• Shareholders have until Thursday morning to register a vote in a merger that would create a standout North American lithium champion
• Piedmont approval is the last step required to sign off on merger of equals with Sayona, with shareholders urged to support deal
• Comes as North American Lithium JV hits its straps and combined miner positions for lithium rebound

 

Special Report: A merger that would create North America’s largest hard rock lithium producer is at risk, with its proponent urgently trying to track down retail investors across regional Australia. 

Piedmont Lithium (ASX:PLL) faces a Thursday deadline to contact investors who need to give their tick of approval to approve a ~$500 million merger with Sayona Mining (ASX:SYA).

Sayona shareholders have already approved the deal, which will consolidate the North American Lithium operation in Quebec, Canada.

But the hold-up has come about with the structure of the dual-listed Piedmont, which also plans to develop its Carolina Lithium project in the US and holds 50% of the Ewoyaa lithium project in Ghana.

Ahead of a vote last week, proxies Piedmont shareholders offered a close to 98% vote in favour of the deal. Resounding.

Yet the July 31 meeting had to be adjourned to Monday, with just 41.52% of the ordinary Nasdaq-listed shares and ASX-listed CHESS Depositary Interests set to vote. US corporations rules dictate at least 50% of the shares must be voted at the now August 11 meeting.

The discrepancy is worst in the Aussie market. Around 25% of Piedmont shares are held as Australian CDIs. But just a small portion of those, 6% in total, have been given voting indications.

The race is now on to have those shareholders approve the deal ahead of the deadline at 7am AEST on Thursday, August 7.

 

Watch: Piedmont CEO urges Aussies to back lithium mega-merger

 

Lithium revival

It comes with the North American Lithium (NAL) operation seriously hitting its straps.

The mine in Quebec produced 58,533 dry metric tonnes of spodumene concentrate at an average grade of 5.2% Li2O in the June quarter.

That’s a 35% quarter on quarter improvement, with recoveries hitting a record 73% and unit operating costs dripping 5% to US$791/dmt in US dollar terms and 10% in Aussie dollar terms to $1232/dmt.

While lithium prices have been tough thanks to oversupply at refineries in China, NAL has proven one of the most resilient operations through the lithium downturn.

Its management of the market has been solid as well, using forward-priced sales to keep its sales prices within 4% of the March quarter on a USD basis at US$682/dmt despite a 15-20% fall in spot markets.

Sayona owns 75% of the mine, with Piedmont boasting another 25%. The scrip-based merger of equals would create the largest standalone lithium miner in the North American market, as well as a range of high-quality growth options to pursue when the market turns around.

There have been strong scents in recent times that the bottom has been hit and better times are ahead with electric vehicle sales and battery storage capacity continuing to increase globally and especially in Asia.

Spodumene prices have charged from the low US$600/t range to close to US$800/t in the past month after mine shuts in China, with lithium carbonate prices also around US$1000/t higher over the same period.

Piedmont shares have run 15% higher in the past month, while Sayona’s are up 5%, with the combined market cap of the two companies now over $500 million.

 

 

This article was developed in collaboration with Piedmont Lithium, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.