Piedmont Lithium Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2025

There are 5 speakers on the call.

Operator

Thank you for standing by. My name is Carrie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 twenty twenty five Piedmont Lithium Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. I would now like to turn the call over to Mr. John Coslow, Investor Relations at Piedmont Lithium. Please go ahead.

Speaker 1

Thank you, and good afternoon. Welcome to Piedmont Lithium's first quarter twenty twenty five earnings call. Joining us today from Piedmont Lithium are Keith Phillips, President and Chief Executive Officer and Michael White, Chief Financial Officer. Keith will provide an introduction and review key updates from the quarter, and Michael will then review our financial results. Keith will provide closing commentary before we transition to a Q and A session.

Speaker 1

As a reminder, today's discussion will contain forward looking statements related 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 metrics in this presentation, and reconciliations to the most directly comparable GAAP financial measure can be found in today's earnings release and the appendix to today's slide presentation. Any references to EBITDA mean adjusted EBITDA. References to shipments are shipments of spodumene concentrate and tons are dry metric tons.

Speaker 1

Copies of our earnings release and presentation, in addition to a replay of this call, will be available on our website at piedmontlithium.com. With that, I'll turn the call over

Speaker 2

to Keith Phillips. Keith? Thanks, John, and thank you all for joining us today. 2025 has opened with considerable volatility in lithium markets. Prices have fluctuated as the industry continues to navigate shifts in global supply and demand, macroeconomic uncertainty and evolving policy landscapes.

Speaker 2

Despite this backdrop, our team remains focused on what we can control, delivering operational and commercial excellence, maintaining capital discipline and positioning our business for long term success. We shipped 27,000 tons to customers to start the year. North American lithium produced a little over 43,000 tons, a decline from the record production level seen in the second half of twenty twenty four. Variable weather conditions impacted mill utilization, but the team reacted quickly to mitigate the effects on a go forward basis. On the corporate side of the business, we continue to advance toward the merger with Sayona Mining that we announced in November.

Speaker 2

We achieved several notable milestones recently and I will spend time at the end of the call providing more detail on the merger process and why we are so excited about the transaction. First, let's move on to Slide four to discuss the quarter at NAL in more detail. NAL saw a 15% quarter over quarter decline in production through March and produced approximately 43,000 tons to start the year. Importantly, the operation remains on track to meet the guidance provided by Sayona Mining called for production of 190,000 to 210,000 tons for their year ended 06/30/2025. The challenges encountered in Q1 were largely driven by volatile weather patterns to begin the year with a stretch of warm and wet days followed by a cold snap resulting in freezing conditions and hurting performance principally in the crushing circuit.

Speaker 2

While this type of weather pattern is atypical, it's exactly what we and our partners at Syanna plan for when installing the crushed ore dome to allow bypassing of the crushing circuit. The crushed ore dome's capacity is roughly one point five days in mill feed, so additional mobile crushing capacity was deployed to support the primary crushing activities as needed. There were several positive developments at NAL during the quarter including the operation setting a record 72% recovery in March thanks to process optimization. In April, Sayana announced the final drill results from the 2024 exploration program and the focus now turns to producing an updated mineral resource estimate for the asset. The program confirmed mineralization outside of the existing MRE and supports our belief that NAL is in the early stages of its life with significant potential to expand its resource base, extend mine life and scale production over time.

Speaker 2

Now let's turn to Slide five for an update on the state of the lithium market. While recent price volatility has captured headlines, it's important to recognize that these fluctuations are not new or unique to the industry. The market is always in cyclical and periods of pricing pressure have historically preceded sharp rebounds driven by structural demand growth. Demand fundamentals remain strong. EV adoption continues to accelerate and grid storage applications are growing across the globe.

Speaker 2

The long term trajectory for lithium demand remains intact. While there are plenty of lithium projects in the pipeline to meet this growing demand, the low pricing we've experienced in the past two years is beginning to have an impact. Greenfield developments are generally moving more slowly, including our own, due to the financing challenges associated with current pricing. In due course, we expect this growing demand and slowdown in project development to ultimately lead to tighter lithium market conditions and stronger pricing. I'd like to take a moment to focus on developing a secure supply chain for critical minerals in North America, and I'll talk more about that on Slide six.

Speaker 2

As technology and the global demand for energy evolve, it is clear that national energy dominance cannot be achieved without critical minerals. And the global supply demand imbalance becomes even more apparent when looking at North America. Lithium demand will continue to accelerate across the region driven by the growth in EV and ESS demand and massive investments in battery manufacturing. The reality is that today North America is heavily reliant on imported lithium and current production levels are nowhere near what's needed to meet future demand. At the same time, OEMs and battery manufacturers are seeking reliable IRA compliant sources of supply, creating a clear opportunity for projects like ours.

Speaker 2

Trade policy is also emerging as a key factor shaping the market outlook. Recent and proposed tariffs could significantly alter supply chains and increase the strategic value of local supply. As policy continues to evolve in support of energy security and onshoring, we believe assets in The U. S. And Canada will be increasingly favored by customers in capital markets.

Speaker 2

Now I'll turn the call over to Michael White to discuss our financial results.

Speaker 3

Thanks, Keith, and good afternoon. We shipped approximately 27,000 dry metric tons for the quarter and recognized $20,000,000 in revenue. This is down from the previous quarter where we shipped approximately 55,700 dry metric tons and recorded $45,600,000 in revenue. While our shipments and revenue declined sequentially, this was expected due to variations in customer requirements and in line with our guidance. Our fourth quarter GAAP net loss was $15,600,000 or a loss of $0.71 per share and adjusted net loss was $10,100,000 or a loss of $0.46 on an adjusted per share basis.

Speaker 3

Included in our GAAP results were $3,600,000 in unrealized loss on equity securities related to Atlantic Lithium, one point four million of transaction costs related to our proposed merger with Siona Mining, dollars three hundred thousand related to restructuring charges associated with our twenty twenty four cost savings plan and approximately $200,000 in other items. We ended the year with $65,400,000 in cash compared to $87,800,000 in cash at the start of 2025. Now moving to Slide nine to discuss our realized pricing in more detail. Our realized price per metric ton was $741 for the quarter. On an FC6 equivalent basis, our realized price per metric ton equated to $823 While lithium prices improved from the lows seen in the second half of twenty twenty four, the backwards looking nature of our customer contracts and the decline in pricing since the March have had a negative impact on our realized pricing to begin the year.

Speaker 3

Despite the decline, we are pleased to report a relatively strong price for the quarter in the context of the soft market and pricing reported by other producers. Now moving to Slide 10 to discuss our sources and uses of cash. Operating cash flows for the quarter were negative $19,000,000 driven by timing of working capital associated with sales of spodumene concentrate and our net loss. Operating cash flows improved $9,000,000 from the first quarter of twenty twenty four as we made large cash payments in Q1 twenty twenty four to settle 2023 spot sales where the final price settlement was less than the provisional payment we received. Additionally, our net loss narrowed versus the comparable period as we are recognizing the benefits of our 2024 cost savings plan, which we completed at the end of last year.

Speaker 3

Cash outflows for our joint ventures as well as capital expenditures were approximately $2,000,000 in aggregate for the first quarter and met the low end of our Q1 guidance range. We anticipate an increase in cash contributions to our joint ventures and funding additional capital expenditures this quarter. However, the levels will remain modest as we look to preserve balance sheet strength. While our cash balance decreased from $88,000,000 at the end of Q4 to $65,000,000 at the end of Q1, we do not expect to see this type of degradation in the second quarter of twenty twenty five as the timing of working capital associated with sales of spodumene concentrate is driving short term cash movements. Further to this point, we expect our cash balance at the end of the second quarter to be similar to our cash balance of $65,000,000 at the end of Q1 of this year.

Speaker 3

Let's move to slide 11, where we provide our updated 2025 outlook for shipments, capital expenditures and investments in joint ventures. We expect to ship 8,000 to 20,000 dry metric tons in the second quarter of twenty twenty five, with the variance related to a planned shipment, which is estimated to depart at the end of the quarter. We expect any shipments that leave after the end of Q2 to be accretive to Q3 shipment totals and will not impact our full year shipment outlook of 113,000 to 130,000 dry metric tons. Our 2024 shipping schedule is back end loaded and at times lumpy, but this is not dissimilar to 2024. As always, certain factors including shipping constraints and customer requirements may impact the timing of future shipments.

Speaker 3

For our CapEx outlook, we have reduced our full year range from $6,000,000 to $9,000,000 down to 4,000,000 to $6,000,000 This is the result of direct actions taken in relation to our land position for our Carolina Lithium project, whereby we have either deferred or opted out of certain land purchases that no longer make sense, especially during the continued Lithium downturn. Joint venture investments and advances are expected to be in the range of 2,000,000 to $4,000,000 in the second quarter and approximately 7,000,000 to $13,000,000 for full year 2025. This compares to $26,000,000 in 2024. Our outlook is subject to changes in market conditions and may vary materially. With that, I'll turn the presentation back over to Keith.

Speaker 2

Thank you, Michael. Turning to Slide 13, I'd like to provide a status update on our merger with Sionna Mining. After announcing the deal in mid November, we've been hard at work progressing the deal towards completion. This is a complex transaction, but we've been very pleased with the progress made to date and we continue to work diligently with our counterparts at Sayana. We recently made several announcements related to progress including the new name for the combined company, Alevra Lithium, and the names of the nominees to the Alevra Board of Directors.

Speaker 2

The deal has received regulatory clearance from Investment Canada and Hart Scott Rodino in The United States. CFIUS also completed their review and indicated they will take no further action with respect to the transaction. Members of the Piedmont and Syanna teams have been engaged in detailed integration planning, making sure that the company is ready to execute as a lever on day one. There are roughly a dozen different work streams focused on everything from corporate branding to project prioritization to measuring corporate synergies. We are in the SEC review process now and continue to expect that shareholder votes for both companies will occur in the coming weeks and the deal will close in mid-twenty twenty five.

Speaker 2

When we announced the transaction, we announced that Piedmont shareholders would receive $5.27 ordinary shares of Cyana Mining for each share of Piedmont lithium common stock held or 5.27 Cyana shares for each Piedmont CDI. This ratio was devised to result in an approximate fifty-fifty split between shareholders of Piedmont and Cyana on a fully diluted basis. After a review, the parties have agreed that a reverse stock split or share consolidation in Australian parlance makes sense as part of the transaction in order to improve a leverage appeal to institutional investors. The reverse split will occur at the Sayana level and be subject to their shareholders' approval. Sayana shareholders will receive one new Allevra share per 150 Sayana shares owned, and this will obviously impact the number of Allevra shares that Piedmont shareholders will receive in the merger.

Speaker 2

Additionally, Sayana is proposing a one for 10 ADR ratio for the American depository shares that will be listed on NASDAQ. A summary is laid out here on Page 14 and there will be more detail included in the merger circular we send to shareholders in coming weeks. Importantly, while these proposals will impact the number of shares outstanding, they are not expected to have any valuation impact. I'd like to conclude this afternoon's call with some brief comments on the benefits to Piedmont Lithium shareholders from our planned merger with Cyano Mining. On Slide 15, we've outlined some of the key benefits of bringing together our two complementary businesses.

Speaker 2

We believe the merger will create a larger, simpler and stronger company. With all of the tonnes produced at NAL coming under control of one company, Elephor will have increased relevance within the market and be a more attractive supplier of the industry. The combination also unlocks value for Piedmont shareholders by enabling the possible expansion of the NAL complex. The strong drill results we've seen at NAL indicate the possibility for meaningful resource and reserve expansion, hopefully leading to the possibility of an attractive brownfield expansion, spreading fixed costs over a larger operating base and further enhancing the economics of the operation. The transaction also brings Mobilin into our portfolio.

Speaker 2

Based on recent drill results reported by Sayana, Mobilin is a transformative growth project large, high grade, scalable. It's exactly the kind of asset customers are looking for to secure reliable sustainable lithium supply in North America. On the corporate side, we expect to realize synergies of approximately 15,000,000 to $20,000,000 annually and the merger secured committed funding of approximately $43,000,000 from resource capital funds. RCF has a significant history of delivering substantial returns and contributing to the advancement of critical mineral project development. Lastly, a unified corporate structure will consolidate strong operational credentials, streamline decision making, reduce duplication and better align operational and strategic priorities across all assets.

Speaker 2

In summary, we believe the long term fundamentals for lithium remains strong and the combination of Piedmont and Syanna to form the lever lithium will create a business that can operate through the cycles and generate sustained value for our shareholders. With that, we can turn the call over to Q and A.

Operator

Your first question will come from Noel Parks with Tuohy Brothers.

Speaker 4

Hi, good afternoon.

Speaker 2

Hey, Noel. How are you?

Speaker 4

Good, thanks. Good. Of course, uncertainty is the word of the day or the month. But you just mentioned tariffs and the effect they could have on supply chains. And do you anticipate a direct effect that could impact North America?

Speaker 4

Or are you thinking more sort of the ripple effects as other supplies, their economics change depending on how the tariffs are applied?

Speaker 2

Yes. No, good question. I think from a long term perspective, it'll be and we're early early innings here in terms of, you know, what may happen in terms of tariffs, whether they become a factory global economics in a way that haven't been for some several decades or or not. In in the long term, who knows? But I think having North American projects is critical and positive from that perspective.

Speaker 2

Certainly, to the extent there are tariff orders up around The US, that's a positive in the Caroline Lithium, for the Caroline Lithium project. In the near term with production in Quebec, mean between ourselves and Tesla sorry, between ourselves and Guyana, we ship most of the material to Asia. It's not impacted by tariffs. Shipments into The U. S.

Speaker 2

Will be impacted by tariffs. As I think I might have said last quarter at prices like the prices as low as they are, the tariff burden isn't that significant and we don't think it will affect customers' decisions on where the material goes, but but it's certainly a factor everybody's watching. And as a reminder, obviously, the tariff falls on the customer, the buyer of the material, not on us directly.

Speaker 4

Right, right. And I just wonder, the President's executive order that sort of put the spotlight on Critical Minerals. Just wonder if at this point, have you detected any impression it's made, any shifts in terms of just reception to the Carolina Lithium Project on the ground and locally. From what I understand, there's also a good bit going on with, you know, interest rates, real estate, and sort of everything in in that area of the country. So just wondering if you had detected any anything in the last couple of months.

Speaker 2

No. I I would say neutral on that. I think the the tone in the government of the in DC of the importance of critical mineral, that's very positive for us at many levels. And we think that will be positively seen locally as well. Just given the market we're in, you know, our focus in Carolina, our primary focus right now remains completing the permitting process.

Speaker 2

So, you know, we've got our mine permit. We're feeling good about the air permit for this year. Some positive signals recently on that. So that's good. So really buttoning up the the permitting before we would approach the rezoning process anyway.

Speaker 2

And then we're just faced with the reality, which I think everybody in the industry is that with spodumene prices at these levels, it's really not a great time to push the button on a project on on projects anyway. It's kind of it's kind of ironic. On the one hand, there's probably never been a better time to go to Washington to get support for a project. On the other hand, the lithium market conditions today, which I can't imagine can persist indefinitely, are are challenging. So it's just not a great time to be funding a project.

Speaker 4

Right. Thanks a lot. Bye bye. Thanks, Noel. Thanks, Noel.

Operator

There are no further questions at this time. I'll turn it back over to management for any closing remarks.

Speaker 2

Thanks very much, moderator, and thanks everybody for listening.

Operator

Thank you for your participation. This does conclude today's conference call. You may now disconnect.

Speaker 3

Thank you.

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Key Takeaways

  • In Q1 the company shipped 27,000 dry metric tons of spodumene concentrate and North American Lithium (NAL) produced just over 43,000 tons, a 15% decline quarter-over-quarter due to atypical weather impacting mill utilization, though a 72% recovery rate record was set in March.
  • Despite recent price volatility, management sees strong long-term lithium demand driven by accelerating EV adoption and grid storage growth, expecting current low pricing to slow greenfield developments and ultimately tighten supply and support prices.
  • The company highlights the strategic importance of building a North American critical minerals supply chain, noting U.S. and Canadian assets will be favored under evolving trade policies and IRA-compliant sourcing requirements, with tariffs likely having limited near-term impact on customer decisions.
  • Financially, Q1 revenue was $20 million on lower shipments, GAAP net loss totaled $15.6 million ($0.71/share) and adjusted net loss was $10.1 million ($0.46/share), cash ended at $65.4 million, and 2025 guidance calls for 113,000–130,000 tons shipped, CapEx trimmed to $4–6 million, and JV investments of $7–13 million.
  • The proposed merger with Sayona Mining to form Alevra Lithium has cleared key regulatory hurdles, is expected to close mid-2025, will consolidate operations at NAL, add the Mobilin growth project, and unlock annual synergies of $15–20 million with $43 million in committed funding.
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Earnings Conference Call
Piedmont Lithium Q1 2025
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