Piedmont Lithium deal a funding exercise

In 2022 when the lithium price was high, Piedmont’s market value was $1.36bn.

Piedmont Lithium’s move to merge with Sayona Mining is seen as a funding play, sources say, since the group had been looking for a financial partner in previous years and needed to get some cash through the door.

In 2022 when the lithium price was high, Piedmont’s market value was $1.36bn, but now it is about $350m.

If it wasn’t for this deal, some believe its other option would be turning off its mine which provides material to China, amid a period of weaker industry global demand for the commodity used to make batteries, with the electric vehicle take up slower than expected.

The company is Australian listed, but most of its operations are in the United States, while Sayona’s assets are also in North America. It already partners on projects in Canada with Sayona Mining. The scrip deal is a 50-50 split and both groups will raise about $149m, creating a company with a market value of about $800m.

Sources believe that further consolidation will unfold in the lithium industry with the commodity price coming off the boil in the past year.

Working as advisers on the transaction to Sayona has been Morgan Stanley, while Piedmont Lithium is working with JPMorgan and Canaccord is advising on Sayona’s placement.

Shares were sold in Sayona as part an initial $40m equity raise for 3.2c each, a 15.8 per cent discount to the last trading price.

It comes after Rio Tinto moved to buy Arcadium Lithium for $US6.7bn ($10.3bn) in October.