Piedmont Lithium Inc. (NASDAQ:PLL) Q1 2024 Earnings Call Transcript

Piedmont Lithium Inc. (NASDAQ:PLL) Q1 2024 Earnings Call Transcript May 9, 2024

Piedmont Lithium Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Thank you for standing by. My name is Caitlyn, and I will be your operator today. At this time, I would like to welcome everyone to the First Quarter 2024 Piedmont Lithium Earnings 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 Instructions]. And now, I will turn the call over to Erin Sanders, Senior Vice President of Corporate Communications and Investor Relations. Please go ahead.

Erin Sanders: Thank you, operator, and good morning, everyone. Welcome to Piedmont Lithium’s first quarter 2024 earnings call. Joining us today from Piedmont Lithium are Keith Phillips, President and Chief Executive Officer, who will provide the introductory remarks; Michael White, Chief Financial Officer, will then review our financial results, followed by Patrick Brindle, Chief Operating Officer, who will offer an update on our projects. Keith will then provide closing commentary before we transition to a live Q&A session. As a reminder, today’s discussion will contain forward-looking statements relating 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 measures in this presentation. Reconciliations to the most directly comparable GAAP financial measures can be found in today’s earnings release and the appendix to today’s slide presentation. Any reference in our discussion today to EBITDA means adjusted EBITDA. Further, references to shipments are lithium concentrate and metric tons are dry metric tons. Please note that copies of our earnings release and presentation as well as a replay of this call will be available on our website, piedmontlithium.com. With that, I’ll turn the call over to Keith Phillips. Keith?

Keith Phillips: Thanks, Erin, and thank you all for joining us today for Piedmont Lithium’s first quarter 2024 earnings call. As I like to do at the start of these calls, I will quickly reiterate our mission and strategy for those of you who may be new to Piedmont Lithium and our story. Piedmont is one of only three U.S.-based lithium companies in production today. Our mission is to be a leading North American supplier of lithium resources to the electric vehicle supply chain. Our goal is to support U.S. efforts to reduce our reliance upon foreign nations for critical materials and strengthen our national energy security. Piedmont’s strategy is based on hard rock production and that is producing and eventually further processing spodumene concentrate from assets we own or in which we have an economic interest.

Turning to the first quarter, the key points you’ll hear about this morning are, first, that North American lithium is ramping nicely with continued record production. We’re really pleased with the path that operation is on. The team is doing a great job. Carolina Lithium is now front and center with the receipt of our state mining permit. Ewoyaa is progressing through the approvals process and we’re evaluating non-dilutive funding options. And lastly, we’re keeping very focused on effectively managing costs and we are on track to achieve the $10 million in annual cost savings we identified in the first quarter. Finally, and thinking about our outlook for the rest of the year, I wanted to highlight that 2024 is shaping up as a year of two halves for Piedmont Lithium.

As we transition to shipments to our core customers under long-term agreements, we expect Piedmont’s spodumene shipments to more than double from the first half of this year to the second half of 2024. Furthermore, our capital and investment spending was heavily weighted to the first quarter of the year, such that second half spending will be less than half of what was invested in the first half. If we get fortunate on the pricing side, we could have a really strong second half of the year. Shifting to Slide 4, let’s start talking about Quebec. North American Lithium is now the largest producing spodumene operation in North America and in the first quarter of 2024, the production ramp up continued. The operation achieved record quarterly production, record lithium recoveries and a record safety performance, truly an exceptional quarter and a tribute to the great work of the entire team up at North American Lithium.

Key capital projects at the operation moved toward completion, which are expected to result in an increase in production levels and a reduction in unit operating costs. The operational review performed in the first quarter by the joint venture partners Piedmont and Sayona Mining affirmed the direction of the operation’s progress and the expected trajectories of both production and costs. We are optimistic that full run rate production levels at NAL will be achieved as expected in the second half of 2024, supporting our guidance that we expect to ship 126,000 tons from Quebec this year with most of our shipments weighted to the back half of the year. Michael will talk more about shipments in his remarks. So the progress that’s been made in the past quarter just underscores our excitement about the future of NAL, which is an absolute core asset for us.

And with our favorable life of mine offtake agreement for qualified Inflation Reduction Act, IRA material, I believe NAL will be a great asset for Piedmont shareholders for the long term. Now, shifting to Carolina Lithium. Obviously, the receipt of the state mining permit was a significant milestone and gating item achieved. Our team had been working with the state for two and a half years to make sure the project meets the state’s exceptionally high standards for development and operations. While it’s the project upon which Piedmont Lithium was founded, we haven’t talked as much about Carolina in our first two earnings calls while we’ve been working on this key permit. But I believe it’s the key project in our development portfolio. Carolina Lithium is a highly strategic, 30,000 ton a year integrated mining to lithium hydroxide project that is well situated in the cradle of the lithium industry, along the same resource that was the foundation of both Albemarle and Arcadium, the Carolina Tin-Spodumene Belt.

Looking at Page 6, some of the advantages of Carolina Lithium is a highlight for those that aren’t as familiar with the project. Based on technical studies, we expect Carolina to be a low cost producer of spodumene concentrate and lithium hydroxide and a key contributor to the North American electric vehicle supply chain. The project should benefit from excellent infrastructure, including low energy costs, minimal transportation distances, a deep local talent pool and proximity to local markets for industrial mineral byproducts. Carolina Lithium is also located in the heart of the growing U.S. battery belt with many cathode battery and EV plants under construction or planned. The economics of the project should be compelling. As a U.S.-based project, Carolina is expected to benefit from the competitive corporate tax regime offered in the U.S., the absence of significant royalties and the absence of a value-added tax assessed in countries like in China.

After tax returns are what matters and we are not aware of any jurisdiction that better combines the benefits of significant spodumene resources, deep customer markets and low royalty and income tax rates. Carolina should also benefit from supportive government programs such as the Inflation Reduction Act of 2022 and the Department of Energy’s ATVM Loan program. Looking at funding this project, we intend to leverage government funding via the ATVM Loan program, as mentioned, and potential strategic partners who could provide some combination of capital, offtake and technical support to reduce our capital burden. We’ve had a lot of interest in this project from a variety of car companies, battery manufacturers, and investors and are encouraged by the conversations we’ve had thus far.

As for timing, the ATVM Loan and strategic partnering processes can take some time to complete, so we’ll be refining our timeline for the funding and rezoning of the project. We’re focused on moving judiciously and doing this right. Carolina Lithium is highly strategic to Piedmont, but frankly it’s also highly strategic for Gaston County, the state of North Carolina and the entire United States. It’s more important to do it right than to do it fast and we’ll always be cognizant of maximizing value for Piedmont shareholders as we advance the process. Let’s turn briefly to Ghana and our joint venture project, Ewoyaa. Patrick and our project team leadership were in Ghana in April meeting with the Atlantic Lithium team and had some good technical sessions as the project continues to advance through permitting and approvals process.

Ewoyaa is expected to be a large spodumene producer with attractive economics, a high return on invested capital driven by relatively low CapEx and relatively low operating cost. It’s going to be a great project for us and our partners, Atlantic Lithium. Right now, we’re in the process of retaining a financial advisor to assist in evaluating funding options for our share of the capital. We’ve received multiple inbound calls from interesting parties, all with the idea of minimizing dilution to Piedmont Lithium shareholders. I also want to mention our Tennessee project, which is fully permitted and designed for 30,000 tons of lithium hydroxide production. Tennessee offers an additional opportunity to expand downstream capacity and we will be evaluating its development timeline given the receipt of the Carolina mine permit.

We believe Piedmont is well positioned for the long term with growth opportunities across our project portfolio with the assets we own or have an interest. Our plan with each of these three projects is to invest in their development strategically and always with the goal of minimizing shareholder dilution. Michael will provide a more detailed discussion. So with that, I’ll turn it over to Michael.

Michael White: Thanks, Keith. Turning to Slide 9, I’d like to provide a high level review of our first quarter results. We shipped approximately 15,500 dry metric tons for the quarter and recognized 13.4 million in revenue, resulting in a realized price of $865 per metric ton. This compares to a realized cost per metric ton of $799. Notably, we ended the quarter with 71.4 million in cash. First quarter gap net loss was 23.6 million, or $1.22 per share. Adjustments this quarter included a loss of 13.9 million related to the sale of our equity method investments in Sayona Mining and Atlantic Lithium, a $1.4 million gain on equity securities, $1.8 million in severance and severance related costs associated with our cost savings plan, $3.1 million associated with the tax effect of these adjustments, and to a much lesser extent, other costs.

Including these adjustments, we reported a first quarter adjusted net loss of 11.9 million, or $0.61 per share. In the first quarter, we initiated our cost savings plan to achieve $10 million in annual operating cost savings and defer 2024 capital spending to 2025. We expect to achieve the majority of our cost savings in 2024. Turning to Slide 10, we earned 13.4 million in revenue as a result of two customer shipments during the quarter and a positive $300,000 adjustment to revenue related to the final settlement of a November spot shipment. The majority of the tons we shipped during the quarter were tons which were originally scheduled to depart in December as part of a spot shipment but were delayed to January due to weather and port congestion.

Included in our first quarter revenue was approximately $2 million of improved pricing related to the January shipment as lithium prices experienced double-digit growth between the date of shipment and the end of the first quarter. Our second smaller customer shipment during the quarter was part of a long-term customer supply agreement and reflected a significantly higher realized price than our January spot shipment. Turning to Slide 11, I’d like to review our cash and working capital balances for the quarter. Our beginning and ending cash positions for the quarter were relatively flat at 71.6 million and 71.4 million, respectively. We bolstered our cash position during the quarter by selling our entire equity holdings in Sayona Mining and a portion of our holdings in Atlantic Lithium for net proceeds of 49.1 million.

We paid approximately $26 million for these shares in prior years. These sales align with our strategy as communicated during our fourth quarter call in February of monetizing non-core assets. Further, these sales had no impact on our joint venture ownership or offtake rights. We significantly improved our working capital balance by $32 million during the period. While we saw improvements across several categories, the most notable was a $21 million decline in current liabilities primarily related to cash payments made to settle 2023 spot sales where the final price settlement was less than the provisional prepayment we received. Moving to Slide 12, I’m pleased to discuss our 2024 outlook. Under our offtake agreement with Sayona, Quebec, we have the right to the greater of 113,000 metric tons of spodumene concentrate or 50% of annual production.

As mentioned earlier, our January spot shipment was scheduled in 2023 but rolled over into 2024. As a result, we now expect to ship approximately 126,000 tons this year. Based on current discussions with our customers, we plan to ship the majority of our tonnage in the second half of 2024. Note that factors including shipping logistics and customer requirements may impact the timing of deliveries. For capital expenditures and investments in and advances to affiliates, we expect to see a decrease of more than 50% in the second half of 2024 as compared to the first half of the year. Our forecasted capital expenditures primarily relate to continued advancement of our wholly owned Carolina Lithium and Tennessee Lithium projects while investments in and advances to affiliates reflect cash contributions to Sayona Quebec, and advances to Atlantic Lithium for the Ewoyaa project.

As always, our current outlook is subject to changes in market conditions. With that, I’ll turn it over to Patrick Brindle for a review of operations and project updates.

Patrick Brindle: Thanks, Michael. We can now turn to Slide 14 for an operational update on NAL. As Keith noted, we’re pleased with the continued success of the ramp up at NAL. The team there led by Sylvain Collard has done an excellent job getting operations to a nearly fully ramped rate. Concentrate production has ramped steadily from last July through this March with new production records achieved each subsequent quarter. Safety has also improved steadily with operations achieving their lowest reportable quarterly incident rate since March 2023. During the quarter, Piedmont accepted deliveries of 15,500 out of 58,000 dry metric tons shipped by NAL during the quarter while the remainder of shipments were sold to third parties.

Moving ahead now to Slide 15, Q1 production at NAL increased 18% from the prior quarter to 40,439 dry metric tons. In March, operations achieved a record production month with 15,669 dry metric tons of spodumene concentrate production, including three new daily production records set between 710 to 750 dry metric tons. Global lithium recovery reached a record 69%, exceeding the ramp up target of 67%, while global recovery has averaged 62% during the July 2023 through March 2024 period. Average mill utilization during Q1 was 73%. We expect that this number will materially improve upon commissioning of the crushed ore dome. Construction of the crushed ore dome is now materially complete and has been tied into the existing operations. Commissioning activities are underway and should complete this quarter.

The dome project, as well as a new crushed ore re-feed system, should result in continued improvements to mill utilization rates, increases in production levels to full ramp rate, and a corresponding reduction in unit operating cost. NAL is forecasted to achieve full run rate production by the second half of 2024. Concluding now on NAL, ramp up remains on track with NAL management’s production target of 140 to 160,000 dry metric tons of spodumene concentrate from July 2023 to June 2024, and sales of 160,000 to 180,000 dry metric tons. I’ll now move to a brief update on Ghana and Ewoyaa Lithium Project. As Keith mentioned I was in Ghana last month together with Piedmont’s Project leadership team for a series of technical meetings with the development group at Ewoyaa.

Work continues with DRA Global EPCM contractor, advancing optimization studies on the DMS-only spodumene concentrator, while other social, environmental, mining, and infrastructure work streams progress. In Q1, Atlantic Lithium progressed an offtake partnership process for the JV portion of the offtake from Ewoyaa. Atlantic has received bids from several interested parties and is now in the due diligence phase. Piedmont is also evaluating a similar offtake partnering process to support our portion of the capital requirements for Ewoyaa. Atlantic Lithium is also planning to incorporate 2023 and 2024 drill results into an upgraded mineral resource estimate later this calendar year. Atlantic management continues to work closely with the Minerals Commission and the Government of Ghana towards ratification of the project’s mining lease.

Here in the United States, we have our wholly-owned Carolina and Tennessee Lithium Projects, and I’ll provide a brief update. As you may know, both projects are strategically located in the growing battery belt and are critical to the goal of achieving some level of lithium self-sufficiency in America. As Keith spoke earlier about Carolina in-depth related to the receipt of our mining permit, I will just make a couple of comments from an operational perspective. We own, lease, or have the right to purchase all of the property within our newly-received mine permit boundary. At the same time, we have actively worked to defer purchases of additional properties that sit outside of this permit boundary as a cash management exercise. This effort has materially improved our cash outlook for the remainder of 2024.

With the receipt of our mining permit in hand, we will continue to engage with the local community, refine our development plans, and explore funding options. Over in Tennessee, at Tennessee Lithium, we’re continuing discussions with the city of Etowah and McMinn County to renew the option agreement for the project site. And as Keith stated, we’re evaluating the timeline for this project with Carolina Lithium in the context of receipt of the state mining permit. That concludes our update on Piedmont global project portfolio. With that, I’ll turn it back over to Keith for an update on the market and our funding strategy.

Keith Phillips: Thank you, Patrick. I’d like to conclude our presentation with some thoughts about the lithium market. There’s a narrative in the market that EV sales are imploding, and that is simply not true. In the first quarter of 2024, global EV sales were up 30%, the same increase as the market experienced a year ago. While there’s been some softness in the U.S., this is a global story, and I imagine there are a lot of minerals and chemical CEOs who would love to see 30% year-on-year growth in their key end markets. Several OEMs have announced April 2024 results and are showing continued year-over-year increases. Ford marked a 129% increase in EV sales from a year ago. Volvo grew 53% from the same period last year. Kia hit an all-time monthly EV sales record, up 61%, and the list goes on.

Moving on to Slide 18, two years ago, we reached historically high prices for lithium. As you know, those prices have come down sharply, but around February, we began to see some recovery. Over the last eight to 10 weeks, spodumene concentrate prices have risen by 30%, which is obviously good news for us as a spodumene concentrate supplier. We are hopeful the prices continue to recover, as we believe current prices are well below the incentive levels required to fund and develop most of the world’s greenfield lithium projects. As you can see in the third graph, we’ve experienced this volatility in lithium before. Lithium is a young, fast-growing industry. Inevitably, demand growth will be more linear than supply growth, leaving the highs and lows we’ve experienced over the past decade.

I expect this cyclicality to continue for some time, as I think the market is at least 10 or 20 years away from reaching maturity. If I’m right, 2024 seems like an opportune time to be deploying capital into the sector. Moving to Slide 19, I just want to highlight again Piedmont’s strong leverage to a possible rise in lithium prices. The forward curve is in contango, and if prices rise, we believe we’ll be a direct beneficiary. As you know, you really only have leverage to rising prices if you’re actually producing something. NAL is North America’s biggest spodumene producer, and through our offtake agreement, we get half or more of the material subject to a cost ceiling. So, any improvement in lithium prices should directly impact our gross profit.

Lastly, on Page 20, we’ve outlined some of the key catalysts for the company for 2024, and we’re making good progress with three boxes checked so far this year. We received our Carolina Mine permit, we fortified our balance sheet by exiting some non-core investments, and we’re on track to achieve the $10 million cost savings we identified in the first quarter. We will report on further progress in subsequent quarters, but our focus is really in two key areas, continued improvement in production volumes and unit costs at NAL, and focusing on advancing funding for Carolina and Ewoyaa with U.S. government agencies and key strategic parties. As always, the priority there is to maximize long-term value for Piedmont shareholders while minimizing equity dilution at the corporate level.

That concludes our presentation portion of the call. Thank you for your time and attention. We’ll shift to Q&A.

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Q&A Session

Operator: Thank you. [Operator Instructions]. Your first question comes from the line of David Deckelbaum of TD Cowen. Please go ahead.

David Deckelbaum: Good morning, Keith, Patrick and team. Thanks for the prepared remarks today and the market overview. Keith, I wanted to start maybe just on some of the micro stuff for the balance of this year. Is there any color that you can give us to sort of inform what your expectations are for pricing relative to what we’re seeing on the index for the rest of the year as you ship more to some of your offtake partners? Or maybe just contrasting the shipments to date that have gone to your offtake partners and what the go forward is the rest of the year and how that might tie back to some better pricing?

Keith Phillips: Yeah, David, thanks for the question. So, as you know, our first shipments were all in the spot market, and the spot market evolved during 2023. So, we were really receiving pricing kind of N+1 [ph] or kind of post-delivery, as opposed to the convention, which had been to receive pricing based on the shipment date. That ended up being a two, four, in some cases, six-month difference, and prices were falling rapidly. So, it had a big impact on us and some others. Our contracts are, and I won’t go into the specifics of them, but they’re more traditional in that they’re based on market reference prices on a lagged basis. In one case, it’s based on the concentrate price. In another case, it’s based on the hydroxide price.

The lags are a little different. So, I think what you’ll see is pricing that’ll be smoother. Certainly, as the lags kind of look backward, right now, and going forward the next month or two or three, we would actually be negatively impacted by those lags, with prices having fallen from 2023 into early 2024. Hopefully, going forward, that’ll reverse with things. Our customer requirements are really back-ended this year. As we build into those shipments, we’ll see considerably more shipments in the second half of this year. It’ll be a unique half, and I think you’ll see things be more steady from there on out. We’ll still have some spot shipments, probably, later this year. In the spot market, that market’s evolving. Just some other people, as you may have seen, have achieved better spot pricing in the last month or two than had been experienced two or three months earlier, partly through the approach to the market.

So, that’s something we’re considering as well.

David Deckelbaum: Helpful color. I wonder if the shift here is just talking, Carolina, from a strategic perspective. You discussed, obviously, that Tennessee’s fully permitted. I know that you’re pursuing, I think, an ATVM loan application for Tennessee. You talked about financing options for Carolina, and then, obviously, funding options for Ewoyaa. But I guess, just to back up, obviously, the intention was to feed Tennessee lithium with Ewoyaa feedstock. Can Carolina be a project that you pursue as upstream only, or do you see a requirement to have a vertically integrated plan there as well that would FID or at least come online and coincident with the upstream side?

Keith Phillips: We’re at a point now where the mine permit received was a massive achievement for the team. It’s really got us thinking about what the right timeline for development of the two big US projects is. They’re both large capital projects. It wouldn’t be prudent for us to try to develop them simultaneously. We’ll be thinking about doing that sequentially. Carolina obviously has a significant advantage over Tennessee in that it has its own ore body. As we’ve had strategic conversations with people around Tennessee and around Carolina, the Tennessee project is exceptional. It’s a great location, great infrastructure, great people in that location, surrounded by customers. A lot of the same benefits as North Carolina, but it’s not on a spodumene belt.

It relies on imported spodumene, and we’ve contemplated bringing that material from Ghana. Carolina has its own spodumene right on site. The cost savings benefits of doing everything together are pretty substantial. We have submitted an application for an ATVM loan at Tennessee. We formerly had applied for an ATVM loan for Carolina that we put that on hold when we proceeded on Tennessee. We’ll make a formal decision in the communication here in the coming weeks and months as to what the cadence of these projects will be. But certainly, we’re excited about Carolina just because it has its own ore body and becomes a superior project. And when you think about project economics around the world, it’s really interesting. We’ve gotten very close to this being in Quebec.

NAL is doing really well, but for the time being, there’s nowhere to send spodumene concentrate in North America. There’s a customer of ours who’s developing a facility, but there are no existing plants, which means you’re sending material either directly or indirectly into China because that’s where all the conversion capacity is. The transport cost involved and VAT involved average around $300 a ton. In Carolina, it’s going to be about $1 a ton to convey material from the concentrate plant to the chemical plant on the same site. It’s just a massive savings. It’ll be the only site on the planet where the chemical plant is on the same site as the mine. We may do the same thing at NAL. As you know, there’s a dormant partially built facility there, but that has a huge strategic advantage.

It’s something we’ll be thinking about.

David Deckelbaum: Thanks, Keith.

Operator: Your next question comes from the line of Austin Yun from Macquarie. Please go ahead.

Austin Yun: Good morning, Keith and the team. Just one quick question from me, please. Firstly, congratulations again on the approval of the mining permit. I’m just wondering if you could share some comment on the funding options. I understand you are trying to get some government support. Just wondering any comments on the potential debt and equity split? That would be very helpful. Thank you.

Keith Phillips: Thanks, Austin. It’s a great question. We were happy for our friends at Lithium Americas. They announced a loan package from the DOE several weeks ago. It was approximately 75% of the total funding package was an ATVM loan. They have corporate level equity coming in from General Motors and from the market. Ioneer, as had secured an ATVM loan commitment a year or so ago. We’ve been looking at those and others. Getting debt funding in the range of 65% to 75% of the total capital would be something we’d like to target. In an ideal world for us, the equity coming into the project would come from a partner or two and it would come at the project level rather than at the corporate level. If our market cap was what LAC’s market cap was when they first brought in General Motors, we might happily do something at the corporate level.

With our current market cap, we’re far more focused on project-level funding. We’ve had conversations with a number of really substantial people. The A-list of people you think might care all care about Carolina. It’s one of two significant U.S. spodumene projects. We talk a lot about location. We think in Ghana we have the best-located Lithium asset in all of Africa. We think NAL is by far the best-located Lithium asset in all of Canada. We think Carolina is the best-located Lithium asset in the world. People are looking at the project, they are interested in the project and it’ll take time. Realistically, the ATVM process has been a two-year process for people. The DOE has commented recently that they think the timeline can be expedited. We’ll see.

We’re viewing this funding process as an 18-to-24-month process. It’s not a great time right now at these Lithium prices to line up financing, but getting ready to benefit from a hopeful recovery in the market will be good. My guess is you may see some partnering announcements later this year. Time will tell. Certainly, we hope to bring that together before project development later in 2025.

Austin Yun: Great. Thank you. One quick question on our wire project. I understand the company is working on different funding options while minimizing the potential dilution. Would that have any potential impact on the off-take agreement that you have for the project? At the moment, the assumption is around 50% of the production. Thank you.

Keith Phillips: Great question. Our capital requirements for Roya is around $120M based on the DFS levels. We’re budgeting for a possible modest capital CapEx creep. Our hope is to use our off-take right, which is for 50% of the material. It’s around 175,000 or 80,000 tons a year. A high-quality concentrate is a mile from the Atlantic Ocean. It’s material that can go anywhere and there are a lot of people interested in it. Atlantic has announced the process with an advisor where they’re in touch with potential parties to secure funding for their share of the capital by committing their off-take to the funding party. We’re going to do the same. We have half the material. In these off-take discussions, the question of value and funding and how much money you can raise all depends on how much material you’re willing to commit.

The more you can commit for longer, the more money you can raise up front. We’ll be hiring an advisor over the next several weeks and formally commencing that process. We’ve had inbound inquiries and we’re optimistic we may be able to raise all of the funding for our AVOIC CapEx via committing the off-take to a customer on a prepaid basis, i.e., a loan. That’s something we’ll be pursuing aggressively over the next several months.

Austin Yun: Thank you.

Operator: Your next question comes from the line of Joseph Eaker of ROTH MKM. Please go ahead.

Joseph Eaker: Hi, Keith. Thanks for taking the questions. Continuing on the AVOIA topic first, there seems to be a bit of a debate out there about the timing of when a construction decision might occur there. What’s your guys’ current outlook on when you would have to actually fund that $120 million or so?

Keith Phillips: Yes, I’ll give a brief comment. Patrick, maybe you can chime in. Patrick, as you know, was on the board of Atlantic Lithium until we sold down our stake. He was just in Ghana a week or two ago. He’s closer to some of the details. We’ve earned a 22.5% stake in the project by funding exploration of the Defensive Feasibility Study. To earn the other 27.5% to get us to $50 million, we need to fund the first $70 million of development capital. A small amount of that’s already been funded, frankly, and then our share of the remainder. That’s a commitment we made and we’re very comfortable with it because we’re earning into a great project and we think at an attractive level. The real question then is, when do you get to the point where you have FID, essentially?

That’s a little bit of a moving target as it is for any project. There are a number of approvals still required. There’s engineering work still being done. I think the Atlantic guys have conveyed a sense that they’re hopeful that this can be wrapped up in the second half of this year. My expectation is it’ll more likely spill into next year, not for any reason related to Atlantic or Ghana, but just because it’s the mining business and things tend to take time and drag. In some cases, we’re looking at government ratification of mining leases, etc. Those things never really move on a timeline and you hope they move. Our view is we’re likely to be in a position in the first half of next year where we’ll begin to really fund that in earnest and then the funding will take place over time.

It’s not like we’ll write a $70 million check in January. It might be $4 million one month, $12 million the next, etc. as you build out the plant over 12 to 18 months. So, that’s my best perspective. Patrick, anything to add?

Patrick Brindle: No, nothing to add other than we continue to work together with our partners at Atlantic and they are working really hard in trying to move the ratification of the mining lease through Parliament. That’s a timeline that we collectively don’t control. That’s in the hands of government. That’s the principal gating item for the project to move forward alongside other EPA, Minerals Commission, Mine Operating Permit, etc. regulatory approval. The project still requires before a decision to mine can be taken by the partners.

Keith Phillips: Just a further thought, I have conversations all the time about people characterizing Ewoyaa as a funding commitment, which it is. We view it very much as an investment opportunity. It’s an exceptional project. The CapEx and OpEx are really competitive on a global scale. It’s the kind of project that can get built in a down market, which is not necessarily the case for a lot of other higher CapEx projects. From our perspective, it’s a really high return opportunity to put money to work. We’d like to get that money from third parties. We have this OpEx agreement and we don’t have a Tennessee lithium bill to take the material. To the extent we have 175,000 or 80,000 tons a year of material, we can commit to somebody else who needs it, who will loan us the money to build the project. It’s something we’re quite attracted to.