Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- North American Lithium (NAL) achieved steady-state operations and set new production records in Q2 2024.
- Piedmont Lithium Inc (ASX:PLL, Financial) successfully implemented a $10 million cost reduction plan for 2024.
- The company has consolidated its US lithium hydroxide development strategy, focusing on a phased approach in North Carolina.
- Positive feedback from potential offtake partners for the Ewoyaa joint venture in Ghana.
- Piedmont Lithium Inc (ASX:PLL) ended Q2 2024 with $59 million in cash, indicating strong liquidity.
Negative Points
- The company reported a GAAP net loss of $13.3 million for Q2 2024.
- Realized price per metric ton of spodumene concentrate was only slightly above the realized cost, indicating tight margins.
- The lithium market is currently in a pricing down cycle, affecting overall profitability.
- Development timelines for major projects like Carolina Lithium are extended due to unfavorable market conditions.
- Significant capital expenditures and investments are deferred, impacting project timelines and growth.
Q & A Highlights
Q: Given the strong 2Q production, spodumene production and comments and NAL has now reached a steady state as of June, wanted to gauge how much further upside do you think can be achieved relative to 2Q production levels as we look through the back half of the year?
A: (Patrick Brindle, COO) The target production at NAL is around 210,000 tons a year. We're operating at that level now, so 50,000 to 55,000 tons a quarter should be sustainable going forward.
Q: What are your expectations on further cost reductions through the back half of the year at NAL with the crushed ore dome now complete?
A: (Keith Phillips, CEO) Operating costs are improving meaningfully and should be sub $700 a ton on a cash cost basis delivered to Quebec City. In today's pricing environment, NAL is a cash flow breakeven or positive enterprise with huge leverage to any increases.
Q: Is Tennessee completely shelved for now? And what does the shift in strategy to North Carolina mean for the timing of North Carolina?
A: (Keith Phillips, CEO) Tennessee and Carolina were always intended to be developed in sequence. With the mine permit in North Carolina and current market conditions, neither project will be developed in today's market. We are advancing Carolina on a measured pace, and FID is unlikely to happen in the next 24 months.
Q: How do you think about the offtake timeline for Ghana and balancing that project versus North Carolina?
A: (Keith Phillips, CEO) Ewoyaa is a great project but requires stronger pricing for development. We are confident in securing funding from offtake parties on a non-dilutive basis, but development will likely be deferred unless markets improve.
Q: Can you provide some guidance on when there might be an updated feasibility study for the larger scale project at Carolina?
A: (Keith Phillips, CEO) We don't have current plans to publish an updated study. We are constantly updating our thoughts and doing optimization studies, but no immediate plans to publish.
Q: How are you thinking about feedstock sourcing requirements for the larger scale project at Carolina?
A: (Keith Phillips, CEO) There are many spodumene sources available for an American conversion project. We expect to secure spodumene on a longer-term basis from various sources, including Quebec, Brazil, and Australia.
Q: Could you provide additional detail on opportunities to monetize noncore assets?
A: (Keith Phillips, CEO) Our projects are core, but we own shares in Atlantic Lithium and some land in North Carolina that isn't core to our project. These don't amount to the same quantum as previous exits but make a difference at the margin.
Q: Could you remind me if there's anything else that needs to be done on the permitting side of things in Carolina?
A: (Keith Phillips, CEO) We need the air permit for the chemical plant operation, which we hope to secure in the first half of next year, and there is the rezoning process. We are advancing the project toward a decision but being careful and disciplined about it.
Q: Is there a scenario where you would consider bringing on the mine in a staggered fashion, with the conversion facility delayed years beyond that?
A: (Keith Phillips, CEO) We could develop it in different scenarios, but the location is particularly conducive to chemical conversion, making it interesting for strategic parties. The project on an integrated basis holds together well.
Q: How quickly could you envision turning around and arriving at satisfactory new terms with potential partners in the event of a rebound in lithium pricing?
A: (Keith Phillips, CEO) The parties that care still care intensively. We are not in a hurry to develop the project right now due to the current pricing environment. Conversations continue, and we are advancing the project toward a decision.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
