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Piedmont Lithium Limited: Chemical Plant PFS Demonstrates Exceptional Economics and Optionality of USA Location

ID: 1558345
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(businesspress24) -
Piedmont Lithium Limited (Piedmont or Company) is pleased to report the results of the Companys pre-feasibility study (PFS) for its proposed lithium hydroxide chemical plant (Chemical Plant) in Kings Mountain, North Carolina, USA. The PFS assumes a stand-alone merchant Chemical Plant that would convert spodumene concentrate purchased on the global market to battery-grade lithium hydroxide (Merchant Project).

Concurrently, Piedmont has updated the scoping study (Scoping Study) for its integrated mine-to-hydroxide project (Integrated Project) to reflect the updated Chemical Plant PFS. Both studies confirm that Piedmont will be a strategic and low-cost producer of battery-grade lithium hydroxide. Piedmont benefits from access to the exceptional infrastructure, low operating costs and low corporate taxes enjoyed by American industrial companies.

Piedmonts Chemical Plant would create an alternative to the numerous merchant spodumene converters currently operating in China and dominating the world lithium hydroxide market, thus providing US and European automotive companies a secure and independent American source of the lithium hydroxide required for their supply chains.

HIGHLIGHTS

LITHIUM HYDROXIDE FOR THE ELECTRIC VEHICLE MARKET
- Electric Vehicle (EV) demand to grow 12x by 2030 driven by falling battery costs
- Lithium Hydroxide (LiOH) required in the high-nickel batteries used in longer range EVs
- LiOH demand forecast to grow 31% per year through 2030
- 22,720 tonnes per year (t/y) of LiOH production under either development scenario

PREMIER USA LOCATION
- An American source of lithium hydroxide to serve the important vehicle and stationary storage markets in the USA and Europe
- Advantageous North Carolina location with well-developed infrastructure, deep experienced lithium industry talent pool, inexpensive power and reagents, stable regulatory environment, and favorable taxes


- Piedmont will provide an alternative supply source for Western auto makers as currently 80% of the worlds LiOH is produced in China

POSITIVE ESG PROFILE
- LiOH will power the electrification of the vehicle business, dramatically reducing emissions vs. traditional internal combustion vehicles
- Automotive companies prefer spodumene-sourced hydroxide for sustainability reasons
- Chemical Plant to be powered entirely by low carbon sources in North Carolina
- USA labor, environmental and safety standards

EXCEPTIONAL FINANCIAL RESULTS DRIVEN BY LOW OPERATING COSTS
- Merchant Project post-tax NPV8 of US$714 million and post-tax IRR of 26%
- Integrated Project post-tax NPV8 of US$1.1 billion and post-tax IRR of 26%
- Both projects at the low end of their respective cost curves
o Average Merchant Project LiOH cash costs of US$6,689/t
o Average Integrated Project LiOH cash costs of US$3,716/t

LEVERAGE TO RISING LITHIUM PRICES
- Lithium prices are currently at 3-year lows and the pricing forecasts utilized herein reflect prices that are ~$4,000/t lower than those used in previous studies
- For every $1,000/t increase in LiOH prices Piedmont would see an annual EBITDA boost of over US$20 million and an increase to NPV8 of ~US$150 million

EXECUTIVE SUMMARY

Piedmont has a strategically significant lithium footprint in the United States which positions the Company to become a low-cost producer of high-quality lithium hydroxide for the automotive industry. This announcement presents the results of two studies:

1. The Chemical Plant PFS supports a potential Merchant Project that assumes a stand-alone Chemical Plant converting spodumene concentrate purchased on the global market to battery-grade lithium hydroxide.
2. The Scoping Study covers the Integrated Project comprising a Mine/Concentrator that will produce spodumene concentrate which will be transported to a Chemical Plant and converted into battery-grade lithium hydroxide.

Both studies deliver excellent economics and robust internal rates of return over 25-year project lives. The Company will continue to progress both studies and assess the staging of development activities to maximize returns to shareholders.

Table 1: Summary outcomes of Merchant Project PFS and Integrated Project Scoping Study

Table 1: Summary outcomes of Merchant Project PFS and
Integrated Project Scoping
Study

Outcomes Unit MerchanIntegra
t ted
Projec Projec
t t

Project Life years 25 25
Annual average lithium hydroxide t/y 22,720 22,720
production
(steady-state)

Annual average spodumene concentrat/y N/A 160,000
te production
(steady-state)

Average cash cost of lithium US$/t $6,689 $3,712
hydroxide production
(steady-state)

Average cost of spodumene concentrUS$/t $651 $201
ate
(steady-state)

Mine/Concentrator - initial US$M N/A $168
capital cost (including
contingency)


Chemical Plant - initial capital US$M $377 $377
cost (including contingency)


Annual average EBITDA US$M/y$149 $218
(steady-state)

After tax Net Present Value US$M $714 $1,071
(NPV) (at) 8% discount
rate

After tax Internal Rate of Return % 26% 26%
(IRR)

Payback from start of operations y 3.34 3.23
Assumed long term LiOH price US$/t $12,910$12,910
(real)

1
1.-Based on Benchmark Mineral Intelligences revised Q1 2020 lithium pricing forecast.

Compelling Operating Costs for Two Development Cases

A cost-curve comparing Piedmonts position relative to the 2028 operating and highly-probable projects according to Roskill demonstrates the 1st quartile position of Piedmonts Integrated Project and the competitive position of Piedmonts Merchant Project vs. other (Chinese) merchant spodumene or lithium carbonate-to-hydroxide converters. (See Figure 1). The competitive cost position allows Piedmont to provide an alternative source of supply to US and European automotive customers.

https://www.irw-press.at/prcom/images/messages/2020/52021/LITHIUM HYDROXIDE FOR THE ELCHEMICAL PLANT PFS DEMONSTRATES EXCEPTIONAL ECONOMICS AND OPTIONALITY OF USA LOCATION_PRCOM.001.png

Figure 1 - Lithium Hydroxide 2028 AISC Cost Curve (Real Basis) (Roskill)
AISC includes all direct and indirect operating costs including feedstock costs (internal AISC or external supply), refining, on-site G&A costs and selling expenses. It does not include costs associated with corporate-level G&A.

The Chemical Plant PFS demonstrates the economic benefit of developing a lithium chemical business in North Carolina, USA, with its exceptional infrastructure, low operating costs and competitive tax regime.

80% of the worlds lithium hydroxide is produced in China, largely by non-integrated merchant producers sourcing spodumene concentrate from Western Australia. As global automotive companies electrify their fleets, we expect them to increasingly seek ex-China sources of lithium supply, and North Carolina is ideally-positioned to benefit given its proximity to major auto markets in the US and Europe, and the deep lithium talent pool resident in the region.

Piedmont will now advance the Chemical Plant through the permitting and definitive feasibility processes, providing us the option to move aggressively on either a merchant or integrated basis toward first lithium production in 2023 as the transition to electric vehicles begins to seriously take hold.

Keith D. Phillips, President and Chief Executive Officer

For further information, contact:

Keith D. Phillips
President & CEO
T: +1 973 809 0505
E: kphillips(at)piedmontlithium.com

Tim McKenna
Investor & Government Relations
T: +1 732 331 6457
E: tmckenna(at)piedmontlithium.com

You can find the entire press release under the following link:
https://www.asx.com.au/asxpdf/20200526/pdf/44j3gdvfp5ppz3.pdf


Cautionary Statements
The Scoping Study referred to in this announcement has been undertaken to determine the potential viability of the Integrated Project comprising a Mine/Concentrator and Chemical Plant constructed in North Carolina, USA and to reach a decision to proceed with more definitive studies. The Scoping Study for the Integrated Project has been prepared to an intended accuracy level of ±25%. The results should not be considered a profit forecast or production forecast.

The Scoping Study is a preliminary technical and economic study of the potential viability of the Integrated Project. In accordance with the ASX Listing Rules, the Company advises it is based on low-level technical and economic assessments that are not sufficient to support the estimation of Ore Reserves. Further evaluation work including infill drilling and appropriate studies are required before Piedmont will be able to estimate any Ore Reserves or to provide any assurance of an economic development case.

Approximately 53% of the total production targets are in the Indicated Mineral Resource category with 47% in the Inferred Mineral Resource category. 100% of the production target in years 1-3 is in the Indicated Mineral Resource category. The Company has concluded that it has reasonable grounds for disclosing a production target which includes an amount of Inferred Mineral Resource. However, there is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work (including infill drilling) on the Piedmont deposit will result in the determination of additional Indicated Mineral Resources or that the production target itself will be realized.

The Scoping Study is based on the material assumptions outlined elsewhere in this announcement. These include assumptions about the availability of funding. While Piedmont considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study will be achieved.

To achieve the range outcomes indicated in the Scoping Study, additional funding will likely be required. Investors should note that there is no certainty that Piedmont will be able to raise funding when needed. It is also possible that such funding may only be available on terms that dilute or otherwise affect the value of the Piedmonts existing shares. It is also possible that Piedmont could pursue other value realization strategies such as sale, partial sale, or joint venture of the Integrated Project. If it does, this could materially reduce Piedmonts proportionate ownership of the Integrated Project.

The Company has concluded it has a reasonable basis for providing the forward-looking statements included in this announcement and believes that it has a reasonable basis to expect it will be able to fund the development of the Integrated Project. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study.




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Date: 05/26/2020 - 12:30
Language: English
News-ID 1558345
Character count: 12049
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Firma: Piedmont Lithium Limited
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Stadt: Wien
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