hope to file our and Siona hopes to file initial SEC documents in the next few weeks That process is somewhat predictable, but it could be faster or slower. So if you think mid year and you think June, July timeframe, I think that's a reasonable way to think about it. The so I'd say the biggest hurdle is always the SEC. And their review of pro form a, their review of Sayana will be registering with the SEC for the first time. So just like in say an IPO there, it will be a review of their initial financial information. I think the other hurdles I think are reasonably we feel good about Investment Canada, which reviews transactions from a Canadian perspective, hurdle CFIUS review. We filed optimistic this deal doesn't present any CFIUS issues. Scott Rodino, I mean, the company together will be bigger, stronger, but still going to be a modest player in the overall market. I don't anticipate any hardscot or antitrust issues So and then we'll need to need shareholder votes, which we're optimistic we'll get, but it's a great deal shareholders of both companies.

So no reason to believe we'll have a problem with that. But yes, for planning purposes and ultimately the real question would be does it close in with Sayana as the surviving company, does it close in their fiscal '25, [indiscernible] have better visibility on that after the first SEC comments. Okay.

Thanks. That was great color. And then one other question, you may not be able to comment on this. There were some media speculation around the permitting and advancement of your partner in Ghana.

Do you have any comment on it or can you give any additional color What they did?

Yes. I think they were in DABBA last week, so the week before and there was just this it's it's a big conference. There's a lot of people with a lot of commentary about this and that. Projects around the world and around Africa. And I don't attribute I don't think it's any more serious than that. I think the Atlanta team is doing a good job advancing that process. There was a federal election in Ghana in December The party that's now in leadership is perceived by Atlantic to be even more friendly toward development of critical minerals mining. So we think that's positive. So I think I think we'll make good progress this year. Obviously, we're in a market where and this is from a medium and longer term perspective, I think bullish, we're in a market where spodumene prices and hydroxide and carbonate prices are at a level where it's harder to really support new investment in any project anywhere. So even in Ghana, even with Awoya, which is a great project, relatively low cap relatively low OpEx, It's hard to justify an investment here right now. I mean, that will change. I have 100% certainty that will change at some point.

But it just means we're not in as big a hurry as we might otherwise have been in Ghana. In Carolina or with the project or Sayana with the project like MobileLand. He certainly takes the long lead items like permitting, he advances the check those boxes and take away those those obstacles. But we're comfortable with time lining going Okay.

Thanks. That was very helpful. I'll turn it over. Excellent. Thanks, Joe. Your next question comes from the line of Noel Parks of Tuohy Brothers.

Please go ahead.

Hi, good morning. I was wondering if you could talk a little bit from your perspective on I guess industries, various projects in Quebec and just if you think sort of third party or regional partnerships around processing are something that could be sort of on the near horizon or in the longer term? And do you see those being [indiscernible] material part of, the sort of business model as Cianna expands possibly into to mobile That's a great question.

When we were putting NAL back into production kind of over the [indiscernible] Swaz and new markets were very strong. People weren't particularly focused on transportation costs. In a market like today, transportation costs mean a lot. If you have a remote mine, NAL is not remote, but every other most other assets Quebec are Just getting material to the market is an expensive part of the process. So first you have to get to port, whether it's Quebec City that we use or Montreal or [indiscernible] You have to get to a customer. Most of the customers as you know are right now in China. So it's an expensive part of the process. So So that means so a couple of things I'd highlight. Number one, there are a lot of spodumene projects in Quebec. Some of them have and some of them many good really good companies, good people and some really interesting war bodies, many of them are very remote. [indiscernible] CapEx will be high, labor costs will be high, infrastructure to get to get to the market would be very challenging and that we think expensive So we're very happy that we think NAL is by far the best located project in Quebec from a spodumene perspective.

And of the James Bay North projects, we think Mogo Land is by far the best located. So we're very excited about that. That will mean and if you think about projects, we think NAL brownfield expansion is particularly exciting. The infrastructure is already there. 40 miles from Val D'Or, CapEx per ton just should be lower to expand that rather than build a greenfield project somewhere So we're excited about that.

Having said all that, NAL could benefit, Moglen could benefit, the North American spodumene market, could benefit from having more conversion locally It would mean it would provide a meaningful opportunity to save on transport costs and improve margins. You just imagine it costs say $100 a ton to take material from Quebec to China depending on how big the shipment is and everything else, That's a business where people are breaking even that makes a big difference. So we're cheering for people to develop that. The only chemical plant being built in Quebec right now is the Arcadium plant at Rio Tinto will inherit in Bacencour. Forget the size of that, I want to say it's 32,000 tons a year. Something like that. We're Quebec is going to need a lot more capacity. I think as Sayana has said and I think as we've said, far as Quebec goes, our strategy is to really ideally partner with other parties who are bigger and stronger and have the technical capability to execute on that basis where we can be the miner and provide the spodumene and make the margin there and potentially participate in some way in the downstream in Quebec.

But it would be wonderful if that happened. I think I could definitely see someone like Rio Santo if they are Arcadium plant goes well and Vicencour sort of doubling down and and really trying to gather up spodumene from multiple sources in Quebec. That'd be good for Quebec, it'd be good for the industry, it'd be good for certainly be good for us. Great. Thanks a lot. Thank you. Thanks, Noel.

Your next question comes from the line of Greg Jones of BMO. Please go ahead.

Hi, Keith. Good morning. Good morning, Michael.

Wanted to follow-up on a prior question regarding Avoya, please.

If the ratification occurs during 2025, how do you envision the project development timeline advancing from here You know, Heard your comments regarding the current market environment If you were in the situation where you get the permit, would you advance as quickly as possible? Would you slow it down? How do you think about moving the project forward and potential start updates.

Yes, good question. And I'll give you our perspective. I think it's shared by Atlantic our partner. I think it's also shared by Sianna, our merger partner. And I think by the time this is a decision that ultimately will be made by what we call MergeCo.

Have a new name for the company soon enough. But so it's something it's a topic of conversation. I think it's fair to say everyone has a view that Expods needs $800 or $900 a year.

It's not the time to go build a new mine. If we were real Tinto and we're funded that way, you could take a view that you invest countercyclically and you invest at the trough but to do so would be really highly dilutive to us, it would be highly dilutive to Atlantic. We just don't think it'd be the right time to do it. We are engaging in conversations with debt funding sources for the project on a joint basis. Those could be international finance organizations like the DFC in Washington or others commercial banking organizations, That's a development that will take time. So I suspect 2025 will be a year where we wrap up all the permitting ratification and from that perspective we're ready to go. And then we really refined the funding and put in place that funding to minimize the equity dilution to any participant but to put the company put the asset on its strongest footing And then once that's done, the question is does the Board approve does do either any of the Boards or do all the Boards approve funding the project when on a spot price basis the IRRs probably not meet your hurdle.

So this is a question that everybody with a project has to deal with. And I think the answer is, there are going to be very few projects that I'd say $900 spot spodumene [indiscernible] Pass that hurdle test from a Board perspective, That will change because spot market prices are going to have to go up because no one is going to be building in this environment. And there may be some brownfield expansions here or there, but we think it's or say nobody, few people will be building in this environment. So it's too early to tell Greg, we still have these steps to go through. But my guess is we'll be waiting for a stronger market.

Great. Thank you for the color. I'll turn it back. Okay. Thanks a lot, Greg.

I'll see you next week.

That concludes our Q and A session. I will now turn the conference back over to John Koslow for closing remarks. Thank you, operator.

That concludes today's call. Thank you for joining this morning. As a reminder, a copy of our earnings release presentation and a replay of this call are available on our website at piedmontlithium.com Piedmont. Thanks everybody.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.