Piedmont Lithium (Nasdaq: PLL) (ASX: PLL) is set to expand its spodumene resources by investing in a Ghana-based lithium portfolio held by Australia’s IronRidge Resources (AIM: IRR).
On Thursday, the companies announced a strategic partnership whereby Piedmont will purchase an equity stake in IronRidge and make staged investments to earn a 50% interest in IronRidge’s lithium portfolio in Ghana.
Piedmont will also enter a binding supply agreement for 50% of its planned spodumene concentrate (SC6) production.
This portfolio of spodumene prospects is anchored by the Ewoyaa project, which has a current mineral resource of 14.5Mt at 1.31% Li2O with further exploration upside. According to Piedmont, the Ewoyaa project “has potential to be a large, low-cost spodumene concentrate producer.”
The US-based lithium company has been conducting extensive due diligence over the past several months, including site visits to Ghana, and believes its new lithium investment “has significant upside potential.”
In January 2021, IronRidge published a scoping study for the Ewoyaa project forecasting an average of 295,000 t/y of planned SC6 production, a $345 million after-tax net present value and an after-tax internal rate of return of 125%, for initial capital investment of $70 million.
Under the partnership agreement, Piedmont is expected to invest approximately $15 million to acquire a 9.47% equity interest in IronRidge and will appoint one director to the IronRidge board.
Piedmont can also earn up to a 50% stake in IronRidge’s lithium project portfolio by making staged investments over a three-to-four-year period, leading to initial production in 2025.
Specifically, the company must invest $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 a further $70 million in 2023-2025 to fund the construction of the Ewoyaa project for the remaining 27.5%.
“We consider IRR’s Ewoyaa project to be among the world’s most promising spodumene projects. The high-grade mineral resource is currently modest in scale but offers substantial exploration potential, and the project is very well-located, being only 70 miles from a major port,” Keith D. Phillips, president and CEO of Piedmont, commented in a news release.
Piedmont is currently developing an open-pit mine in the Carolina tin spodumene belt of North Carolina, a historic lithium mining and producing region.
The Piedmont project is last estimated (June 2019) to contain indicated and inferred resources of 29.1Mt grading 1.11% Li2O, for 309,000t of lithium oxide (Li2O) or 764,000t of lithium carbonate-equivalent (LCE).