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Piedmont Lithium is pivoting to an integrated development: Canaccord Genuity

Piedmont is well funded to accelerate the work required to commence construction of an integrated lithium hydroxide project in North Carolina, US.

Piedmont Lithium Ltd - Piedmont Lithium is pivoting to an integrated development: Canaccord Genuity
Canaccord Genuity has maintained its speculative buy rating for Piedmont with a target price of 30 cents

Piedmont Lithium Ltd (ASX:PLL) is focused on a number of near-term milestones in the December quarter including key federal permits for the mine and lithium hydroxide test work commencing at the Piedmont Lithium Project in North Carolina, US.

The company is well funded to accelerate the work required to commence construction of the integrated lithium hydroxide project.

Canaccord Genuity has maintained its speculative buy rating for Piedmont with a target price of 30 cents per share (current share price: 10 cents)

Following is an extract from Canaccord’s company update:

Piedmont Lithium project to progress as an integrated development: PLL recently announced that it will now be pursuing an integrated development plan, replacing what was previously planned to be a staged development (prior CGe - concentrate production late 2021, lithium hydroxide (LiOH) production late 2023). PLL's new timeline envisages commissioning of the mine and chemical plant in late 2022, with permitting and studies for the integrated project to be completed in 2020.

Integrated development is a positive on several fronts: We think the move to an integrated development is a positive for the project for the following reasons: 1) brings forward higher margin LiOH production; 2) eliminates several years of concentrate production, removing exposure to a product market, which in our view has a low pricing outlook and structural headwinds; 3) preserves mineral resources for production of higher margin products; and 4) improves probability of securing offtake with "bankable" counterparties, which may assist in project financing.

CG development scenario: We have revised our project model assumptions to now feature development of an integrated, 16-year, ~20ktpa LiOH facility with total capex of US$560m (mine + chemical plant), with commissioning of the project in mid-2023. We estimate LiOH cash costs at US$5,400/t (excl. by-products) versus our LT LiOH pricing assumptions at US$15,000/t. Key project milestones in the interim include mine permits (Q4'19), LiOH testwork (2020), integrated PFS (1H'20), and DFS (late 2020). We acknowledge that current market conditions are difficult for financing new lithium projects, but given the strategic location, and attractive project economics driven by an integrated model, we think the project has the necessary features to attract interest from strategic partners. Uncommitted offtake (discussions with potential customers have commenced) also presents as a possible avenue to project financing, in our view.

Valuation & Recommendation

Our target price (heavily risked NPV10%) is unchanged at A$0.30, with updated project development assumptions and pricing, offset by an increased risk weighting on financing uncertainty. We maintain our SPECULATIVE BUY rating.

Quick facts: Piedmont Lithium Ltd

Price: 0.105 AUD

ASX:PLL
Market: ASX
Market Cap: $85.61 m
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