Minerals Income Investment Fund of Ghana (MIIF) will invest US$27.9 million (~A$51.4 million/£26.3 million) to acquire a 6% stake in the Ewoyaa Lithium Project of Piedmont Lithium Inc (ASX:NASDAQ:PLL, OTC:PLLTL) and partner Atlantic Lithium Limited.
MIIF, a sovereign wealth fund, will also provide an additional US$5 million (~A$7.8 million/£4 million), investment in Atlantic Lithium, of which Piedmont owns 9%.
The project-level funding is likely to be used for project development costs, with MIIF also contributing 6% of exploration and development costs within Atlantic’s Ghanaian portfolio on an ongoing basis.
There are several benefits in this investment which highlight the sovereign wealth fund’s endorsement of the Ghanaian hard rock lithium project.
A key benefit of the investment and ongoing contributions by MIIF will be a reduction in capex investments equally for Piedmont and Atlantic Lithium.
As Proactive reported last week, the strategic investment highlights the desirability of the Ewoyaa Lithium Project, de-risks the success of the project and sees MIIF contribute towards the development expenditure for the project.
Read: Piedmont Lithium investee Atlantic Lithium advances Ghanaian lithium portfolio with US$32.9 million funding
Multi-asset strategy
Piedmont has a multi-asset strategy to become one of the largest and lowest-cost diversified producers of high-quality, battery-grade lithium hydroxide in the world, serving the US electric vehicle market through its lithium hydroxide business in North Carolina and strategic investments in spodumene assets in the US, Canada and Ghana.
In August, the company announced its mooted acquisition of a 22.5% interest in Ewoyaa, subject to government approvals, as part of its agreement to earn a 50% equity interest in Atlantic’s Ghanaian portfolio.
Piedmont committed to fund the first $70 million of project capex and share additional capital costs with Atlantic on an equal basis, a move that will see it earn an additional 27.5% interest in Ewoyaa.
Following the investment by MIIF, Piedmont and Atlantic's stakes in the Ewoyaa Project will decrease to 47% each, prior to accounting for the Ghanaian government's free carried interest. Piedmont plans to allocate capex for the Ewoyaa Project through its cash flow from its North American Lithium joint venture in Quebec, Canada.
Piedmont will uphold its offtake agreement to buy 50% of the lithium concentrate produced at Ewoyaa over the life of the mine, based on a market pricing mechanism. This lithium concentrate will serve as the feedstock for Piedmont’s planned lithium hydroxide conversion facility in Tennessee, set to have an annual production capacity of 30,000 tonnes.
“The investment by MIIF and the significant endorsement this funding represents will further de-risk the Ewoyaa project," Piedmont Lithium (ASX:PLL, OTC:PLLTL) COO and Atlantic Lithium board Member Patrick Brindle said.
"We believe MIIF’s investment is a validation of both the work completed to date by our partners and the commitment of the Ghanaian government to support diversified mining development as the project advances toward mining lease approval expected later in 2023 and targeted first production in the second half of 2025.
“Ewoyaa is a core project for Piedmont Lithium and we welcome MIIF’s support as an equity partner in this important development.”
Investors should note that, at this stage, the agreement between Atlantic and MIIF is non-binding, and, therefore, there can be no certainty that an investment by MIIF will be concluded.
About Piedmont
Piedmont is developing a world-class, multi-asset, integrated lithium business focused on enabling the transition to a net zero world and the creation of a clean energy economy in North America.
The company aims to become one of the largest lithium hydroxide producers in North America by processing spodumene concentrate produced from assets in which it holds an economic interest.
Projects include the Carolina Lithium and Tennessee Lithium projects in the United States and partnerships in Quebec with Sayona Mining and in Ghana with Atlantic Lithium.
These geographically diversified operations will enable Piedmont to play a pivotal role in supporting America’s move toward energy independence and the electrification of transportation and energy storage.