Piedmont Lithium Inc.

Thank you for standing by. My name is Kathleen and I will be your operator today. At this time, I would like to welcome everyone to the first quarter 2024 Piedmont Lithium earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star 1 again. And now I will turn the call over to Irene Sanders, Senior Vice President of Corporate Communications and Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Piedmont Lithium's first quarter 2024 earnings call. Joining us today from Piedmont Lithium are Keith Phillips, President and Chief Executive Officer, who will provide the introductory remarks. Michael White, Chief Financial Officer, will then review our financial results, followed by Patrick Brindle, Chief Operating Officer, who will offer an update on our projects. Keith will then provide closing commentary before we transition to a live Q&A session. As a reminder, today's discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the company's actual results to differ materially from these statements are included in today's presentation earnings release and in our SEC filings. In addition, we have included non-GAAP financial measures in this presentation. Reconciliations to the most directly comparable GAAP financial measures can be found in today's earnings release and the appendix to today's slide presentation. Any reference in our discussion today to EBITDA means adjusted EBITDA. Further, references to shipments are lithium concentrate and metric tons are dry metric tons. Please note that copies of our earnings release and presentation, as well as a replay of this call, will be available on our website, piedmontlithium.com. With that, I'll turn the call over to Keith Phillips. Keith?

Thanks, Erin, and thank you all for joining us today for Piedmont Lithium's first quarter 2024 earnings call. As I like to do at the start of these calls, I will quickly reiterate our mission and strategy for those of you who may be new to Piedmont Lithium and our story. Piedmont is one of only three US-based lithium companies in production today. Our mission is to be a leading North American supplier of lithium resources to the electric vehicle supply chain. Our goal is to support U.S. efforts to reduce our reliance upon foreign nations for critical materials and strengthen our national energy security. Piedmont's strategy is based on hard rock production, and that is producing and eventually further processing spodumene concentrate from assets we own or in which we have an economic interest. Turning to the first quarter, the key points you'll hear about this morning are First, that North American lithium is ramping nicely with continued record production. We're really pleased with the path that operation is on. The team is doing a great job. Carolina lithium is now front and center with the receipt of our state mining permit. Alloya is progressing through the approvals process, and we're evaluating non-dilutive funding options. And lastly, we're keeping very focused on effectively managing costs, and we are on track to achieve the $10 million in annual cost savings we identified in the first quarter. Finally, in thinking of our outlook for the rest of the year, I wanted to highlight that 2024 is shaping up as a year of two halves for Piedmont Lithium. As we transition to shipments to our core customers under long-term agreements, we expect Piedmont's supply chain shipments to more than double from the first half of this year to the second half of 2024. Furthermore, our capital and investment spending was heavily weighted to the first quarter of the year, such that second half spending will be less than half of what was invested in the first half. If we get fortunate on the pricing side, we could have a really strong second half of the year. Shifting to slide four, let's start talking about Quebec. North American Lithium is now the largest producing spodumene operation in North America, and in the first quarter of 2024, the production ramp-up continued. The operation achieved record quarterly production, record lithium recoveries, and a record safety performance, truly an exceptional quarter and a tribute to the great work of the entire team up at North American Lithium. Key capital projects at the operation move toward completion, which are expected to result in an increase in production levels and a reduction in unit operating costs. The operational review performed in the first quarter by the joint venture partners, Piedmont and Sciana Mining, affirmed the direction of the operation's progress and the expected trajectories of both production and costs. We are optimistic that full run rate production levels at NAL will be achieved as expected in the second half of 2024. supporting our guidance that we expect to ship 126,000 tons from Quebec this year, with most of our shipments weighted to the back half of the year. Michael will talk more about shipments in his remarks. So the progress that's been made in the past quarter just underscores our excitement about the future of NAL, which is the absolute core asset for us. And with our favorable life of mine offtake agreement for qualified Inflation Reduction Act, IRA material, I believe NAL will be a great asset for Piedmont shareholders for the long term. Now shifting to Carolina Lithium, obviously the receipt of the state mining permit was a significant milestone and gating item achieved. Our team had been working with the state for two and a half years to make sure the project meets the state's exceptionally high standards for development and operations. While it's the project upon which Piedmont Lithium was founded, we haven't talked as much about Carolina in our first two earnings calls while we've been working on this key permit. But I believe it's the key project in our development portfolio. Carolina Lithium is a highly strategic 30,000 ton a year integrated mining to lithium hydroxide project that is well situated in the cradle of the lithium industry along the same resource that was the foundation of both Albemarle and Arcadium, the Carolina Tin Spodumene Belt. Looking at page six, some of the advantages of Carolina lithium is a highlight for those that aren't as familiar with the project. Based on technical studies, we expect Carolina to be a low-cost producer of spodumene concentrate and lithium hydroxide and a key contributor to the North American electric vehicle supply chain. The project should benefit from excellent infrastructure, including low energy costs, minimal transportation distances, a deep local talent pool, and proximity to local markets for industrial mineral byproducts. Carolina Lithium is also located in the heart of the growing U.S. battery belt, with many cathode battery and EV plants under construction or planned. The economics of the project should be compelling. As a U.S.-based project, Carolina is expected to benefit from the competitive corporate tax regime offered in the U.S., absence of significant royalties and the absence of a value-added tax assessed in countries like in China. After-tax returns are what matters, and we are not aware of any jurisdiction that better combines the benefits of significant spodumene resources, deep customer markets, and low royalty and income tax rates. Carolina should also benefit from supportive government programs such as the Inflation Reduction Act of 2022 and the Department of Energy's ATVM loan program. Looking at funding this project, we intend to leverage government funding via the ATVM loan program, as mentioned, and potential strategic partners who could provide some combination of capital, offtake, and technical support to reduce our capital burden. We've had a lot of interest in this project from a variety of car companies, battery manufacturers, and investors, and are encouraged by the conversations we've had thus far. As for timing, the ATVM loan and strategic partnering processes take some time to complete, So we'll be refining our timeline for the funding and rezoning of the project. We're focused on moving judiciously and doing this right. Carolina lithium is highly strategic to Piedmont, but frankly, it's also highly strategic for Gaston County, the state of North Carolina, and the entire United States. It's more important to do it right than to do it fast, and we'll always be cognizant of maximizing value for Piedmont shareholders as we advance the process. Let's turn briefly to Ghana and our joint venture project, Avoya. Patrick and our project team leadership were in Ghana in April meeting with the Atlantic Lithium team and had some good technical sessions as the project continues to advance through permitting and approvals process. Amoya is expected to be a large-spodging producer with attractive economics, a high return on invested capital driven by relatively low CapEx and relatively low operating costs. It's going to be a great project for us and our partners at Atlantic Lithium. Right now, we're in the process of retaining a financial advisor to assist in evaluating funding options for our share of the capital. We've received multiple inbound calls from interesting parties, all with the idea of minimizing dilution to Piedmont lithium shareholders. I also want to mention our Tennessee project, which is fully permitted and designed for 30,000 tons of lithium hydroxide production. Tennessee offers an additional opportunity to expand downstream capacity, and we will be evaluating its development timeline given the receipt of the Carolina mine permit. We believe Piedmont is well positioned for the long term with growth opportunities across our project portfolio, with the assets we own or have an interest. Our plan with each of these three projects is to invest in their development strategically and always with the goal of minimizing shareholder dilution. Michael will provide a more detailed discussion, so with that, I'll turn it over to Michael.

Thanks, Keith. Turning to slide nine, I'd like to provide a high-level review of our first quarter results. We shipped approximately 15,500 dry metric tons for the quarter and recognized $13.4 million in revenue. resulting in a realized price of $865 per metric ton. This compares to a realized cost per metric ton of $799. Notably, we ended the quarter with $71.4 million in cash. First quarter gap net loss was $23.6 million or $1.22 per share. Adjustments this quarter included a loss of $13.9 million related to the sale of our equity method investments in Siona Mining and Atlantic Lithium, a $1.4 million gain on equity securities, $1.8 million in severance and severance-related costs associated with our cost savings plan, $3.1 million associated with the tax effect of these adjustments, and to a much lesser extent, other costs. Including these adjustments, we reported a first quarter adjusted net loss of $11.9 million, or 61 cents per share. In the first quarter, we initiated our cost savings plan to achieve $10 million in annual operating cost savings and defer 2024 capital spending to 2025. We expect to achieve the majority of our cost savings in 2024. Turning to slide 10, We earned $13.4 million in revenue as a result of two customer shipments during the quarter and a positive $300,000 adjustment to revenue related to the final settlement of a November spot shipment. The majority of the tons we shipped during the quarter were tons which were originally scheduled to depart in December as part of a spot shipment but were delayed to January due to weather and port congestion. Included in our first quarter revenue was approximately $2 million of improved pricing related to the January shipment as lithium prices experienced double-digit growth between the date of shipment and the end of the first quarter. Our second smaller customer shipment during the quarter was part of a long-term customer supply agreement and reflected a significantly higher realized price than our January spot shipment. Turning to slide 11, I'd like to review our cash and working capital balances for the quarter. Our beginning and ending cash positions for the quarter were relatively flat at 71.6 million and 71.4 million respectively. We bolstered our cash position during the quarter by selling our entire equity holdings in Ciona Mining and a portion of our holdings in Atlantic Lithium for net proceeds of 49.1 million. We paid approximately $26 million for these shares in prior years. These sales aligned with our strategy as communicated during our fourth quarter call in February of monetizing non-core assets. Further, these sales had no impact on our joint venture ownership or offtake rights. We significantly improved our working capital balance by $32 million during the period. While we saw improvements across several categories, the most notable was a $21 million decline in current liabilities primarily related to cash payments made to settle 2023 spot sales where the final price settlement was less than the provisional prepayment we received. Moving to slide 12, I'm pleased to discuss our 2024 outlook. Under our offtake agreement with Sciena Quebec, we have the right to the greater of 113,000 metric tons of spodumene concentrate or 50% of annual production. As mentioned earlier, Our January spot shipment was scheduled in 2023 but rolled over into 2024. As a result, we now expect to ship approximately 126,000 tons this year. Based on current discussions with our customers, we plan to ship the majority of our tonnage in the second half of 2024. Note that factors including shipping logistics and customer requirements may impact the timing of deliveries. For capital expenditures and investments in and advances to affiliates, we expect to see a decrease of more than 50% in the second half of 2024 as compared to the first half of the year. Our forecasted capital expenditures primarily relate to continued advancement of our wholly owned Carolina Lithium and Tennessee Lithium projects, while investments in and advances to affiliates reflect cash contributions to Cyano-Quebec and advances to Atlantic Lithium for the OUYA project. As always, our current outlook is subject to changes in market conditions. With that, I'll turn it over to Patrick Brindle for a review of operations and project updates.

Thanks, Michael. We can now turn to slide 14 for an operational update on NAL. As Keith noted, we're pleased with the continued success of the ramp-up at NAL. The team there led by Sylvain Collard has done an excellent job getting operations to a nearly fully ramped rate. Concentrate production has ramped steadily from last July through this March, with new production records achieved each subsequent quarter. Safety has also improved steadily, with operations achieving their lowest recordable quarterly incident rate since March 2023. During the quarter, Piedmont accepted deliveries of 15,500, out of 58,000 dry metric tons shipped by NAL during the quarter, while the remainder of shipments were sold to third parties. Moving ahead now to slide 15, Q1 production at NAL increased 18% from the prior quarter to 40,439 dry metric tons. In March, operations achieved a record production month with 15,669 dry metric tons of spodumene concentrate production including three new daily production records set between 710 to 750 dry metric tons. Global lithium recovery reached a record 69%, exceeding the ramp-up target of 67%, while global recovery has averaged 62% during the July 2023 through March 2024 period. Average mill utilization during Q1 was 73%. We expect that this number will materially improve upon commissioning of the crushed ore dome. Construction of the crushed ore dome is now materially complete and has been tied into the existing operations. Commissioning activities are underway and should complete this quarter. The dome project, as well as a new crushed ore refeed system, should result in continued improvements to mill utilization rates, increases in production levels to full ramp rate, and a corresponding reduction in unit operating costs. NAL is forecasted to achieve full run rate production by the second half of 2024. Concluding now on NAL, ramp-up remains on track with NAL management's production target of 140,000 to 160,000 dry metric tons of spodumene concentrate from July 2023 to June 2024 and sales of 160,000 to 180,000 dry metric tons. I'll now move to a brief update on Ghana and the Awuja Lithium Project. As Keith mentioned, I was in Ghana last month together with Piedmont's project leadership team for a series of technical meetings with the development group at Awuja. Work continues with DRA Global EPCM contractor advancing optimization studies on the DMS-only spodumene concentrator while other social, environmental, mining, and infrastructure work streams progress. In Q1, Atlantic Lithium progressed an offtake partnership process for the JV portion of the offtake from Awuja. Atlantic has received bids from several interested parties and is now in the due diligence phase. Piedmont is also evaluating a similar offtake partnering process to support our portion of the capital requirements for Awuja. Atlantic Lithium is also planning to incorporate 2023 and 2024 drill results into an upgraded mineral resource estimate later this calendar year. Atlantic Management continues to work closely with the Minerals Commission and the Government of Ghana towards ratification of the project's mining lease. Here in the United States, we have our wholly owned Carolina and Tennessee lithium projects, and I'll provide a brief update. As you may know, both projects are strategically located in the growing battery belt and are critical to the goal of achieving some level of lithium self-sufficiency in America. As Keith spoke earlier about Carolina in depth, related to the receipt of our mining permit, I will just make a couple of comments from an operational perspective. We own, lease, or have the right to purchase all of the property within our newly received mine permit boundary. At the same time, we have actively worked to defer purchases of additional properties that sit outside of this permit boundary as a cash management exercise. This effort has materially improved our cash outlook for the remainder of 2024. With the receipt of our mining permit in hand, we will continue to engage with the local community, refine our development plans, and explore funding options. Over in Tennessee, at Tennessee Lithium, we're continuing discussions with the City of Ottawa and McMinn County to renew the option agreement for the project site. And as Keith stated, we're evaluating the timeline for this project with Carolina Lithium in the context of receipt of the state mining permit. That concludes our update on Feedmont's global project portfolio. With that, I'll turn it back over to Keith for an update on the market and our funding strategy.

Thank you, Patrick. I'd like to conclude our presentation with some thoughts about the lithium market. There's a narrative in the market that EV sales are imploding, and that is simply not true. In the first quarter of 2024, global EV sales were up 30%. the same increase as the market experienced a year ago. While there's been some softness in the U.S., this is a global story, and I imagine there are a lot of minerals and chemicals CEOs who would love to see 30% year-on-year growth in their key end markets. Several OEMs have announced April 2024 results and are showing continued year-over-year increases. Ford marked a 129% increase in EV sales from a year ago. Volvo grew 53% from the same period last year. Kia hit an all-time monthly EV sales record, up 61%. And the list goes on. Moving on to slide 18. Two years ago, we reached historically high prices for lithium. As you know, those prices have come down sharply, but around February, we began to see some recovery. Over the last 8 to 10 weeks, spodumene concentrate prices have risen by 30%, which is obviously good news for us as a spodumene concentrate supplier. We are hopeful the prices continue to recover, as we believe current prices are well below the incentive levels required to fund and develop most of the world's greenfield lithium projects. As you can see in the 3rd graph, we've experienced this volatility in lithium before. Lithium is a young, fast growing industry. Inevitably, demand growth will be more linear than supply growth, leaving the highs and lows we've experienced over the past decade. I expect this cyclicality to continue for some time as I think the market is at least 10 or 20 years away from reaching maturity. If I'm right, 2024 seems like an opportune time to be deploying capital into the sector. Moving to slide 19, I just want to highlight again Piedmont's strong leverage to a possible rise in lithium prices. The forward curve is in contango, and if prices rise, we believe we'll be a direct beneficiary. As you know, you really only have leverage to rising prices if you're actually producing something. NAL is North America's biggest spodumene producer, and through our offtake agreement, we get half or more of the material subject to a cost ceiling. So any improvement in lithium prices should directly impact our gross profit. Lastly, on page 20, we've outlined some of the key catalysts for the company for 2024, and we're making good progress with three boxes checked so far this year. We received our Carolina mine permit, we fortified our balance sheet by exiting some non-core investments, and we're on track to achieve the $10 million cost savings we identified in the first quarter. We will report on further progress in subsequent quarters, but our focus is really in two key areas, continued improvement in production volumes and unit costs at NAL, and focusing on advancing funding for Carolina and Arroyo with U.S. government agencies and key strategic parties. As always, the priority there is to maximize long-term value for Piedmont shareholders while minimizing equity dilution at the corporate level. That concludes our presentation portion of the call. Thank you for your time and attention. We'll shift to Q&A.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. And if you are called upon to ask your question and listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star 1 to join the queue. Your first question comes from the line of David Deckelbaum of TD Collin. Please go ahead.

Morning, Keith, Patrick, and team. Thanks for the prepared remarks today and the market overview. Keith, I wanted to start maybe just on some of the micro stuff for the balance of this year. Is there any color that you can give us to sort of inform what your expectations are for pricing today? Relative to what we're seeing on the index for the rest of the year as you ship more to some of your offtake partners, or maybe just contrasting. The shipments to date that have gone to your offtake partners and what the go forward is the rest of the year and how that might tie back to some better pricing.

Yeah, David, thanks for the question. So as you know, our first shipments were all in the spot market and the spot market evolved during 2023. So we were really receiving pricing kind of M plus one or kind of post delivery as opposed to the convention, which had been to receive pricing based on the shipment date. That ended up being a two, four, in some cases, six month difference and prices were falling rapidly. So it had a big impact on us and some others. Our contracts are, and I won't go into the specifics of them, but they're more traditional in that they're based on They're based on market reference prices on a lagged basis and they're based on, you know, in one case, it's based on the concentrate price. Another case is based on the hydroxide price. The lags are a little different. So, I think what you'll see is pricing that'll be smoother and. Certainly as the lags kind of look backward, you know, right now and going forward the next month or two or three, we would actually be negatively impacted by those lags with prices having fallen from 2023 into early 2024. And hopefully going forward, that'll reverse with things. So our contract, our customer requirements are really back-ended this year. So as we build into those shipments, we'll see considerably more shipments in the second half of this year. It'll be a unique half. And I think you'd see things be more steady from there on out. We still have some spot shipments probably later this year. And in the spot market, that market's evolving. And some other people, as you may have seen, have achieved better spot pricing in the last month or two than had been experienced two or three months earlier, partly through the approach to the market. So that's something we're considering as well.

Helpful color. Yeah, I wanted to shift gears just talking Carolina from a strategic perspective. You know, you discussed, obviously, the Tennessee's fully permitted. You know, I know that you're pursuing, I think, an ATVM loan application for Tennessee. You talked about financing options for Carolina and then, obviously, funding options for Iwulia. But I guess just to back up, I mean, obviously, the intention was to feed Tennessee lithium with Iwulia feedstock. Can Carolina be a project that you pursue as upstream only, or do you see a requirement to have a vertically integrated plan there as well that would sort of FID or at least come online in coincidence with the upstream side?

Yeah, we're at a point now with the mine permit received, that was a massive achievement for the team and it's really got us thinking about what the right timeline for development of the two big U.S. projects is. They're both large, large capital projects. It wouldn't be prudent for us to try to develop them simultaneously. So we'll be thinking about doing that sequentially. Carolina obviously has a significant advantage over Tennessee in that it has its own war body. So as we've had strategic conversations with people around Tennessee and around Carolina, the Tennessee project is exceptional. It's a great location, great infrastructure, great people in that location surrounded by customers. A lot of the same benefits as North Carolina, but it's not on a spodumene belt. So it relies on imported spodumene, and we've contemplated bringing that material from Ghana. Carolina has its own spodumene right on site, and the cost savings benefits of doing everything together are pretty substantial. So we have submitted an application for an ATVM loan at Tennessee. We formerly had applied for an ATVM loan for Carolina. We put that on hold when we proceeded on Tennessee. We'll make a formal decision in the communication here in the coming weeks and months as to what the cadence of these projects will be. But certainly we're excited about Carolina just because, again, it has its own ore body becomes a superior project. And when you think about project economics around the world, it's really interesting. We've gotten very close to this being in Quebec. NAL is doing really well, but for the time being, there's nowhere to send spodumene concentrate in North America. There is a customer of ours who's developing a facility, but there are no existing plants, which means you're sending material either directly or indirectly into China because that's where all the conversion capacity is. And the transport cost involved and the VAT involved average around $300 a ton. In Carolina, it's going to be about a dollar a ton to convey material from the concentrate plant to the chemical plant on the same site. Just a massive savings. And it'll be the only site on the planet where the chemical plant is on the same site as the mine. We may do the same thing at NAL. As you know, there's a kind of dormant, partially built facility there. But that has a huge strategic advantage. This is something we'll be thinking about. Thanks, Keith.

Your next question comes from the line of Austin Yoon from Macquarie. Please go ahead.

Morning, Keith and the team. Just one quick question from me, please. Firstly, congratulations again on the approval of the mining permit. I'm just wondering if you could share some color on the funding options. I understand you are trying to get some government support. Just wondering, like, any colors on the potential debt and equity split? That would be very helpful. Thank you.

Thanks, Austin. Yeah, it's a great question. So we were happy for our friends at Lithium Americas. They announced a loan package from the DOE several weeks ago. It was approximately 75% of the total funding package was an ATVM loan. They have corporate-level equity coming in from General Motors and from the market. Ioneer earlier, as you know, had secured an ATVM loan commitment a year or so ago. We've been looking at those and others. I think to getting debt funding in the range of, say, 65 to 75% of the total capital would be something we'd like to target. We'd like the equity. In an ideal world for us, the equity coming into the project would come from a partner or two And it would come at the project level rather than at the corporate level. If our market cap was what LAC's market cap was when they first brought in General Motors, we might happily do something at the corporate level. But with our current market cap, we're far more focused on project-level funding. And we've had conversations with a number of really substantial – sort of the A-list of people you think might care all care about Carolina. It's one of two significant U.S. spodumene projects. We talk a lot about location. We think in Ghana we have the best asset, best located lithium asset in all of Africa. We think NAL is by far the best located lithium asset in all of Canada, and we think Carolina is the best located lithium asset in the world. So people are looking at the project or interested in the project, and it'll take time. I mean, realistically, the ATVM process has been a two-year process for people. The DOE has commented recently they think the timelines can be expedited. We'll see. But we're viewing this funding process as sort of an 18 to 24-month process. Not a great time right now at these lithium prices to line up financing, frankly, but getting ready to kind of benefit from a hopeful – hope for recovery in the market will be good. So my guess is you'll see – you may see some partnering announcements later this year. Time will tell. But certainly we hope to bring that together, obviously, before project development later in 2025.

Great. Thank you. Just one quick question on our wire project. I understand the company is working on different funding options while minimizing the potential dilution. Would that have any potential impact on the offtake agreement you have for the project? I believe which is at the moment the assumption is around 50% of the production. Thank you.

Yeah, no, great question. So, our capital requirements for, I think, is around 120 million based on the DFS levels. So we're, you know, we're, you know, we're budgeting for a possible, you know, modest capital capex creep there. So our hope is to fund, is to use our offtake agreement and use our offtake right, which is for 50% of the material. So it's around 175 or 80,000 tons a year. high-quality concentrate a mile from the Atlantic Ocean. So it's material that can go anywhere, and there are a lot of people interested in it. Atlantic has obviously announced a process with an advisor where they're in touch with potential parties to secure funding for their share of the capital by committing their offtake to the funding party. We're going to do the same, and we have half the material, and really, In these offtake discussions, the question of value and funding and how much money you can raise all depends on how much material you're willing to commit. The more you can commit for longer, the more money you can raise up front. So that's something. We'll be hiring an advisor over the next several weeks and formally commencing that process. But we've had inbound inquiries and we have, we're confident, we're optimistic we may be able to raise all of the funding for our Awoya CapEx via committing the offtake to a customer. on kind of a prepaid basis, i.e. a loan. So that's something we'll be pursuing aggressively over the next several months.

Thank you.

Your next question comes from the line of Joseph Eaker of Roth MKM. Please go ahead.

Thank you. Thanks for taking the questions. Kind of continuing on the warrior topic first, there seems to be a bit of a debate out there about the timing of when a construction decision might occur there. What's your guys' current outlook on when you would have to actually fund that $120 million or so?

Yeah, I'll give a brief comment Patrick. Maybe you can chime in because Patrick's Patrick, as you know, was on the board of Atlantic lithium until we sold down our stake. He was just in Ghana a week or 2 ago. He's closer to some of the details. I mean, ultimately our requirement, so we've, we've kind of earned a 22 and a half percent stake in the project by. Funding exploration of the definitive feasibility study to earn the other 27 and a half percent to get us to 50. We need to fund the 1st, 70Million of development capitals. You know, a small amount of that's already been funded frankly. and then our share of the remainder. So that's a commitment we made and we're very comfortable with it because we're earning into a great project and we think at an attractive level. So the real question then is, when do you get to the point where you have FID essentially? And that's a little bit of a moving target as it is for any project. There are a number of approvals still required. There's engineering work still being done. I think the Atlantic guys have conveyed a sense that they're hopeful that this can be kind of wrapped up in the second half of this year. My expectation is it'll more likely spill into next year, not for any reason related to Atlantic or Ghana, but just because it's the mining business and things tend to take time and drag. And in some cases, we're looking at government ratification of mining leases, et cetera. And those things, you know, they never really move on the timeline you hope they move. Our view is we're likely to be in a position in the first half of next year where we'll begin to really fund that in, in earnest and then the funding will take place over time. It's not like we'll write a 70Million dollar check in January. It might be 4Million one month, 12Million the next, et cetera, as you build out the plant over 12 to 18 months. So that's our best, that's my best perspective. Patrick, anything to add?

No, nothing to add other than, you know, we continue to work together with our partners at Atlantic, and they are working really hard in trying to move the ratification of the mining lease through Parliament. That's a timeline that we collectively don't control. That's in the hands of government. That's a principal gating item for the project to move forward alongside other EPA minerals commission, mine operating permit, et cetera, regulatory approval that the project still requires before a decision to mine can be taken by the partners.

And Joe, just a further thought, you know, people, I have conversations all the time about people, you know, characterizing Avoya as a funding commitment, which it is. We view it very much as an investment opportunity. It's an exceptional project. The return, you know, that The CapEx and OpEx are really competitive on a global scale, and it's the kind of project that can get built in a down market, which is not necessarily the case for a lot of other higher CapEx projects. So, from our perspective, it's a really high return opportunity to put money to work. We'd like to get that money from third parties who are – and we have this OpTech agreement, and we don't need the material. We don't have a Tennessee Lithium built to take the material. So to the extent we have 175 or 80,000 tons a year of material we can commit to somebody else who needs it, who will loan us the money to build the project, it's something we're quite attracted to. Okay.

Fair enough. And then shifting over to NAL, given the improvements you guys have made, what's the long-term goal in your guys' mind for annual production rate and cash operating costs? on a per ton of spodumene basis?

It's a joint venture operated by Cyana. So to some extent, we're limited on what we're comfortable saying to get ahead of them because they're the operator. I'm on the board of the joint venture. We're very active in the joint venture. But fundamentally, we sort of rely on them to provide guidance and we follow it. But they did publish a definitive feasibility study We're optimistic that cost will trend toward that, whether they achieve DFS levels, that'd be hard in an inflationary environment like we've been in. But we think cost will improve meaningfully with some of these capital projects that are being completed, particularly the Dome. We think production levels will increase meaningfully. So the DFS targeted 226,000 tons a year. I think that's probably a stretch goal in my own view, but I think exceeding 200,000 tons a year is something I think the JV hopes to accomplish. And I think we hope to get to that run rate in the second half of this year. So that'll be more tons at lower unit costs. And it will make the asset quite competitive. And the more tons, I mean, we get the greater of 113,000 tons a year or 50%. So up to 226, the JV benefits the most from increased production. But that's good for us. It makes the JV that much more viable. We own 25% of the JV. So we're excited to see production ramp up. And I think One thing we haven't talked about, but I think there's been a lot of drilling going on with NAL. It was a big announcement last fall. I think you'll see future announcements from Cyana and the joint venture. This is a very large, you know, potential mineral resource. I think the opportunity for future resource and reserve increases, mine life extensions, perhaps even production increases in the medium term is pretty interesting. And I think NAL is going to go from an asset that has been misunderstood given its sort of history to being a very highly strategic asset. We think it's by far the best located asset in Quebec. It's 40 miles from rail. It's 40 miles from the town of Val d'Or. Every other project is really in some version of the hinterlands in the frozen tundra of the north. So it's really advantaged, and we think it's going to get bigger and better, and we're very excited about it.

Okay.

Thanks for the color.

I'll turn it over. Thanks.

Your next question comes from the line of Gregory Lewis of BTIG. Please go ahead.

Yeah, hey, thanks, and good morning, everybody, and good afternoon. Keith, I did want to touch a little bit more on some of your comments you've been talking about, you know, the give and takes between going forward with Tennessee and obviously North Carolina, and congratulations on that. I guess my question is around, because the ATVM loan is in process already in Tennessee, how does the sequencing adapt if we have a better line of sight on securing financing for the ATVM? I think you mentioned for North Carolina, it might take 18 to 24 months. How do we think about that pool of money going to both projects in terms of you know, making that decision to move forward?

Yeah, we need to make a decision reasonably soon as to which project we're going to advance first. You know, that's, and we'll articulate that, you know, reasonably soon, i.e. not today, but, you know, hopefully by 4th of July. And we need to, and we're doing a lot of work on different scenarios, but fundamentally, the ATVM process is very involved. The government does exceptionally deep diligence work as you'd expect. A lot of the work that's been done on Tennessee benefited from the work that had earlier been done by the DOE team on Carolina. It's the same chemical plant. So a lot of the technology work is the same. So the work that's been done is largely transferable from a technical perspective. But I think in either event, we haven't advanced so far in Tennessee that we're weeks away from a loan commitment and giving up that's a big deal where it's not that far along. And for strategic reasons, we've been optimistic about the Carolina mine permit for some time. So I think we're in an environment where we think lithium prices are still at, I would characterize a depressed level, like a level where building a billion dollar plus project is something that even if you could do it, it might not be the right time to do it. We've seen other companies announce similar things. So we're not in a hurry. We think there's massive strategic value. As we think about our business, I mean, we're a joint venture partner in the biggest botany producer in all of North America. We have an offtake agreement associated with that. It's very favorable and it's sort of an asset in its own right. We have a lawyer, which is relatively near term production that low cap X. And then we have these big strategic projects, which are realistically. 20, you know, second half of the second half of the decade kind of production. So it's really important to get it right. It's really important to get the funding, right? Get the right partner or partners. to come in to help technically, help with offtake, and help with funding, and to do it on a basis that's at least dilutive. So we're going to be patient. We're not in a hurry. But I think our timing is excellent because we expect to see positive momentum in the lithium market, and the strategic interest remains very, very strong. And I think our timing might end up being pretty darn good to bring this all together over kind of 2025 and 6 from a funding perspective.

Okay, great. And then I did want to touch on, you know, thanks for the macro higher-level slides. You know, I mean, despite what a lot of people say, you know, EV penetration continues to increase, you know, just under that backdrop, has there been any change in cadence, right? I mean, I feel like for, you know, obviously you're having multiple customer conversations, multiple offtake around multiple projects. Has that kind of cadence changed at all over the last couple months just simply as, you know, lithium pricings have stabilized, kind of recovered, you know, EV demand has slowed, but it's still up. Has there been any kind of change or is it kind of, you know, hey, you know, the conversations that we were having six months ago are kind of the same ones we're having now?

Yeah, I would say it's, I think it's changed. It's, you know, with different parties that might have changed, there are one or two parties who think they've kind of achieved a lot of what they need for lithium in the next several years. I'm talking about customers here and customer funding. There are others who have arisen who are making big investments who need supply. But on a macro basis, I would say demand from big blue chip customers for substantial amounts of lithium, way more than we can produce or any one of these projects can produce, remains very strong. Strategic interest is very strong. Hasn't wavered at all. To some extent, it's more active now with prices lower and people trying to be opportunistic. But we're in a position to take our time and bide our time, and we will. But interest is, I would say, frothy, particularly for an asset like an American or Canadian asset where there's only so much North American material that's really going to get developed on a meaningful timeline. And of that, very little of it, frankly, is spodumene. And I would say just about everybody has come to the realization that while there's some interesting things, some other things that are pretty interesting, the probability of success with the spodumene operation is basically 100%. I mean, you may have execution issues, but Anybody with a good spodumene ore body can produce a material that can be turned into battery-quality hydroxide or carbonate. That's still to be proven by a lot of other people with a lot of other projects. So the strategic guys get that, and I think they're increasingly focused on spodumene where they can find it, particularly in good locations.

Super helpful. Thank you very much.

Thank you. Thanks, Greg.

Your next question comes from the line of Bill Peterson of J.P. Morgan. Please go ahead.

Hi, everyone. This is Mihima Kakani on for Bill Peterson. Maybe starting with Carolina, what is your latest thinking on pursuing rezoning of the land for mining purposes? Is that sort of a 2024 story or is it 2025? And then can you maybe also touch on any estimated costs associated with this process?

Yeah, no, great question. The costs associated with it are pretty modest. I mean, there's some engineering studies we'll be doing as part of that process, but it's It's, you know, through the life of the rezoning process, it's in the single digit millions of dollars. I think from a timing perspective, we're looking at the project kind of holistically. And as we think about a funding timeline that's really 18 to 24 months from the time we commence it, and we're just now really sort of commencing it, you know, the rezoning process we think of as a sort of six to nine month process. And the question is, when's the right time to do that? We've kind of reached a conclusion that the right time to do that is probably during 2025. We're in an election year, we're in May, you know, we'd be bumping up against timelines if we kind of rushed it. And we don't think it's the right thing for us to do or for the county, frankly, for us to rush what's a pretty important process. This is the biggest economic kind of development project in the county in years and years and years, if not ever, from a capital perspective. So our plan with that is to really prepare ourselves properly over the course of this year to kind of embark on that formally in 2025.

Okay, thank you for that, Kelly. Maybe a second question on NAL. Do you expect to get to your internally projected, you know, normalized cash cost level in the back half of this year considering you'll get to full run rate production or is there room for cost to move even lower in 25 and beyond?

I'll give you my answer. Patrick can pipe in if he has a different view. I think we're going to see pretty substantial progress this year. I think Patrick mentioned the inventory adjustments that affected costs in Q1 that Zion had reported. I think those are reversed and kind of worked their way average out over time. But I think on a cash cost of production basis, we hope to see substantial improvement in, we hope to see improvement in Q2 and meaningful improvement the second half of the year. And I would think we should be at kind of run rate. And then it's really a question of, are you in a quarter or two where the ore is of higher grade or quality and maybe there's movements. But I think we expect to hit those targets or internal targets by the end of the year. Do you agree with that, Patrick?

Yeah, I agree with that. We would expect as production increases to see meaningful improvement in unit operating costs on a time-produced basis. I think we mentioned last quarter. We're still working through. Some of the old underground works in the in the pit and that will persist. Through the greater part of 2024, so I think. Even going into the 1st, half of 2025, there's still some room. Or some level of cash operating cost improvement. As we get through those old works, and we're back into kind of fresh rock.

Okay, appreciate it. Thank you. Thank you.

Your next question comes from the line of Greg Jones of BMO Capital Markets. Please go ahead.

Good morning, Keith and team. My first question is regarding the timing of shipments for 2024 and looking forward. I think I heard Michael comment that the reason for the back half weighted shipments this year was related to timing of customer demand. How should we think about sales heading into 2025 and beyond? Do you expect that those might smooth out as the amount that you sell under contract increases relative to spot sales?

Yeah, listen, I think, so this is an unusual year in that we had a delayed shipment. So we're shipping 126,000 tons versus 113 on a normal basis. So 113 would be the kind of expected number for 2025, unless there's some delays later this year. And it's also an unusual year in that we're transitioning into customer shipping. So our two customers are kind of gearing up to receive material. We think they'll be fully geared up over the course of this year to do so. So right now where we sit, between the two customer contracts, they account for around 110,000 tons a year. Our entitlement is 113,000 tons a year. So effectively, all of our material will be shipped to our contract customers beginning in 2025. and on a relatively smooth basis. Now, to the extent those shipments all go by vessel, there's a possibility of things being lumpy and having shipments, you know, two shipments, one quarter, one shipment, the next, et cetera. So that's something we'll be working with our partners at Cyan on the actual shipping schedule for next year in the calendar. And we're not quite there yet. But, yeah, this is just an unusual year. A, we have the extra shipment. B, our customers are ramping up. And they don't just need the material now, but they do need it later. this year, so that's why we have the back-ended shipments. That may work to our benefit from a pricing perspective. It may not. Who knows? We can't predict lithium prices, but this will be a somewhat unusual year.

Thank you. And then regarding Tennessee and Carolina, I appreciate the comments that your team made earlier on the call around assessing the timing of the two projects. There was a note in today's release that Piedmont has exited the purchase agreement for the industrial complex near Tennessee. Can you please elaborate on that decision? And is there any read through that we should take in terms of that, meaning Carolina might jump ahead in the development sequencing?

Yeah, it's a good question. I would think of it more as a cash management thought. So when we secured the option on the core property in Tennessee that's permitted, We became aware of a property just down the road, very close by. It was an industrial property that had a lot of existing infrastructure that had shut down. It was an old foundry, and it was available for sale. And we were in a little bit more of a frothy market where we thought, gee, if we can pick that up for $4 or $5 million, it's close by. It's got some infrastructure that might be helpful. There may be capital efficiencies. So we optioned that property. We thought that made sense, and we think it did at the time. As we kind of move forward and we realized it was a nice to have, we didn't need to have it. Our technical studies on the Tennessee Lithium Project did not contemplate having that property. And writing a check in a difficult market where we're, you know, selling non-core assets and laying people off, we just decided we'd just walk away from that property. You know, it was a potential benefit for us. We hadn't really even done all the engineering work yet to figure out how much it might benefit. So it was a decision we made. It has nothing to do with the core property. Um, where we, um, are permitted. And I wouldn't read into it anything about Carolina or the decision. And who knows we may 1 day secure that property again, or some other property in the area. There's lots of property that might be available, but that was really kind of a tactical decision just based on cash management in a down market. Thanks.

And one final question, if I could. The DOE Loan Program Office recently clarified that it may fund production or mining and extraction activities as eligible expenses. In relation to Carolina, is there understanding that this could form a portion of the mine funding in addition to what you may be pursuing under the ATVM loan program, so you could sort of benefit from both aspects of this more recent announcement?

Yeah, no, we saw that. We noted that announcement with interest. That's good. As you know, as you may know, the ATVM program doesn't extend itself to the pure mining operations. It does extend a lot of the, you know, what you think of as, what I think of as the downstream part of the upstream business. So the concentrate plant would qualify. The mining activity would not qualify. And the mining share of the overall CapEx is not that high. So as we've thought about Carolina historically, we've assumed we wouldn't have availability for a DOE loan for that mining activity. That's something we're obviously reevaluating now. That will be good news. And the team's just really beginning to digest that and what it really means. But, yeah, it's interesting. There's a lot of activity in D.C. around, you know, U.S. critical minerals projects and global critical minerals projects. So we're still in discussions with the DFC around Ghana, for instance, So that's encouraging. Great. Thank you. Thank you.

Your next question comes from the line of Stephen Richardson of Evercore ISI. Please go ahead.

Hi. Good morning. Sorry to jump on late here. A couple quick ones, Keith. So on the previous comments about the timing of the offtake shipments from NAL and what the balance of the year and just kind of squaring what Michael said earlier in the script in terms of you could have some more spot shipments in the back part of the year. Are you dependent on Tesla's ramp up at Corpus? You probably don't want to talk too much about your customers, but are you dependent on their ramp up? Is that creating some uncertainty in terms of what you'll deliver for the balance of the year?

Well, as you said, I don't want to talk about other customers specifically, but I think when you have a project like this with long-term offtake ability, people take the material. So each of our customers are taking material into supply chains that didn't exist a year or two ago. So the material that's going to our other customer is kind of going through a process where the converter they're using to convert that material is kind of effectively building capacity for that as well. So it's just, I think it's a natural thing. Yes, it's true. If either one of these customers needs less material later in the year than they're currently expecting, we would turn to spot shipments for that material. The spot market's evolved in a way that we think we can do better on spot shipments than we have done in the past, just based on some of the announcements we've seen from people like Pilbara and Albemarle and others. But, yeah, it's possible. I think, listen, we'll get to a regular cadence with each of our customers, you know, hopefully later this year. If it slips into 2025, that's okay. Interestingly, as you may recall when we announced these, they're not long-term agreements. One of them is three years. It's really 25 months. And one is four years. I'm confident each of our customers is going to want to renew those. Those will be discussions we'll have over time. But so long as we're having material coming out of any of what we want to ship somewhere, we're really happy with the two customers we have and with the agreements we have and looking forward to fulfilling them as their requirements really kind of evolve.

Okay. That's clear. And then can you remind us as well, the payment terms on these, I'm assuming, is it fair to assume that you get paid more promptly on the offtakes than you do what you sell in the spot market, just in terms of, I appreciate some of the comments earlier on working capital?

Yeah, it's interesting. It's sort of the opposite in that the spot shipments are generally done via trading companies who are generally happy to prepay for the material. So let's say it's a $10 million ship, but they might make a provisional payment of of 80 or 90% of the value of the shipment up front. So that's what happened to us last August when prices were over 3,000. We got a big provisional payment in August, and we had to reverse all that, and we actually owed money to the customer because by the time it settled, it was after the delivery had occurred. In that case, I think five months later. So with our contract shipments, they pay on standard terms we've negotiated. They don't prepay. They pay reasonably promptly after shipment, and the timing is reasonably good, and I think We're hopeful that on average we'll be paid by them before we have to pay the JV. We have 30 days effectively to pay the JV for the material. So it's interesting. We'd rather shift to our long-term customers. We think the terms are generally better for us and they're more stable. One of the advantages of the spot market is you can get people to prepay for the material. It costs you. It's not free. It's a funding cost associated with it, but you can get the money up front.

Understood. Okay. It's been a lot of things asked about Carolina. Just one last one on my part. So understood the comments on zoning sounds like a 2025 affair. Can you just remind us where you are on EPA and how that fits in? And then, you know, considering this kind of timeline plus the funding and partnership conversations, when would be the right timeline for your next cut at a DFS, acknowledging that you've done multiple kind of runs at this over the last couple of years?

Yeah, we haven't given a lot of thought to updating the technical study, but we've obviously been updating technical work on an ongoing basis. We did front-end engineering design in Tennessee last year, spent a lot of money, did some good work on that. There were some good learnings from that. So I think as you think about the timeline, I think we're going to be commencing these funding discussions and strategic conversations and DOE conversations this quarter. They're already sort of beginning, but we're going to formally begin them. And they'll run their course. And the strategic partnership process could be multiple parties involved, depending how it rolls out. It could be announcements this year. But I think bigger comprehensive funding conclusions will kind of take place really over the course of 2025. And as we think about the timeline, we think development decisions probably, give or take, two years from now. It could be earlier. And there's a question, as we prepare for this, Just the idea, if lithium markets recover more quickly, we can move things more quickly if we want to. But at the time, that's sort of the way we're thinking about it. In terms of updating technical studies, we haven't really given that a lot of thought. We are updating technical work internally. We will at some point around kind of the conclusion of a partnering process, maybe bring new economics to the market. But generally speaking, we think the economics of the project remain really compelling, both projects, frankly.

and EPA, Keith?

Oh, sorry. Yeah, that permit, you know, the air permit is underway. I think we're hoping to accomplish that air permit this year. I think we have October sort of slotted in as a target, but these are moving targets. Some of the details around requirements have changed during the permitting process, so we're accommodating that and doing fresh work, but I think we see, you know, we've obviously received an air permit in Tennessee. We received an air permit for our Kings Mountains property or four years ago. We're pretty comfortable with that process. We don't see that as a particularly significant risk, but from a timing perspective, that's something we're targeting for the second half of the year. Okay. Thanks. Thank you. Thanks, Steve.

There are no further questions. I will now turn the conference back over to Irene Sanders for closing remarks.

Thank you. That concludes our call today. As a reminder, you can find our earnings release, presentation, and a replay of this call on our website. And we thank you for your time and interest in Piedmont Lithium.

Thanks, everybody.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.