RESEARCH: Piedmont Lithium, Made In The USA

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Lithium demand is shifting from lithium carbonate to lithium hydroxide. Pitt Street Research reports Piedmont Lithium should be among the beneficiaries

By Pitt Street Research

An integrated and low-cost lithium processing play

Piedmont Lithium ((PPL)) is developing a hard-rock lithium mine and associated processing operation in North Carolina.

Like Kidman (acquired in 2019 for $776m) PLL intends to be an integrated player from spodumene mining to hydroxide processing.

PLL’s mine has a higher-than-average lithium grade, is already ESG-compliant and is in the advanced stage of development.

A US-based integrated alternative

Currently a great deal of lithium carbonate and hydroxide has to be sourced from China.

Given the ongoing US-China trade war and the expected backlash against China related to the Coronavirus, a US-based lithium supplier with reduced supply chain risk is likely to be welcomed by potential customers.

Lithium hydroxide demand on the rise

Given its technological superiority, lithium-ion battery makers for Electric Vehicles are gradually shifting from lithium carbonate to lithium hydroxide, with demand for the latter material expected to rise 25% p.a. for the next five years.

PLL expects to benefit from this shift with its hydroxide plant.

Valuation range of $0.34–0.62 per share

We value PLL at $0.34 per share base case and $0.62 per share optimistic case using a DCF approach.

We expect a steady growth in lithium prices, further progress on the project development plan and clarity on project funding will help re-rate the stock to our valuation range.

Download the full report

Last week the report above was released by Pitt Street Research for which FNArena is a partner in distribution. The full report can be accessed here:

https://www.fnarena.com/index.php/pitt-street-research/PLL/

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