Austin Yun: Okay, cool. Thanks. Just really quickly, and what are the key considerations during your search for the partner for Tennessee development?
Keith Phillips: That’s also a great question. We are – first and foremost, we’re going to need capital. And we currently own 100% of Tennessee Lithium, and we’d be willing to own less, we’d be willing to own anything down to 50%. We don’t want to own less than 50%. It all depends on what the economic parameters of an opportunity are. So, we need capital. So that means, we need companies with of scale who have capital. We’re speaking to all this sort of people you might expect, customers, OEMs, battery manufacturers, other spodumene suppliers who have made material they want to bring into the US to get into the business and others – other mining businesses, et cetera. Some of those parties bring technical knowhow and experience that would be helpful or could be helpful.
And so that’s a component as we think about derisking. Obviously, spodumene projects are relatively straightforward to start up as mining projects go. Lithium hydroxide plants at scale with a relatively new phenomenon that folks in Australia have struggled certainly from a timing perspective. So, bringing in a partner who has technical capability would be a benefit. So that’s something we’re considering as well. We’re speaking to all the folks you might imagine. And I think if we wanted to, we could move forward with a transaction reasonably quickly. But the best thing from our perspective is to be patient. And to really get the best deal for shareholders and to – and that will take several months.
Austin Yun: Great, thank you.
Operator: And we will take our next question from Greg Lewis with BTIG. Your line is open.
Greg Lewis: Yeah. Hi, thank you and good morning and thank you for taking my questions. Keith, I just – I really wanted to follow-up really on that last comment you meant. You just mentioned about bringing on a partner at Tennessee, really in terms of the timing of that, it almost would sound like we would expect to get that ATVM loan ahead of a partner just because that probably improves the pricing terms that Piedmont would be able to get, is that kind of what you were trying to say?
Keith Phillips: Yeah, listen. The ATVM process takes time, nine to 12 months is a reasonable estimate. That’s we’re assuming it’ll take. Certainly, if we brought in a strong strategic partner, and that partner was a strong offtaker, one of the considerations for any lender, including the DOE would be who you’re going to sell the material to, who’s your customer, having a big, strong, credible customer will be helpful, that the customer may or may not be our partner. But those are all things we’re working on and we’ll bring them together. And I think in an ideal world, you’re right, we would bring in a partner, and we would finalize offtake arrangements prior to finalizing the ATVM process. We’ll certainly be advancing the ATVM process without that complete.
The DOE has a strong team, they understand what we’re up to, they understand the nature of the product we’re going to produce and the deep market there is for that. So I think that’ll be the offtake and kind of partnering information will be information we can feed into the process midway and this certainly will reinforce it, and then it will be important to have that before it’s finalized.
Greg Lewis: Okay, great. And then I just had one more on the price paid from NAL. It looks like it was about $800 realizing pricing for spodumene has been volatile. But it was kind of below that ceiling of $900. Could you talk a little bit about that? And, I’m assuming it’s around the grade, but could you talk about that and how maybe we should think about that that cost going forward?
Keith Phillips: Yes. The arrangement is $900 – the ceiling is $900 for 6% concentrate delivered to North Carolina. So, there are a few moving parts, by far the most important is grade. So the average concentrate grade we purchased in Q3 was 5.3%. So, if you take 900 times 5.3 divided by 6.0, you get pretty close to that number, there are some adjustments potentially around freight, and around some other elements that are relatively material, but that’s the best way to think about it. And then depending on who we’re selling the material to and depending on the nature of the contract, we record the freight costs to get the material to the customer, either as a reduction in revenue or as an addition to cost. And that could vary by quarter. In this quarter, one of our arrangements had the net freight costs counted as cost, which means, the 806 is higher than it might be next quarter, depending on the nature of those two shipments.
Greg Lewis: Super helpful. Thank you.
Operator: And we will take our next question from Matthew Key with B. Riley Securities. Your line is open.
Matthew Key: Good morning, everyone and thank you for taking my question. Most of mine have already kind of been touched on. But I was wondering if you could potentially just share your outlook for where you see spodumene price? And as we head into 2024, obviously, tough thing to predict. But any color on where you think this market is kind of heading directionally would be really helpful. Thank you.
Keith Phillips: Yeah. Thanks, Eric. Listen, I think the lithium markets are very inefficient. I’m a believer in capital markets efficiency. So I always believe the best view forecasts the future prices, today’s price, it’s not a very helpful answer. We’re bullish. We believe over time that most of the projects people are modeling coming into production next year, and in coming years, will take longer to be funded to be built to ramp, that’s just a general point of view we have. And we’re bullish on electrification generally, and on the EV thematic globally. So we’re positive, we don’t really have a crystal ball in terms of quarterly or even annual fluctuations, depending on what – I think major factors like what’s going on in the world from an economic and security perspective, will probably overwhelm some of the other things I’ve been thinking about.
So sorry, that’s not very helpful. But we’re positive, we’re very happy to have 50% gross margins even in this environment. And for our purposes, we model internally on a conservative basis, we want to be very careful to preserve our cash. But we’re hopeful the prices will strengthen into 2024.
Matthew Key: Got it. Thank you for that. And I just wanted to touch a little bit more on M&A. As you mentioned in your prepared comments, you said, obviously seen a lot of announcements in Australia, but less so in the US and Canada. Why do you think that is? And do you think the grown US industry for lithium could also use some M&A? And where could PLO kind of play in all of this?
Keith Phillips: Thanks, Matt and sorry, I was reading the list of questioners here incorrectly. So, apologies for getting – Listen, I think most of the spodumene produced in the world is in Western Australia. Today, there are a lot of exciting projects over there. Australia, Western Australia is an active mining market. There’s some very deep pocketed, very capable, aggressive mining entrepreneurs over there putting a lot of money to work. By definition, there are fewer opportunities in the US for M&A. There are fewer kind of advanced projects. But I think certainly things will come here. In our conversations with the Australians, for instance, including some of the people that are involved, they’re all focused on the US and Canada as sort of the next frontier.
