Piedmont’s DFS for Tennessee delivers a solid US$2.5bn NPV

Nick Sundich Nick Sundich, April 21, 2023

Piedmont Lithium’s DFS for its Tennessee Lithium project was unveiled to investors this morning. Piedmont (ASX:PLL), which is one of the few ASX lithium stocks to have a supply contract with Tesla, delivered an NPV of US$2.5bn and a post-tax IRR of 32%.

 

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Piedmont’s DFS delivers the goods

The Tennessee Lithium project consists of a lithium deposit and a lithium hydroxide plant that will deliver 30,000 metric tonnes per year. It anticipates an annual steady state after-tax cash flow of US$317m and a payback of less than three years. However, it won’t come cheap – it will require an initial capital cost of US$809m.

Piedmont told shareholders it anticipates commencing construction in 2024.

 

Tennessee just one of three projects

Piedmont’s portfolio also includes the Quebec project (owned and operated in a JV with ASX peer Sayona Mining (ASX:SYA) as well as the Ewoyaa Lithium Project in Ghana – indirectly owned through a stake in Atlantic Lithium (ASX:A11).

A DFS for the latter is anticipated in mid-2023. This will be important not just for that project, but for Tennessee too because lithium from Ewoyaa will become the primary feedstock for Tennessee. A PFS was unveiled last September, outlining a 2Mtpa (million tonnes per annum) operation over 12.5 years with an initial capital investment of US$125m. At a grade of 6% lithium, this would equate to 255,000 tpa.

 

Piedmont (ASX:PLL) share price chart, log scale (Source: TradingView)

 

A ride for shareholders

Piedmont shares were down 6% on Friday and are down 20% in 12 months. But they’re up nearly 400% in 5 years. Lithium prices have corrected in the past 12 months and this has flowed through to the company’s share price. But the long-term fundamentals for lithium remain solid.

 

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