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Piedmont Lithium establishes strategic partnership with IronRidge Resources

Piedmont Lithium Inc. has entered into definitive agreements to establish a strategic partnership with IronRidge Resources (IRR) Ghana through the purchase of an equity stake in IRR, staged project investments to earn a 50% interest in IRR’s Ghana-based lithium portfolio, and a binding supply agreement for 50% of IRR Ghana’s planned spodumene concentrate (SC6) production.

IRR Ghana has a notable portfolio of spodumene prospects, anchored by the promising Ewoyaa Project. The Ewoyaa Project has a current Mineral Resource of 14.5 million t at 1.31% Li2O with vast exploration potential. The Ewoyaa Project has the potential to be a large, low-cost SC6 producer.

Due diligence

In January 2021, IRR published a scoping study for the Ewoyaa Project forecasting an average of 295 000 tpy of planned SC6 production, an US$345 million after-tax net present value and an after-tax internal rate of return of 125%, for initial capital investment of US$70 million. The Ewoyaa Project capitalises on a good location, less than one mile from a major national highway and only 70 miles to the major port of Takoradi. The site is also directly adjacent to high voltage power and is expected to have a low environmental impact, due to reliance on solar and hydroelectric generating capacity to power the facility. Piedmont conducted extensive due diligence over the past several months, including through site visits to Ghana, and reportedly believes that IRR Ghana has significant upside potential.

Piedmont will invest approximately US$15 million (£10.8 million) to acquire a 9.47% equity interest in IRR (the subscription), and will appoint one director to IRR’s Board of Directors. Piedmont will also have the opportunity to earn a 50% stake in IRR Ghana by investing: (i) US$17 million to fund ongoing exploration and a definitive feasibility study over the next 24 months to earn an initial 22.5% project interest; and (ii) a further US$70 million in 2023 – 2025 to fund the construction of the Ewoyaa Project to earn an additional 27.5% project interest, which would bring the total to 50% ownership in IRR Ghana. Piedmont and IRR have also entered into a binding SC6 supply agreement, conditioned on Piedmont completing its earn-in obligations, pursuant to which IRR will supply Piedmont 50% of IRR Ghana’s planned SC6 production (currently estimated to be 147 500 tpy) at market prices on a life-of-mine basis.

The subscription is expected to close in August 2021 subject to satisfaction of conditions precedent with the project investment expected to be staged over a 3 to 4 year period, leading to initial production in 2025.

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