True2022Q3000172820512/31900017282052022-01-012022-09-3000017282052022-10-28xbrli:shares0001728205pll:AtlanticLithiumMember2022-09-30xbrli:pure
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-Q/A
(Amendment No. 1)
__________________________
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2022
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the transition period from _______ to ________
Commission File Number 001-38427
___________________________________________________________
PIEDMONT LITHIUM INC.
(Exact name of Registrant as specified in its Charter)
_________________________________________________________________________________________
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Delaware |
36-4996461 |
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(State or other jurisdiction of incorporation or
organization) |
(I.R.S. Employer Identification No.) |
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42 E Catawba Street
Belmont, North Carolina
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28012 |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
(704) 461-8000
___________________________________________________________
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
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Common stock, par value $0.0001 per share |
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PLL |
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The Nasdaq Capital Market
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒
No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such
files). Yes ☒ No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Securities Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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☐ If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Securities
Exchange Act.
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Securities Exchange
Act).
Yes ☐ No ☒
As of October 28, 2022, there were 18,010,228 shares of the
Registrant’s common stock outstanding.
EXPLANATORY NOTE
Piedmont Lithium Inc. (the “Company”) filed its Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 2022 (the
“Original Form 10-Q”), with the U.S. Securities and Exchange
Commission (the “SEC”) on November 4, 2022. The Company is filing
this Amendment No. 1 to the Original Form 10-Q (this “Form 10-Q/A”)
solely to remove certain disclosures referencing our Equity Method
Investees’ prefeasibility study results that were not prepared in
accordance with Item 1300 of Regulation S-K. This amendment solely
relates to, and replaces, all information previously included in
Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
Except as described above, no other changes have been made to the
Original Filing, and this Form 10-Q/A does not modify, amend or
update in any way any of the financial or other information
contained in the Original Filing. Except as described below, this
Form 10-Q/A does not reflect events that may have occurred
subsequent to the filing date of the Original Filing.
Except as described above, this Amendment No. 1 does not amend,
update or change any other information set forth in the Original
Form 10-Q (including in the unaudited consolidated financial
statements included therein) and does not reflect or purport to
reflect any information or events occurring after the original
filing date or modify or update those disclosures affected by
subsequent events. Accordingly, this Amendment No. 1 should be read
in conjunction with the Original Form 10-Q and the Company’s other
filings with the Securities and Exchange Commission. This Amendment
No. 1 consists solely of the preceding cover page, this explanatory
note, Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations, and a signature page and the
exhibits filed herewith.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition
and results of operations should be read in conjunction with our
financial statements and related notes included elsewhere in our
Quarterly Report on Form 10-Q. The following discussion contains
forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those
discussed in the forward-looking statements. Factors that could
cause or contribute to these differences include those discussed
below and elsewhere in our Quarterly Report on Form 10-Q and those
in the sections of our Transition Report on Form 10-KT for the
six-month transition period ended December 31, 2021 entitled “Risk
Factors,” “Cautionary Note Regarding Forward-Looking Statements,”
and “Cautionary Note Regarding Disclosure of Mineral
Properties.”
This
management’s discussion and analysis
is a supplement to our financial statements (including notes)
referenced elsewhere in our Quarterly Report on Form 10-Q and is
provided to enhance your understanding of our operations and
financial condition. This discussion is presented in millions, and
due to rounding, may not sum or calculate precisely to the totals
and percentages provided in the tables.
Cautionary Note to Investors
In the U.S., we are governed by the Exchange Act, including
Regulation S-K, Subpart 1300 (“S-K 1300”) thereunder. Sayona and
Atlantic Lithium, however, are not governed by Exchange Act and
from time to time report estimates of “measured,” “indicated” and
“inferred” mineral resources as such terms are used in the 2012
Edition of the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (“JORC Code”). In March
2022, our partner, Atlantic Lithium, published a JORC Code mineral
resource estimate update for the Ewoyaa project. Also in March
2022, our partner, Sayona, published a JORC Code mineral resource
estimate update for the Authier and North American Lithium
projects. Although S-K 1300 and the JORC Code have similar goals in
terms of conveying an appropriate level of confidence in the
disclosures being reported, they at times embody different
approaches or definitions. Consequently, investors are cautioned
that public disclosures by Sayona, Atlantic Lithium, or us of
measures prepared in accordance with the JORC Code may not be
comparable to similar information made public by companies subject
to S-K 1300 and the other reporting and disclosure requirements
under the U.S. federal securities laws and the rules and
regulations thereunder.
Executive Overview
Piedmont Lithium is a U.S., development stage company advancing a
multi-asset, integrated lithium business in support of a clean
energy economy and America’s national energy security. We plan to
supply lithium hydroxide to the electric vehicle and battery
manufacturing supply chains in North America by processing
spodumene concentrate produced from assets we own or in part. Our
projects include our Carolina Lithium and Tennessee Lithium
projects in the southeastern U.S. and strategic investments in
lithium assets in Canada and Ghana. Subject to obtaining permits
and approvals, we plan to bring spodumene concentrate production
online in 2023 (Quebec) and 2024 (Ghana), lithium hydroxide
production online in 2025 (Tennessee), and our integrated
spodumene-to-hydroxide project in 2026 (North Carolina). Our
investments in Canada should provide the opportunity for near-term
revenue through production and offtake of spodumene concentrate.
Offtake agreements from our international investments are expected
to supply spodumene concentrate to our Tennessee Lithium project
for conversion to lithium hydroxide, while our proposed Carolina
Lithium project is a fully integrated spodumene-to-hydroxide
operation in North Carolina. These diversified operations should
enable us to have a pivotal role in supporting America’s energy
independence and the electrification of transportation and energy
storage.
Strategy
Our goal is to become a leading producer of lithium hydroxide in
North America, supplied by geographically diverse and sustainable
spodumene mineral resources. American demand for large vehicles and
the custom of driving relatively long distances, combined with
automakers’ plans for and commitments to electric vehicle
production, should continue to expand the demand for North American
lithium hydroxide. We believe our global portfolio of hard rock
lithium assets should support a level of estimated lithium
hydroxide production that will dramatically expand current
production in North America.
We believe spodumene concentrate represents the lowest-risk and
most commercially scalable raw material source for the production
of lithium hydroxide. Our plan to produce battery-grade lithium
hydroxide from spodumene concentrate will use the innovative
Metso:Outotec alkaline pressure leach process combined with a
number of processes commonly used in the lithium industry today. As
part of our strategy, we will continue to evaluate opportunities to
further expand our resource base and production
capacity.
Together with our foreign investments, we have four key capital
projects that are being developed on a measured timeline to provide
the potential for both near-term cash flow and long-term value
maximization. At production, we expect to have an estimated lithium
hydroxide manufacturing capacity of 60,000 metric tons per year,
compared to the current total estimated U.S. production capacity
of
15,000 metric tons per year. This expected lithium hydroxide
conversion capacity is supported by production and offtake rights
of approximately 500,000 metric tons of spodumene concentrate per
year.
Developing an Integrated Lithium Production Business—Key
Projects
Quebec
Piedmont Lithium owns an equity interest of 25% in Sayona Quebec,
which owns full interests in North American Lithium, the Authier
Lithium project, and the Tansim Lithium project. These projects are
located in the Abitibi region of Quebec, Canada. Additionally, we
own an equity interest of approximately 14% in Sayona Mining, which
is the parent company of Sayona Quebec, and we hold an offtake
agreement for the greater of 113,000 metric tons or 50% of
spodumene concentrate production at market prices, subject to a
price floor of $500 per metric ton and a price ceiling of $900 per
metric ton, from Sayona Quebec on a life-of-mine
basis.
The restart of North American Lithium is proceeding as
construction, procurement, recruitment, permit transfers and
approvals, and other restart activities are well advanced, and most
major equipment and machinery items required for the restart are
currently onsite. The majority of operational leadership has been
hired, and a 4-year mining contract has been awarded for the
operation of North American Lithium’s open pit. While potential
delays in restart activities could defer the start date of
production, we expect North American Lithium to begin spodumene
concentrate production in the first half of 2023.
Depending upon the successful commencement of production and
ability to produce 6% spodumene concentrate, shipments of spodumene
concentrate from North American Lithium could commence in 2023,
resulting in initial revenue generation from the operation as well
as the resale of product received through Piedmont Lithium’s
offtake agreement with Sayona Quebec.
In addition to spodumene mining and concentrate production, the
North American Lithium complex also includes a partially completed
lithium carbonate refinery, which was developed by a prior operator
of the project. Sayona Quebec recently announced the commencement
of a prefeasibility study for the completion of this facility.
Study results are expected in the first half of 2023.
Further evaluation of the production of lithium carbonate or
lithium hydroxide in Quebec may follow completion of the
prefeasibility study. In order for Sayona Quebec to proceed with
the construction and operation of a lithium carbonate conversion
plant or lithium hydroxide conversion plant, approvals are required
from both Piedmont Lithium and Sayona.
Ghana
We own an equity interest of approximately 9% in Atlantic Lithium
and have the ability to earn a 50% equity interest in Atlantic
Lithium’s spodumene projects in Ghana. This agreement includes an
offtake agreement for 50% of annual production at market prices on
a life-of-mine basis. The Ewoyaa project is Atlantic Lithium’s
flagship project in the Cape Coast region of Ghana, approximately
70 miles via a national highway to a major port, and is key for
transporting spodumene concentrate to our planned Tennessee Lithium
plant for conversion to lithium hydroxide.
In October 2022, Atlantic Lithium announced it had submitted the
mining license application for the Ewoyaa project to the Minerals
Commission of Ghana. We expect construction of the mine and
concentrator to begin in 2023 and production of spodumene
concentrate to begin in 2024, subject to the receipt of the mining
license, approval of environmental studies, and other statutory
requirements.
Tennessee Lithium
Tennessee Lithium (previously referred to as LHP-2) is expected to
be a world-class lithium hydroxide production facility located
within McMinn County in Etowah, Tennessee. With first production
targeted by the end of 2025, the facility is expected to produce
30,000 metric tons per year of lithium hydroxide, doubling the
current estimated U.S. production capacity of 15,000 metric tons
per year. The plant is expected to be one of the most sustainable
lithium hydroxide operations in the world and among the first to
use the innovative Metso:Outotec technology.
In October 2022, Piedmont Lithium was selected for a $141.7 million
grant from the DOE to expand domestic manufacturing of batteries
for electric vehicles and the electrical grid and for materials and
components currently imported from other countries. The funding
will support the construction of our Tennessee Lithium project,
which has an estimated cost of approximately $600 million. We
expect Tennessee Lithium to create approximately 120 new, direct
jobs.
On October 31, 2022, Piedmont Lithium submitted its construction
and operating conditional major non-Title V air permit application
for the its Tennessee Lithium project to the Tennessee Department
of Environment and Conservation.
In September 2022, Piedmont Lithium announced the award of a
front-end engineering design (“FEED”) contract to Kiewit
Corporation, a leading U.S. based Engineer, Procure, and Construct
(“EPC”) firm, and Primero Group, an EPC firm specialized in lithium
projects. We expect FEED, which commenced shortly after the
contract award, to be completed in the first half of 2023. Permit
applications for Tennessee Lithium are progressing, and subject to
receipt of all material required permits as well as the completion
of FEED and project financing, we expect to sign an EPC contract
for the construction of Tennessee Lithium. Contingent upon the
timely receipt and completion of items discussed above, we expect
to begin construction in 2023 with first production of lithium
hydroxide targeted by the end of 2025.
Carolina Lithium
Our fully-integrated Carolina Lithium project (“Carolina Lithium”)
is a development stage, hard rock lithium project located within
the Carolina Tin-Spodumene Belt and in close proximity to lithium
and byproduct markets. Carolina Lithium is expected to consist of a
mining operation, concentrator, and lithium hydroxide conversion
plant. A feasibility study completed in December 2021 estimated a
project capital investment requirement of approximately $1 billion.
The project is expected to produce 30,000 metric tons of lithium
hydroxide per year. Given the quality of this asset, integration of
the operation, strong infrastructure, and proximity to lithium and
byproduct markets, we believe Carolina Lithium should enable us to
be one of the lowest cost producers in the world.
We are currently engaged in permitting activities with state and
local representatives for Carolina Lithium. Our goal is to obtain
the necessary permits and rezoning in 2023, commence construction
in 2024, and begin production of lithium hydroxide in 2026. A
Prevention of Significant Deterioration – Title V Air Permit
application has been submitted and is under review by the North
Carolina Division of Air Quality for the Carolina Lithium project.
Piedmont Lithium has until January 2023 to respond to North
Carolina Division of Energy, Minerals, Land, and Resources second
additional information request; which progresses the mine permit
application.
Change in Fiscal Year End
Effective January 1, 2022, we changed our fiscal year end from June
30 to December 31. The six-month period from July 1, 2021 to
December 31, 2021 served as a transition period. Our fiscal year
2022 commenced on January 1, 2022 and will end on December 31,
2022.
Critical Accounting Polices and Estimates
Our management’s discussion and analysis of our financial condition
and results of operations is based on our unaudited consolidated
financial statements, which have been prepared in accordance with
U.S. GAAP. The preparation of these consolidated financial
statements requires us to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities as of the date of
the consolidated financial statements as well as the reported
expenses incurred during the reporting periods. Our estimates are
based on our historical experience and on various other factors
that we believe are reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under
different assumptions or conditions.
There have been no material changes in the significant accounting
policies followed by us during the nine months ended
September 30, 2022 from those disclosed in our Transition
Report for the six-month period ended December 31,
2021.
Components of our Results of Operations
Exploration and Mine Development Costs
We incur costs in resource exploration, evaluation and development
during the different phases of our resource development projects.
Exploration costs incurred before the declaration of proven and
probable ore reserves, which primarily include exploration,
drilling, engineering, metallurgical test-work, site-specific
reclamation, and compensation for employees associated with
exploration activities, are expensed as incurred. We have also
expensed as incurred engineering costs attributable to the
evaluation of land for our future concentrator and chemical plants,
development project management costs, feasibility studies and other
project expenses that do not qualify for capitalization. After
proven and probable ore reserves are declared, exploration and mine
development costs necessary to bring the property to commercial
capacity or increase the capacity or useful life will be
capitalized.
General and Administrative Expenses
General and administrative expenses relate to overhead costs, such
as employee compensation and benefits for corporate management and
office staff including accounting, legal, human resources and other
support personnel, professional service fees, insurance, and costs
associated with maintaining our corporate headquarters. Included in
employee compensation costs are cash and stock-based compensation
expenses.
Loss from Equity Investments in Unconsolidated
Affiliates
Loss from equity investments in unconsolidated affiliates reflects
our proportionate share of the net loss resulting from our
investments in Sayona, Sayona Quebec and Atlantic Lithium. These
investments are recorded under the equity method and adjusted each
period, on a one-quarter lag, for our share of each investee’s
loss. Our equity method investments are an integral and integrated
part of our ongoing operations. We have determined this justifies a
more meaningful and transparent presentation of our proportional
share of income in our equity method investments as a component of
our loss from operations. In the third quarter of 2022, we
reclassified our share of loss in equity method investments to
operating income for all periods presented. See Note
3—Equity
Investments in Unconsolidated Affiliates
for further discussion.
Other Income (Expense)
Other income (expense) consists of interest income (expense),
foreign currency exchange gain (loss), and gain on dilution of
equity investments in unconsolidated affiliates. Interest income
consists of interest earned on our cash and cash equivalents.
Interest expense consists of interest incurred on long-term debt
related to noncash acquisitions of mining interests financed by the
seller as well as interest incurred for lease liabilities. Foreign
currency exchange gain (loss) relates to our foreign bank accounts
and marketable securities denominated in Australian dollars. Gain
on dilution of equity investments in unconsolidated affiliates
relates to our reduction in ownership of Sayona and Atlantic
Lithium due to their issuance of additional shares through public
offerings and employee stock compensation grants.
Results of Operations
Three Months Ended September 30, 2022 Compared to Three Months
Ended September 30, 2021
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Three Months Ended
September 30, |
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2022 |
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2021 |
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$ Change |
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% Change |
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Exploration and mine development costs |
$ |
434,177 |
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$ |
5,563,028 |
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$ |
(5,128,851) |
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(92.2)% |
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General and administrative expenses |
7,160,482 |
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4,818,647 |
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2,341,835 |
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48.6% |
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Total operating expenses |
7,594,659 |
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10,381,675 |
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(2,787,016) |
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(26.8)% |
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Loss from equity investments in unconsolidated
affiliates |
(2,002,617) |
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(410,538) |
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(1,592,079) |
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387.8% |
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Loss from operations |
(9,597,276) |
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(10,792,213) |
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1,194,937 |
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(11.1)% |
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Other income (expense) |
29,684,376 |
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(69,146) |
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29,753,522 |
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* |
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Tax expense |
3,422,219 |
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— |
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3,422,219 |
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100.0% |
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Net income (loss) |
$ |
16,664,881 |
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$ |
(10,861,359) |
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$ |
27,526,240 |
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(253.4%) |
__________________________
* Not meaningful.
Exploration and Mine Development Costs
Carolina Lithium entered the development stage in December 2021. As
such, direct costs incurred in the three and nine months ended
September 30, 2022 were capitalized and recorded to “Property,
plant, and mine development, net” in our consolidated balance
sheets. Direct costs incurred in the three months ended
September 30, 2021 were recorded to “Exploration and mine
development costs” in our consolidated statements of
operations.
Exploration and mine development costs decreased $5.1 million, or
92.2%, to $0.4 million in the three months ended September 30,
2022 compared to $5.6 million in the three months ended
September 30, 2021. The decrease was primarily due to the
capitalization of direct costs totaling $2.7 million during the
three months ended September 30, 2022, as discussed
above.
Excluding the impact of capitalizing direct costs of $2.7 million
in the three months ended September 30, 2022, exploration and
mine development costs decreased $2.4 million, or 42.8%, to $3.2
million in the three months ended September 30, 2022 compared
to $5.6 million in the three months ended September 30, 2021.
The decrease in costs was primarily driven by a decline in
engineering, drilling and metallurgical testwork activities,
partially offset by an increase in employee compensation expenses
related to additional headcount in the three months ended
September 30, 2022 compared to the three months ended
September 30, 2021.
General and Administrative Expenses
General and administrative expenses increased $2.3 million, or
48.6%, to $7.2 million in the three months ended September 30,
2022 compared to $4.8 million in the three months ended
September 30, 2021. The increase in general and administrative
expenses was primarily driven by an increase in employee
compensation costs associated with the hiring of additional
management and support staff at our headquarters in Belmont, North
Carolina. Stock-based compensation expense was $1.1 million and
$0.5 million in the three months ended September 30, 2022 and
September 30, 2021, respectively.
Loss from Equity Investments in Unconsolidated
Affiliates
Loss from equity investments in unconsolidated affiliates
was
$2.0 million
in the three months ended September 30, 2022 compared
to
$0.4 million
in the three months ended September 30, 2021. The loss
reflects our proportionate share of the net loss resulting from our
investments in Sayona, Sayona Quebec, and Atlantic
Lithium.
Due to the timing of our equity investment in Atlantic Lithium, we
did not have income or loss from this equity investment in the
three months ended September 30, 2021.
Other Income (Expense)
Other income was $29.7 million in the three months ended
September 30, 2022 compared to other expense of less than $0.1
million in the three months ended September 30, 2021. The vast
majority of the increase was due to our gain on dilution in equity
method investments, specifically Sayona, of $29.4 million in the
three months ended September 30, 2022 and to a lesser extent
an increase in interest income of $0.4 million in the three months
ended September 30, 2022 compared to September 30,
2021.
Income Tax Expense
Income tax expense was $3.4 million for the three months ended
September 30, 2022 compared to $0 in the three months ended
September 30, 2021. The increase was mostly related to
deferred tax expense of $7.4 million recorded on the gain on
dilution of equity method investments of
$29.4 million
in the three months ended September 30, 2022, partially offset
by a $4.0 million tax benefit for a release in valuation allowance
against certain deferred tax assets in the three months ended
September 30, 2022.
Nine Months Ended September 30, 2022 Compared to Nine Months
Ended September 30, 2021
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Nine Months Ended
September 30, |
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2022 |
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2021 |
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$ Change |
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% Change |
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Exploration and mine development costs |
$ |
1,484,889 |
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$ |
12,865,364 |
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$ |
(11,380,475) |
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(88.5)% |
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General and administrative expenses |
20,199,852 |
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11,506,078 |
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8,693,774 |
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75.6% |
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Total operating expenses |
21,684,741 |
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24,371,442 |
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(2,686,701) |
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(11.0)% |
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Loss from equity investments in unconsolidated
affiliates |
(6,547,499) |
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(475,164) |
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(6,072,335) |
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* |
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Loss from operations |
(28,232,240) |
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(24,846,606) |
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(3,385,634) |
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13.6% |
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Other (expense) income |
29,583,405 |
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(223,763) |
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29,807,168 |
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* |
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Tax expense |
3,422,219 |
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— |
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3,422,219 |
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100.0% |
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Net loss |
$ |
(2,071,054) |
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$ |
(25,070,369) |
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$ |
22,999,315 |
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(91.7%) |
__________________________
* Not meaningful.
Exploration and Mine Development Costs
For purposes discussed above, direct exploration and mine
development costs related to development stage projects incurred in
the nine months ended September 30, 2022 were capitalized and
recorded to “Property, plant, and mine development, net” in our
consolidated balance sheets. Direct costs incurred in the nine
months ended September 30, 2021 were recorded as expense to
“Exploration and mine development costs” in our consolidated
statements of operations.
Exploration and mine development costs decreased
$11.4 million,
or 88.5%, to
$1.5 million
in the nine months ended September 30, 2022 compared to
$12.9 million
in the nine months ended September 30, 2021. The decrease was
primarily due to the capitalization of direct costs totaling
$7.9 million
in the nine months ended September 30, 2022.
Excluding the impact of capitalizing direct costs of
$7.9 million
noted above, costs decreased
$3.5 million,
or 26.9%, to
$9.4 million
in the nine months ended September 30, 2022 compared to
$12.9 million
in the nine months ended September 30, 2021. The decrease in
costs was primarily driven by a decline in drilling and engineering
activities, partially offset by an increase in engineering,
permitting activities and an increase in employee compensation
expenses related to additional headcount in then the nine months
ended September 30, 2022 compared to the nine months ended
September 30, 2021.
General and Administrative Expenses
General and administrative expenses increased
$8.7 million,
or 75.6%, to
$20.2 million
in the nine months ended September 30, 2022 compared to
$11.5 million
in the nine months ended September 30, 2021. The increase in
general and administrative expenses was primarily due to increased
professional fees, including legal and accounting services,
consulting services, and insurance expense as we became subject to
U.S. public company requirements as part of the Redomiciliation.
Employee compensation costs also contributed to higher general and
administrative expenses due to the hiring of additional management
and support staff at our headquarters in Belmont, North Carolina.
Stock-based compensation expense was
$2.5 million
and
$1.1 million
in the nine months ended September 30, 2022 and
September 30, 2021, respectively.
Loss from Equity Investments in Unconsolidated
Affiliates
Loss from equity investments in unconsolidated affiliates,
was
$6.5 million
in the nine months ended September 30, 2022 compared to
$0.5 million
in the nine months ended September 30, 2021. The loss
reflects our proportionate share of the net loss resulting from our
investments in Sayona, Sayona Quebec, and Atlantic
Lithium.
For purposes discussed above, we did not have income or loss from
our
equity investment in Atlantic Lithium in the nine months ended
September 30, 2021. We had only one quarter of income or loss
from our equity investment in Sayona Quebec in the nine months
ended September 30, 2021.
Other Income (Expense)
Other income increased
$29.8 million
to income of
$29.6 million
in the nine months ended September 30, 2022 compared to
$0.2 million
of expense in the nine months ended September 30, 2021. The
increase was mostly due to our gain on dilution of equity method
investments of
$29.4 million
in the nine months ended September 30, 2022 and to a lesser
extent an increase in interest income of $0.4 million in the nine
months ended September 30, 2022 compared to September 30,
2021.
Income Tax Expense
Income tax expense was
$3.4 million
for the nine months ended September 30, 2022 compared to $0 in
the nine months ended September 30, 2021. The increase was
primarily related to deferred tax expense of $7.4 million recorded
on the gain on dilution of equity method investments of
$29.4 million
in the nine months ended September 30, 2022, partially offset
by a $4.0 million deferred tax benefit for a release in valuation
allowance against certain deferred tax assets in the nine months
ended September 30, 2022.
Liquidity and Capital Resources
Overview
As of September 30, 2022, we had cash and cash equivalents of
$117.6 million compared to $64.2 million as of December 31, 2021.
As of September 30, 2022, our cash balances held in the U.S.
totaled $116.1 million, or 98.8%, and the remaining $1.5 million,
or 1.2%, of our cash balances were held in Australia. Our cash
balances in Australia can be repatriated to the U.S. with
inconsequential tax consequences.
Our predominant source of cash has been generated through equity
financing from issuances of our common stock. Prior to 2022, we had
entered into noncash seller financed debt agreements to acquire
land for Carolina Lithium. Since our inception, we have not
generated revenues, and as such, have principally relied on equity
financing to fund our operating and investing activities and to
fund our debt payments.
In October 2022, Piedmont Lithium was selected for a $141.7 million
grant from the DOE Office of Manufacturing and Energy Supply Chains
and the Office of Energy Efficiency and Renewable Energy under the
Bipartisan Infrastructure Law—Battery Materials Processing and
Battery Manufacturing to expand domestic manufacturing of batteries
for electric vehicles and components currently imported from other
countries. Funding from the grant is solely in support for the
construction our Tennessee Lithium project, which is estimated to
cost approximately $600 million.
Our primary uses of cash during the nine months ended
September 30, 2022 consisted of: (i) equity investments in
Sayona Quebec mainly for the operational restart of North American
Lithium totaling $13.0 million; (ii) purchases of real property and
associated mining interests of $15.7 million and exploration and
development expenditures of $5.1 million for Carolina Lithium;
(iii) advances to Atlantic Lithium for exploration and evaluation
activities related to phase one of the Ewoyaa project totaling $9.8
million; and (iv) working capital. As of September 30, 2022,
we had working capital of $113.7 million.
As of September 30, 2022, we had long-term debt of $0.2
million, net of the current portion of $0.5 million, related to
seller financed debt, as discussed above.
In March 2022, we issued 2,012,500 shares of our common stock at
$65.00 per share for $130.8 million. We received cash proceeds of
$122.1 million, which is net of $8.7 million in share issuance
costs associated with the U.S. public offering under our shelf
registration statement. As of September 30, 2022, we had
$369.2 million remaining under our shelf registration statement,
which expires on September 24, 2024.
Outlook
We expect our current cash balances to fund cash expenditures in
the fourth quarter of 2022 and fiscal year 2023 primarily related
to: (i) continued equity investments in Sayona Quebec primarily for
the restart of North American Lithium, (ii) continued cash advances
to Atlantic Lithium for phase one of the Ewoyaa project, (iii) real
property acquisition costs and engineering and permitting
activities associated with our Tennessee Lithium project, (iv) real
property and associated mineral rights acquisition costs and
continued permitting, engineering and testing activities associated
with our Carolina Lithium project, and (v) working capital
requirements.
As we progress our projects in accordance with our strategic
timeline, we expect to incur certain additional cash expenditures
in 2023, which will require additional equity or debt financing.
These additional cash expenditures primarily relate to: (i) funding
of phase two of the Ewoyaa project and (ii) the purchase of
long-lead equipment which is likely to occur in the first half of
2023 and the beginning of construction in the second half of 2023
for our Tennessee Lithium project. These additional cash
expenditures are dependent upon reaching certain milestones such as
completion of a definitive feasibility study and the decision to
proceed with phase two of the Ewoyaa project as well as obtaining
certain permits and approvals for the Tennessee Lithium project. As
we approach construction decisions for our lithium projects, we
will evaluate various project financing options, including possible
strategic partnering opportunities. We will also require approval
from our Board of Directors prior to proceeding with these
additional cash expenditures.
As of September 30, 2022, we had entered into land acquisition
contracts in North Carolina totaling $40.8 million, of which we
expect to close and fund $3.5 million throughout the remainder of
2022, $20.2 million in 2023, $15.6 million in 2024, and $1.5
million in 2025. These amounts do not include closing costs such as
attorney’s fees, taxes and commissions. We are not obligated to
exercise our land option agreements, and we are able to cancel our
land acquisition contracts, at our option and with de minimis
cancellation costs, during the contract due diligence period.
Certain land option agreements and land acquisition contracts
become binding upon commencement of construction for Carolina
Lithium.
We believe our current cash balances are sufficient to fund our
cash requirements for at least the next 12 months. In the event
costs were to exceed our planned expenditures, we will reduce or
eliminate current and/or planned discretionary spending. If further
reductions are required, we will reduce certain non-discretionary
expenditures.
We have submitted loan applications to the Advanced Technology
Vehicles Manufacturing Loan Program (“ATVM”) of the Loan Programs
Office of the DOE for potential funding of program eligible capital
costs associated with a concentrator and lithium hydroxide
conversion facilities for our proposed Carolina Lithium project and
a lithium hydroxide conversion facility for our proposed Tennessee
Lithium project. We cannot be certain that our loan applications
will be approved or will have terms acceptable to us. Additionally,
our eligibility for an ATVM loan for our Tennessee Lithium project
may be reduced as a result of our award of the DOE $141.7 million
grant for the same project.
Historically, we have been successful raising cash through equity
financing; however, no assurances can be given that additional
financing will be available in amounts sufficient to meet our needs
or on terms that are acceptable to us. If we issue additional
shares of our common stock, it would result in dilution to our
existing shareholders. There are many factors that could
significantly impact our ability to raise funds through equity and
debt financing as well as influence the timing of future cash
flows. These factors include, but are not limited to, permitting
and approvals for our projects, our ability to access capital
markets, stock price volatility, commodity price volatility,
uncertain economic conditions, and access to labor. See Part I,
Item 1A “Risk Factors.” in our Transition Report for the six-month
period ended December 31, 2021.
Cash Flows
The following table is a condensed schedule of cash flows provided
as part of the discussion of liquidity and capital
resources:
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Nine Months Ended
September 30, |
|
2022 |
|
2021 |
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|
Net cash used in operating activities |
$ |
(22,041,466) |
|
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$ |
(21,988,447) |
|
|
Net cash used in investing activities |
(45,794,340) |
|
|
(81,293,071) |
|
|
Net cash provided by financing activities |
121,179,738 |
|
|
114,297,676 |
|
|
Net increase in cash and cash equivalents |
$ |
53,343,932 |
|
|
$ |
11,016,158 |
|
Cash Flows from Operating Activities
Operating activities used $22.0 million and $22.0 million in the
nine months ended September 30, 2022 and 2021, respectively,
resulting in an increase in cash used in operating activities of
$0.1 million. The increase in cash used in operating activities was
primarily due to changes in working capital totaling $4.1 million,
partially offset by a decrease in net loss adjusted for noncash
items of $4.0 million in the nine months ended September 30,
2022 compared to the nine months ended September 30,
2021.
Cash Flows from Investing Activities
Investing activities used $45.8 million and $81.3 million in the
nine months ended September 30, 2022 and 2021, respectively,
resulting in a decrease in cash used in investing activities of
$35.5 million. The decrease in cash used in investing activities
was mainly due to a decrease in equity investments in Sayona for
purchases of Sayona’s common stock totaling $17.4 million, Sayona
Quebec primarily for the restart of North American Lithium totaling
$11.5 million, and Atlantic Lithium totaling $15.9 million. These
decreases were partially offset by increases in cash advances to
Atlantic Lithium for exploration and evaluation activities for
phase one of the Ewoyaa project totaling $9.8 million in the nine
months ended September 30, 2022 compared to the nine months
ended September 30, 2021.
Cash Flows from Financing Activities
Financing activities provided $121.2 million and $114.3 million in
the nine months ended September 30, 2022 and 2021,
respectively, resulting in an increase in cash of $6.9 million. The
increase in cash from financing activities was mainly due to a $7.3
million increase in net cash proceeds from issuances of our common
stock and cash exercises of stock options in the nine months ended
September 30, 2022 compared to September 30, 2021. The
increase in cash was partially offset by an increase in debt
payments totaling $0.4 million.
Item 6. EXHIBITS.
Exhibit Index
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Exhibit
Number |
Description |
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Amended and Restated Certificate of Incorporation of Piedmont
Lithium Inc. (filed with the SEC as Exhibit 3.1 to the Company’s
Current Report on Form 8-K12B filed on May 18, 2021) |
|
|
Amended and Restated Bylaws of Piedmont Lithium Inc. (filed with
the SEC as Exhibit 3.2 to the Company’s Current Report on Form
8-K12B filed on May 18, 2021) |
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Certification of Principal Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 |
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Certification of Principal Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 |
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Certification of Principal Executive Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 |
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Certification of Principal Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 |
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101.INS* |
XBRL Instance Document - - embedded within the Inline XBRL
document |
|
101.SCH* |
XBRL Taxonomy Extension Schema Document |
|
101.CAL* |
XBRL Taxonomy Extension Calculation Linkbase Document |
|
101.DEF* |
XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB* |
XBRL Taxonomy Extension Label Linkbase Document |
|
101.PRE* |
XBRL Taxonomy Extension Presentation Linkbase Document |
|
104* |
Cover page Interactive Data file (formatted as Inline XBRL and
contained in Exhibit 101). |
__________________________
*Filed
herewith.
+ Indicates management contract or
compensatory plan.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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Piedmont Lithium Inc. |
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(Registrant) |
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Date: February 17, 2023 |
By: |
/s/ Michael White |
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Michael White |
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Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting
Officer) |
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