- LG Chem investing $75 million to acquire Piedmont Lithium
common shares
- Piedmont to supply LG Chem with 200,000 metric tons of
spodumene concentrate over four years
- Agreements illustrate the benefits of the Inflation
Reduction Act of 2022, with North American critical minerals
supporting the development of a U.S. battery supply chain
Piedmont Lithium Inc. (“Piedmont” or the “Company”)
(Nasdaq:PLL; ASX:PLL), a leading global developer of lithium
resources critical to the U.S. electric vehicle (“EV”) supply
chain, today announced that it has signed agreements with LG Chem,
Ltd. (“LG Chem”), under which LG Chem will make a $75 million
equity investment in Piedmont (“Subscription Agreement”) and commit
to the offtake of 200,000 metric tons of spodumene concentrate
(“SC6”) from Piedmont’s jointly-owned North American Lithium
(“NAL”) over a four-year term (“Offtake Agreement”).
LG Chem will purchase 1,096,535 newly-issued shares of Piedmont
common stock at an approximate price of $68.40 per share for a
total consideration of $75 million. Closing of the Subscription
Agreement is expected on or around February 24, 2023, and will
result in LG Chem holding approximately 5.7% of Piedmont common
shares. Transaction details are described in the table at the end
of this announcement.
Piedmont has agreed to supply LG Chem with 50,000 metric tons
per year of SC6 for four years with planned shipments beginning in
Q3 2023. SC6 pricing will be determined by a formula-based
mechanism linked to SC6 market prices at the time of each shipment.
LG Chem will utilize the material to support its plans to produce
cathode materials for key North American customers as well as the
intentions of the Inflation Reduction Act of 2022 (“IRA”). Piedmont
has also agreed to provide LG Chem priority negotiation rights for
10,000 metric tons per year of lithium hydroxide produced by the
Company at either of its proposed facilities in Tennessee or North
Carolina.
“We welcome LG Chem as a shareholder in Piedmont and are excited
to partner with them to supply North American lithium that will
meet the requirements of the IRA and support the development of the
U.S. battery supply chain,” said Piedmont President and CEO Keith
Phillips. “LG Chem is a global leader with a commitment to U.S. EV
battery manufacturing and plans to build one of the world’s largest
cathode plants in Clarksville, Tennessee. We look forward to
working with LG Chem as NAL comes online as an important source of
lithium in North America.”
“This agreement allows LG Chem to provide differentiated values
to North American customers with products that satisfy IRA
standards by preemptively securing raw materials in the U.S., our
key market,” said Mr. Hak-Cheol Shin, Vice Chairman and CEO of LG
Chem. “As we work to build various partnerships, including joint
metal investments with automotive OEMs and battery makers, we’re
pleased that our partnership with and commitment of funds to
Piedmont will help support its development of U.S. lithium
projects.”
NAL is a project of Sayona Quebec, a joint venture between
Piedmont and Sayona Mining Limited (ASX:SYA). SC6 production at NAL
is expected to restart in H1 2023, with commercial shipments
expected to begin in Q3 2023. Piedmont’s offtake agreement with
Sayona Quebec entitles Piedmont to purchase the greater of 113,000
metric tons per year or 50% of the joint venture’s SC6 production.
The Company’s purchases of SC6 from Sayona Quebec are subject to a
floor price of $500/ton and a ceiling price of $900/ton for the
life-of-mine term.
Piedmont intends to utilize the funding from LG Chem to advance
its portfolio of projects, including its planned 30,000
metric-tons-per-year lithium hydroxide project at Tennessee
Lithium, the Ewoyaa Lithium Project in Ghana in partnership with
Atlantic Lithium, and the fully integrated Carolina Lithium project
in development in North Carolina, as well as for general corporate
purposes.
JPMorgan and Evercore acted as financial advisors, and Gibson
Dunn and Thomson Geer served as legal counsel to Piedmont. Allen
& Overy acted as legal counsel to LG Chem.
Key terms of Subscription Agreement between LG Chem and
Piedmont
Item
Details
Date of Agreement
■ February 16, 2023
Subscription and Pricing
■ LG Chem will subscribe for an amount
equal to the lesser of (i) $75 million; or (ii) 99.9 billion Korean
Won (converted from Korean Won to US$ on the business day prior to
closing) of Piedmont common shares listed on the Nasdaq.
■ The purchase price per share of $68.3973
is based on the 10-day volume-weighted average price (“VWAP”) as of
the Nasdaq market close on February 15, 2023.
■ The subscription is expected to close on
or around February 24, 2023, and is subject to customary closing
conditions, including no material adverse effect having occurred
with respect to Piedmont.
■ The agreement contains standard
termination rights for an agreement of this nature.
Lock-up and Voting Arrangements
■ The shares will be subject to a 6-month
lock-up period and customary standstill provisions for 2 years from
the date of the agreement.
■ LG Chem agrees to vote its subscription
shares in accordance with the recommendations of the Piedmont board
at any meeting of stockholders until the earlier of:
(i) 4 years from the date of the
agreement; or
(ii) the date the subscriber and its
affiliates cease to beneficially own 5% or more of the common stock
of the subscriber.
Key terms of Offtake Agreement between LG Chem and
Piedmont
Item
Details
Date of Agreement
■ February 16, 2023
Product and Term
■ Piedmont1 has agreed to supply LG Chem
and LG Chem has agreed to take delivery of a minimum volume of
50,000 metric tons per year of SC6 from NAL, under the Company’s
offtake agreement with Sayona Quebec.
■ Piedmont plans to supply a target volume
of 10,000-15,000 metric tons of SC6 on a quarterly basis.
■ The term of the agreement will be four
years, beginning at the date of loading the first shipment.
■ Piedmont and LG Chem may extend the term
of the agreement for any number of additional years by mutual
agreement.
■ The agreement contains standard
termination rights for an agreement of this nature.
Pricing, Specifications, and
Adjustments
■ The pricing for each shipment will be
determined by a market-based formula linked to the published
Fastmarkets Index Prices for spodumene concentrate on a trailing
basis.
■ In consideration of LG Chem’s
substantial investment, the price is subject to a discount based on
the prevailing market price at a given time.
About Piedmont Lithium
Piedmont Lithium (Nasdaq:PLL; ASX:PLL) is developing a
world-class, multi-asset, integrated lithium business focused on
enabling the transition to a net zero world and the creation of a
clean energy economy in North America. Our goal is to become one of
the largest lithium hydroxide producers in North America by
processing spodumene concentrate produced from assets where we hold
an economic interest. Our projects include our Carolina Lithium and
Tennessee Lithium projects in the United States and partnerships in
Quebec with Sayona Mining (ASX:SYA) and in Ghana with Atlantic
Lithium (AIM:ALL; ASX:A11). These geographically diversified
operations will enable us to play a pivotal role in supporting
America’s move toward energy independence and the electrification
of transportation and energy storage. For more information, follow
us on Twitter @PiedmontLithium and visit
www.piedmontlithium.com.
About LG Chem
LG Chem is a leading global chemical company with a diversified
business portfolio in the key areas of petrochemicals, advanced
materials, and life sciences. The company manufactures a wide range
of products from high-value added petrochemicals to renewable
plastics, specializing in cutting-edge electronic and battery
materials, as well as drugs and vaccines to deliver differentiated
solutions for its customers. LG Chem is committed to reaching
carbon-neutral growth by 2030 and net-zero emissions by 2050 by
managing the impacts of climate change and making positive
contributions to society through renewable energy and responsible
supply chains. Headquartered in Seoul, Korea, LG Chem has multiple
operation sites worldwide and generated consolidated revenue of KRW
51.9 trillion (USD 42.1 billion) in 2022. For more information,
please visit www.lgchem.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of or as described in securities legislation in the
United States and Australia, including statements regarding
exploration, development, construction and sales activities of
Sayona Mining, Atlantic Lithium and Piedmont; current plans for
Piedmont’s mineral and chemical processing projects; and strategy.
Such forward-looking statements involve substantial and known and
unknown risks, uncertainties, and other risk factors, many of which
are beyond our control, and which may cause actual timing of
events, results, performance or achievements and other factors to
be materially different from the future timing of events, results,
performance, or achievements expressed or implied by the
forward-looking statements. Such risk factors include, among
others: (i) that Piedmont, Sayona Mining or Atlantic Lithium will
be unable to commercially extract or deliver mineral deposits to LG
Chem or otherwise, (ii) that Piedmont’s, Sayona Mining’s or
Atlantic Lithium’s properties may not contain expected reserves,
(iii) risks and hazards inherent in the mining business (including
risks inherent in exploring, developing, constructing and operating
mining projects, environmental hazards, industrial accidents,
weather or geologically related conditions), (iv) uncertainty about
Piedmont’s ability to obtain required capital to execute its
business plan, (v) Piedmont’s ability to hire and retain required
personnel, (vi) changes in the market prices of lithium and lithium
products, (vii) changes in technology or the development of
substitute products, (viii) the uncertainties inherent in
exploratory, developmental and production activities, including
risks relating to permitting, zoning and regulatory delays related
to our projects as well as the projects of our partners in Quebec
and Ghana, (ix) uncertainties inherent in the estimation of lithium
resources, (x) risks related to competition, (xi) risks related to
the information, data and projections related to Sayona Mining or
Atlantic Lithium, (xii) occurrences and outcomes of claims,
litigation and regulatory actions, investigations and proceedings,
(xiii) risks regarding our ability to achieve profitability, enter
into and deliver product under supply agreements on favorable
terms, our ability to obtain sufficient financing to develop and
construct our projects, our ability to comply with governmental
regulations and our ability to obtain necessary permits, and (xiv)
other uncertainties and risk factors set out in filings made from
time to time with the U.S. Securities and Exchange Commission
(“SEC”) and the Australian Securities Exchange, including
Piedmont’s most recent filings with the SEC. The forward-looking
statements, projections and estimates are given only as of the date
of this press release and actual events, results, performance, and
achievements could vary significantly from the forward-looking
statements, projections and estimates presented in this press
release. Readers are cautioned not to put undue reliance on
forward-looking statements. Piedmont disclaims any intent or
obligation to update publicly such forward-looking statements,
projections, and estimates, whether as a result of new information,
future events or otherwise. Additionally, Piedmont, except as
required by applicable law, undertakes no obligation to comment on
analyses, expectations or statements made by third parties in
respect of Piedmont, its financial or operating results or its
securities.
1 Via its wholly owned subsidiary Piedmont Lithium International
US, LLC
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version on businesswire.com: https://www.businesswire.com/news/home/20230216005283/en/
Erin Sanders SVP, Corporate Communications & Investor
Relations T: +1 704 575 2549 E: esanders@piedmontlithium.com
Christian Healy/Jeff Siegel Media Inquiries E:
Christian@dlpr.com E: Jeff@dlpr.com
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