Piedmont Completes Bankable Feasibility Study Of The Carolina Lithium Project With Positive Results

PRESS RELEASE | December 14, 2021 | NASDAQ:PLL – Piedmont Lithium Inc. (“Piedmont” or the “Company”) is pleased to report the results of a Bankable Feasibility Study (“BFS”) for its 100% owned proposed integrated lithium hydroxide business (“Carolina Lithium” or the “Project”) in Gaston County, North Carolina. The Study confirms that Carolina Lithium could be one of the world’s largest and lowest-cost producers of lithium hydroxide, with a sustainability footprint that is superior to incumbent producers, all in a highly favorable location to supply the rapidly growing electric vehicle supply chain in the United States.

LIthium Hydroxide FOR THE UNITED STATES ELECTRIC VEHICLE MARKET

-        U.S. Electric Vehicle (“EV”) demand is expected to grow 12x by 2030 (Benchmark Minerals)

-        Commitments of over $25 billion to build U.S. battery capacity by 2030

-        Lithium Hydroxide (“LiOH”) is required in the high-nickel batteries used in longer range EVs

-        Carolina Lithium is positioned to be the leading U.S. source of Lithium Hydroxide

POSITIVE ESG PROFILE

-        LiOH will power the electrification of the vehicle business, dramatically reducing carbon and other emissions vs. traditional internal combustion vehicles

-        Superior sustainability profile relative to current LiOH producers in China and South America

-        Automotive companies prefer spodumene-sourced lithium hydroxide for sustainability reasons

-        Chemical Plant designed to rely on low carbon power sources in North Carolina

-        Carolina Lithium will operate under U.S. labor, environmental and safety standards

STRONG Financial Results EXPECTED FROM LOW ESTIMATED OPERATING COSTS[i]

-        BFS indicates results of NPV8 (after tax) of $2.0 billion and post-tax IRR of 27%

-        BFS estimated steady-state EBITDA[ii] of $459 million over the first 10 years of operations

-        Projected steady-state LiOH cash costs of $3,657/t and AISC of $4,377/t for the first 10 years

OPPORTUNITIES FOR FURTHER ECONOMIC UPSIDE

-        Stronger lithium pricing - current spot prices point toward higher EBITDA than BFS projections with indicative after tax $4.5bb NPV8 and 50% IRR using spot price modeling[iii]

-        Conversion of additional ore reserves and new mineral resources consistent with Piedmont’s strong track-record through continued exploration of the Carolina Tin Spodumene Belt

-        Continued evaluation of possible Phase 2 LiOH expansion using SC6 sourced from Piedmont-affiliated companies

EXECUTIVE SUMMARY

Piedmont’s Carolina Lithium Project is uniquely positioned to benefit from its highly favorable location in Gaston County, North Carolina, with exceptional infrastructure, a deep local talent pool, low-cost energy, and proximity to local markets for the monetization of by-product industrial minerals. The Study reflects more conservative costing assumptions than prior studies, with recent inflationary pressures having a substantial impact on both capital expenditures and operating costs.  These cost impacts are partially offset using lithium pricing assumptions based on the more positive outlook incorporated in the consensus estimates described herein.  Summary results of the Study are shown below.

The competitive advantage of Carolina Lithium’s unique location is depicted in the following lithium hydroxide cost curve, which was prepared by Roskill, a leading lithium industry consultancy.

Figure 1 – Lithium hydroxide 2028 AISC cost curve (real basis) (Roskill) for Carolina Lithium BFS Production Case[iv]

AISC includes all direct and indirect operating costs including feedstock costs (internal AISC), refining, corporate G&A and selling expenses.

Industry Leading Sustainability Profile

Carolina Lithium is expected to have a superior sustainability profile relative to current lithium hydroxide producers in China and South America. Chinese lithium producers are highly reliant on coal-fired power and generally utilize a carbon-intensive sulfuric acid roasting process to convert raw materials shipped in from Australia, while South American producers tend to utilize vast tracts of land and large quantities of water, all in the driest desert in the world, the Atacama.

Figure 2 – Life cycle analysis of key carbon intensity, water usage, and land footprint of Carolina Lithium[v][vi]

United States Market Dynamics

2021 has been a transformative year for electrification in the United States. Current and forecasted battery manufacturing capacity now exceeds 500 GWh with public announcements of over $25bb in capital investments to occur by 2025.  Based on an average requirement of 960 t of lithium hydroxide per GWh of manufacturing capacity the resultant U.S. demand for lithium hydroxide could exceed 460,0000 t/y by 2027, dramatically exceeding the current development plans of domestic lithium companies.

Figure 3 – Operating, Under Construction, or Announced U.S. Battery Manufacturing Capacity

Strong Estimated Financial Results with Potential for Extended Operational Life

The BFS prioritizes the production of the Company’s newly defined Probable Ore Reserves, which are calculated based upon compliance standards promogulated by the Joint Ore Reserve Committee (“JORC”) and those standards recently adopted by the United States Securities and Exchange Commission (SEC) via its rules issued under Regulation S-K, Item 1300.  Following exhaustion of the Company’s Ore Reserves, chemical plant feed is assumed to be supplemented with ore obtained via the Company’s equity-backed offtake agreements or other spodumene concentrate purchased from the market.

The production target outlined in the BFS is limited to the Company’s Probable Ore Reserves. Table 1 summarizes the financial outcomes of the BFS Ore Reserves production scenario.

The BFS emphasizes an initial production target of 11 years of spodumene concentrate to be processed at the Company’s chemical plant which will be located adjacent to mining operations.  The BFS incorporates assumptions of additional lithium hydroxide production sourced from equity-backed offtake agreements, discussed below, which allow the Company to secure spodumene from alternate sources, increasing the chemical plant life to 30 years.

Multi-Asset Business with Upside Potential

Strategic investments in logistically advantaged, high quality spodumene projects have transformed Piedmont Lithium in 2021 from a single project company to a multi-jurisdictional business with access to spodumene concentrate from multiple sources.

Piedmont Lithium holds a 25% equity interest in Sayona Quebec and North American Lithium along with a 50% offtake right to spodumene concentrate produced by Sayona Quebec on a life-of-mine basis.

Additionally, Piedmont Lithium has an earn-in right to acquire a 50% interest in Atlantic Lithium’s Ghanaian project portfolio including the Ewoyaa Project.  Along with this equity earn-in right Piedmont holds a 50% offtake right to spodumene concentrate produced by Atlantic Lithium on a life-of-mine basis.

Offtake rights provide Piedmont Lithium the flexibility to extend the operational life of Carolina Lithium, or to increase lithium hydroxide production capacity through construction of a Phase 2 Lithium Hydroxide Conversion Plant.

The Company expects to publish additional technical studies in 2022 evaluating potential expansion cases for Phase 2 Lithium Hydroxide Operations.

Figure 4 – Piedmont holds spodumene concentrate offtake rights along with project investments in multiple jurisdictions

Fully Integrated Manufacturing Campus

Carolina Lithium contemplates a single, integrated site, comprising quarrying, spodumene concentration, by-products processing, and spodumene conversion to lithium hydroxide.  There are currently no such integrated sites operating anywhere in the world, and the economic and environmental advantages of this strategy are compelling:

-        Premier location in Gaston County, North Carolina – “the cradle of the lithium business”

-        Integrated site eliminates unnecessary SC6 transportation costs and truck movements

-        Electric powered conveyors eliminate mine trucks, reduce noise, dust and diesel-based CO2 emissions

-        On-site solar complex to power concentrate operations

-        Potential to co-locate downstream battery materials, Li-ion battery manufacturing, and by-product customers

-        Creation of up to 500 permanent manufacturing, engineering, and management jobs (Phase 1)

Figure 5 – Site plan for the planned permit area of the Phase 1 30,000 t/y Carolina Lithium operations

“We are exceedingly pleased with the results of the BFS for the Carolina Lithium Project, which we believe confirm the Project’s industry-leading sustainability profile as well as exceptional economics while incorporating the substantial capital and operating cost inflation experienced during 2021.

We will soon commence detailed engineering for the Project with a view to a final investment decision in 2022. We are actively engaged in project financing discussions, including possible debt finance via the U.S. Department of Energy’s Advanced Technology Vehicle Manufacturing loan program, and potential strategic equity investments via the partnering process being coordinated by our financial advisors.

An important priority for 2022 will be the evaluation of expansion opportunities incorporating the spodumene concentrate assets we control in Quebec and in Ghana. Our ambition is to build America’s largest lithium hydroxide business, and the spodumene resource base we’ve assembled during 2021 should underpin substantial growth.”

Keith D. Phillips, President and Chief Executive Officer

For further information, contact:

Keith Phillips

President & CEO

T: +1 973 809 0505

E: [email protected]

Brian Risinger

VP – Corporate Communications

: +1 704 910 9688

E: [email protected]

Please follow the link to view entire original news in English language:

https://piedmontlithium.com/piedmont-completes-bankable-feasiblity-study-of-the-carolina-lithium-project-with-positive-results/

[i] Based on the assumptions made as part of the Carolina Lithium Project’s BFS announcement dated December 14, 2021.

[ii] EBITDA defined as earnings before interest, taxes, depletion, depreciation, and amortization.

[iii] Indicative NPV and IRR of the Carolina Lithium Project when applying current spot prices as reported by Fastmarkets on 12/03/21 of $31,000/t for LiOH and $2,300/t for SC6 for pricing assumptions in the project’s financial model.

[iv] Carolina Lithium AISC presented based on December 2021 BFS results showing Piedmont’s steady-state AISC during the first 10 years of operations.  All other costs shown based on Roskill May 2021 cost curve but assuming $900/t SC6 input costs for Merchant Converters to match BFS pricing assumptions.

[v] Water scarcity values published by AWARE and available at wulca-waterlca.org/aware/

LCA results previously announced on June 9, 2021

[vi] Atlantic Lithium and Sayona are spodumene projects in which the Company has equity interests and offtake agreements

[vii] References to $ in this announcement are United States Dollars.