Q4 2023 Piedmont Lithium Inc Earnings Call

Thank you for standing by my name is Ellen and I will be your conference call operator for today at this time I would like to welcome everyone to the Piedmont Bcm.

Well.

Fourth quarter and full year earnings call. Please note that this call is being recorded.

If you'd like to asking questions later Q&A. Please press star and number one on your telephone keypad, if you'd like to see if you'd like to know what are your hand, you can also press the star and number one again I will now turn the call over to Erin Sanders Senior Vice President of.

Corporate Communications and Investor Relations you May now go ahead.

Okay.

Thank you operator, and good morning, everyone welcome to Piedmont, lithium fourth quarter and full year 2023 earnings call joining.

Joining us today from Piedmont, lithium or keeps Phillips, president and Chief Executive Officer.

Who will provide the introductory and closing 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 project.

Keith will provide the 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.

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 todays slide presentation.

Any reference in our discussion today to EBITDA means adjusted EBITDA.

Further references to shipments our 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 Piedmont lithium dot com with that I'll turn the call over to Keith Philips Keith.

Thanks, Erin and thank you all for joining us today for what is now Piedmont lithium second earnings call, we're reporting fourth quarter and full year 2023 results today for those of you who are new to Piedmont lithium I will quickly reiterate our mission and strategy is one of only three U S. Based lithium companies in production today Piedmont Smith mission is to be a leading supplier.

Of lithium resources for the North American EV supply chain. Our goal is to support U S efforts to reduce our reliance on foreign nations for critical materials and strengthen our national Energy Security underpinning. This mission is our strategy focused on hard rock production and that is producing and further processing spodumene concentrate from assets that we own.

The Big story for US in 2023 was the restart of our Quebec joint venture North American lithium Nal successfully commenced operations last March.

Leading to our first revenue in Q3, the shipments made under our North American lithium Offtake agreement Nio has been successfully ramping up production over the past 10 months and hit record production levels in December.

How has the distinction of being the largest lithium operation in North America. The only large spodumene mine in North America, and one of a couple of handfuls of spodumene mines control by Western companies anywhere in the world.

We are completing a few remaining capital projects in the first half of 2024 that we expect will result in further improvements in production and unit operating costs as any looks to achieve full run rate production levels. Later this year Patrick will talk about these in more detail during his update.

<unk> is a key focus for us given its status as a producing asset, but we have a strong development pipeline with our projects in Ghana in the United States.

We believe Piedmont is well positioned for the long term with growth opportunities across our project portfolio I'll speak to that more fully on the next slide.

We have been very disciplined in our approach to growth prioritizing a prudent funding strategy, while minimizing dilution to Piedmont shareholders part of this strategy includes managing our cash balance. Obviously, we ended 2023 with $71 7 million in cash and cash equivalents and in the first quarter, we have solar holdings in Scioto mining and a portion of our holdings in the Atlantic lithium.

For approximately $49 million in net proceeds we have an additional number of non dilutive project funding options that we're exploring all of them in an effort to help ensure that we are leveraged to the lithium price recovery that we believe is not a matter of if but when youll hear more from Michael about our finances shortly.

So let's take a look at our integrated development pipeline over the past several years, we've created a robust pipeline with large strategic projects positioned for development on a sequential basis at Nal production is ramping toward target production volumes and unit costs are expected to improve in 2024. After the completion of key capital projects the future at Nal appears as.

Especially encouraging given the exceptional drill results announced by say honor in late 2023, notably some of the drill intercepts from the 2023 program are thicker and higher grade than any previously encountered increasing confidence in <unk> mine life with infill and exploration drilling continuing we expect a resource update to come during 2024.

Which may offer the potential for further mine life extensions.

My point is that <unk> is very much a core asset and with our life of mine off take agreement for qualified inflation reduction act material and is critical important to our customers I believe <unk> will be a great asset for Piedmont shareholders for the long term.

Now while this is an earnings call and Nal was our only producing asset I do want to highlight the exciting growth projects in our portfolio, including our <unk> project in Ghana, and our strategic projects in the United States.

The award the project continues to advance through the permitting and approvals process in Ghana Award is planned to be a large spodumene producer with a high return on invested capital driven by relatively low capital and operating cost is going to be a great project for us and our partners Atlantic lithium.

Our Carolina and Tennessee projects are both strategically located in the growing battery belt and are critical to the goal of achieving some level of lithium self sufficiency in America Caroline lithium is our integrated project that we're that we're designing to include mining spodumene concentrate production and 30000 tons per year of lithium hydroxide production all on one site.

We expect to complete the material permitting process in 2024, our Tennessee project, which is permitted and also design for 30000 tons of lithium hydroxide production provides an additional opportunity to expand downstream capacity, when we and the market already so.

So our plan with each of these three projects is to invest in their development at the right time in the right way and always with the goal of minimizing shareholder dilution.

Let me turn it over to Michael.

Thanks, Keith turning to slide seven as Keith noted in the second half of 2023, we had several shipments of spodumene concentrate from Piedmont Nal offtake and.

In total we shipped $43 2000, dry metric tonnes of spodumene concentrate last year.

From these shipments we recorded full year revenue of $39 8 million and gross profit of $5 7 million, which equated to a realized price of $920 per metric ton and our realized cost of $789 per metric ton.

Looking at earnings per share full year 2023, GAAP diluted earnings per share was a loss of $1 14.

Adjusted diluted earnings per share was a loss of $1 64, which reflects a 51 improvement compared to an adjusted diluted earnings per share loss of $2 15 in the prior year period.

We ended the year with $71 7 million in cash and cash equivalents subsequent to year end, we strengthened our current cash position by $49 1 million by selling our holdings in Scioto mining and a portion of our holdings in Atlantic lithium the sale of these shares had no impact on our joint venture.

<unk> or off take positions with either <unk> or the <unk> project with Atlantic lithium.

As of February 21, we hold approximately $8 million in marketable securities.

Moving to the next slide we reported third quarter revenue of $47 1 million, which included provisional pricing for a spot price shipment.

In the fourth quarter, we recorded a $15 $1 million provisional revenue adjustment for settlement of our third quarter spot shipment.

This adjustment was due to the sharp decline in spot market lithium prices from mid Q3 to the eventual price settlement at the end of 2024.

Also in the fourth quarter, we recorded $7 $8 million in revenue associated with Q4 shipments and total fourth quarter revenue was negative $7 3 million and full year 2023 revenue was $39 8 million.

To better depict the revenue scenario I just discussed let's move to slide nine.

In 2023, we made shipments under spot contracts and under our long term customer contracts, the majority of which on a dry metric ton basis being spot.

In the third quarter, we had two shipments one on the spot market and one to a contract customer.

The spot shipment occurred in September however, pricing was based on market prices at the time, we executed our spot contract in August.

As part of our spot contract Piedmont received a large prepayment.

We then reported provisional pricing at the end of the third quarter, Yes final price settlement did not occur until the end of December after the shifts that arrived at its destination as we know lithium prices declined precipitously during transit of the shipment.

This delayed price settlement as the current practice in the spot market, which is subject to large price swings due to volatility in the spot market.

We had four shipments in 2023 and one in early January 2024, which was scheduled for December but was delayed due to inclement weather report.

Our shipments took various routes largely due to weather conditions.

We will talk about how we're going to reduce our exposure to the spot market shortly.

Let's turn to slide 10 for sources and uses of cash <unk>.

We began the fourth quarter with $94 million given the decline in lithium prices, we work to minimize our expenses.

Lower capital expenditures and investments in affiliates and ended the quarter with $72 million in cash and cash equivalents looking.

Looking at full year of 2023, we had $99 million at the beginning of the year followed shortly thereafter by a net equity investment by LG Kim of $71 million.

We had $57 million in capital expenditures and $43 million and investments in and advances to affiliates.

Thereby ending the year with $72 million in cash.

Now moving to our outlook on the following slide.

Especially during this current price environment Piedmont is focused on conserving cash undertaking measures to reduce expenses and limit capital spending across our global portfolio.

In February 2024, we initiated a cost savings plan to reduce spending by $10 million annually and deferred capital spending in 2024.

We expect to complete our cost savings plan by the end of the first quarter and recognized most of the $10 million run rate savings in 2024.

As part of our plan, we reduced our workforce by 27% mainly within our corporate office staff.

We expect to record approximately $1 million in severance and related costs associated with this plan in the first quarter of 2024.

In 2024, we are projecting to fund capital expenditures between $10 million to $14 million and investments in and advances to affiliates between 32% and $38 million.

As you can see in response to current lithium market conditions are planned funding is significantly reduced from our 2023 funding levels.

Worth, noting that our current 2024 outlook is subject to further changes in market conditions.

The majority of our forecasted capital expenditures relate to the Carolina lithium in Tennessee, lithium investments in and advances to affiliates reflect cash contributions to sayano, Quebec and advances to Atlantic lithium for the <unk> project.

Piedmont lithium expects a way of funding to be minimal in 2024 and is evaluating a range of options to fund its share of project capital that would be non dilutive to Piedmont lithium shareholders.

We expect a final investment decision for <unk> to be made by the end of 2025.

Moving to the next slide.

In October 2023.

Iona mining provided a forecast for the one year period, beginning July 2023 through June 2020 for projecting spodumene concentrate production of 140 to 160000 dry metric tons and shipments of 160000.

To 180000 dry metric tonnes.

Under our offtake agreement with <unk>, Quebec Piedmont has the right to purchase the greater of 50% of production or 113000 dry metric tonnes per year.

This is in addition to the $13 1000 dry metric ton shipment that sale in mid January.

Our purchase price is subject to a floor of $500 per metric ton and a ceiling of $900 per metric ton on a life of mine basis.

Note piedmont's actual purchases in 2024 may differ from the allotment I just discussed based on how deliveries under our customer contracts are scheduled.

As we begin deliveries under our customer contracts, we expect to provide more stable price realizations and reduced our reliance on unpredictable spot market sales.

As we have published previously our supply agreement with LG Chem is to deliver 200000 dry metric tonnes of spodumene concentrate over a four year period based on market pricing.

Our agreement with Tesla is to deliver 125000 dry metric tonnes of spodumene concentrate over a three year period also based on market pricing.

With that I'll turn it over to Patrick Brendel for our operations and projects update.

Thanks, Michael starting on Slide 14, I'll summarize 2023 Nal operational results.

Production at North American lithium restarted in March of last year ramp up has progressed really well in 2023 and in line with our expectations and we hope to achieve full production on a run rate basis within 2024.

In the fourth quarter of last year Nal produced over 34000 tons of concentrate representing an increase of almost 3000 tons compared to quarter three.

Q4 saw shipments of almost 24000 tons 14000 of which were sold to Piedmont with the remainder sold to third parties.

For full year 2023, Nal produced nearly 99000 shipped more than 72000 tons of lithium concentrate.

More than 43000 of these concentrate tons were sold to Piedmont, which we then deliver to our customers.

Moving ahead on slide 15, again restart has been highly successful after an almost four year period of care and maintenance December production of almost 14000 tonnes of concentrate may be the most concentrated ever produced at <unk> in a single month in the entire history of the mine.

Decembers record production was made possible by reaching a mill utilization rate of 80% and global lithium recovery of 66%. We are planning for additional improvements in utilization rates in 2024, which I'll speak to shortly.

Based on production achieved from July to December last year, and current pace of operations. We believe the target of 140000 to 160000 tons of production reported by <unk> for their fiscal year July 2023 to June 2024 to be a realistic operational target.

Our objective for the operation is to achieve full production run rate within this year.

The principal driver to achieve full production. This year is going to be completion of the crestor storage down one of the fundamental challenges with the design of Nal has always been the limited storage capacity for crushed ore between the crushing plant and the mill. This lack of capacity in effect limit mechanical availability to what is achieved.

Well in the crushing plant.

Once we complete and commission the crushed ore them later, this coming spring and management should achieve their target mill availability of greater than 90% <unk>.

Completion of the Dome should then result in increases in monthly production rates and decreases in overall cash operating cost for <unk> in the second half of 2024.

In the pit production challenges related to existing underground mine works and our current area of operations will likely persist throughout 2024, but should largely fall away by 2025.

Our strategic review of Nal operations remains ongoing together with our partners at <unk> with the goal of positioning nal to operate through all periods of cyclical market pricing.

Shifting to exploration activities, what's not on this slide are some of the exceptional drill results reported by <unk> in November 2023, which makes us even more optimistic about the long term future of nal.

These drill results showed thick high grade lithium bearing pegmatite that are some of the best intercepts ever encountered on the property. While these intercepts it outside of the current pit shell they speak to some of the Blue Sky potential at the project and we will have more information after.

After follow up drill campaigns are completed.

Now, let's turn to Ghana, and the <unk> lithium project.

He is just such a fantastic project with low estimated upfront capital cost simple dense medium processing low expected operating cost based on last year's feasibility study <unk> is only about 70 miles from the port of <unk>, whose bulk terminal is capable of handling up to Cape sized vessels that <unk>.

Terminal has recently been upgraded by the port authorities and the automated ship loading facilities have been in service for a number of months.

<unk> estimated annual production on the basis of mineral reserves only will be in the range of 340000 metric tonnes of spodumene concentrate per year.

We have an earn in rate to a 50% ownership stake in the project excluding government interests and we hold a life of mine off take rate to 50% of production at market prices.

A number of important milestones were achieved last quarter and in the first few weeks of this year.

Last October gone as Ministry of lands and natural resources granted a mining lease for the <unk> project. That's the countries that very first lithium mining lease that lease includes a 13% free carried interest in a way for the government of Ghana as well as a 10% royalty. This lease does remain subject to ratification by the <unk>.

Our limit.

In the second half of 2023 myth, that's the minerals income investment fund of Ghana entered into an Mou with Atlantic lithium to make a total of $32 9 million U S dollars and investments in Atlantic lithium at the listed company level as well as directly into the <unk> project in January.

This year <unk> completed the first part of its investments under the Mou by completing a 5 million U S dollar subscription into Atlantic lithium.

The discussions between Atlantic and myth continue regarding the second stage of myths investment of $27 9 million dollar investment directly into the <unk> project in exchange for a 6% project stake.

Should myth complete that project investment than net of the Ghanaian government, 13% free carried interest Piedmont and Atlantic lithium would each hold a net project level interest of 45%.

Very importantly from our Piedmont perspective, amidst investment and the government's free carried interest do not impact our off take rate to 50% of annual spodumene concentrate production on a life of mine basis at.

Atlantic is also advancing other regulatory approvals and permits and they estimate that all of these permits along with government ratification of the mining lease should be received within 2024.

That wraps up discussion of our joint venture partnerships now I'd like to come back to the United States and move to Slide 18, where we can touch on our wholly owned Carolina and Tennessee lithium projects. Both of these projects are strategically located and we continue to advance them on timelines that consider current lithium market conditions.

Strategic partnering efforts and government debt financing opportunities.

Speaking, specifically about our fully integrated Carolina lithium project, our main efforts over the past quarter and early this year have been directed at continuing to make progress on our state mining permit in January we submitted our Adi number three response to Daimler that's the division of energy minerals and land resources here in north.

Carolina. This adi dealt principally with the type of liner under our proposed waste rock stockpile and the monitoring of surface and groundwater around that stockpile.

After reviewing our responses Daimler has followed up with an Adi number four earlier this month, which includes two questions first relating to monitoring of groundwater associated with are back filling of pits and technical questions regarding our design drawings for our erosion and sediment control plans.

We assess that these questions by Daimler are relatively straightforward in nature, and we expect to be able to respond to daimler within the coming weeks.

Upon receipt of our state mining permit will then make a decision regarding the timing of our rezoning application for the project, we continue to engage with community stakeholders, including the Gaston County Board of Commissioners in advance of that future rezoning process.

Flipping ahead to slide 19, and Tennessee last quarter, we purchased a tailing storage facility adjacent to our proposed project site owning our own storage facility for our NRC tailings has been part of our strategy for Tennessee and will provide significant operating cost savings versus tailings disposal by third parties.

Last quarter, we also signed a purchase agreement to buy a large industrial site in Tennessee next door to our proposed operations, which we could potentially use to reduce future project capex.

Right now, we're kind of evaluating the timing of Tennessee lithium against the backdrop of prevailing market conditions financing opportunities and progress on regulatory approvals that Carolina lithium ended of William.

That concludes my remarks, and in our update on Piedmont's global portfolio with that I'll turn it over to Keith for an update on the market and our funding strategies.

Thank you Patrick I'd like to conclude our presentation with some thoughts about the market and our funding strategy, there's an old saying in the mining industry. The solution to low prices is low prices after hitting record highs in 2022 lithium prices have fallen 85% or 90% and appear to have settled at these lower levels. These lower lithium prices have led to lower equity valuations for.

Lithium companies and with share prices lower and interest rates higher the cost of capital has risen significantly for new project development. The economics of new projects are obviously more challenging and we expect more greenfield lithium projects to shift their timelines to the right to the extent strong demand growth continues and new supply in fall short a strong recovery in lithium prices could be in our future.

The next slide shows you the trailing 24 months and 12 week average reported pricing as you can see in the right hand chart prices appear to have stabilized. We are hearing from many market observers that inventories throughout the system are down significantly in some cases cathode producers have less than five days of inventory on hand down nearly 75% from early 2020.

Three.

Battery manufacturers that made over $80 billion in commitments to newer expanded manufacturing to build out the EV supply chain in recent years and that is just in the United States. We believe the demand from these downstream manufacturers will equate to significant new pressure on prices, which contribute to the global expectations that demand will outstrip supply in the latter half of the decade.

Yeah.

While lithium supply and demand near to balance in 2023 and May continue in 2020 for the low price environment is causing cracks in the supply growth story.

Analysis of supply reductions and project delays are picking up as some examples we've seen core lithium suspend mining operations and the Grand Open Spirit open pit tolleson as revised production guidance lower Albemarle is deferring capital for its planned Mega site in South Carolina and just this week we've heard the train three at <unk> is not ramping up the <unk>.

It is challenging right now for many project developers our sense is that delays in supply chain development combined with the growing demand in the EV industry may underpin the next lithium price recovery.

Forward pricing curves are in contango, and we are well positioned to capitalize on any upswing in prices via our offtake agreement at Nal.

With the ceiling price of $900 per ton the offtake agreement structure to capture meaningful upside in a rising price environment similar to a call option on lithium prices now, let's look at what's driving the demand growth story electric vehicles and energy storage systems.

There's a false narrative circulating in the market right now, but EV sales.

The industry actually a record sales in 2023. This includes the month of December were $1 5 million, New Evs were sold which is more EV sold in the entire year of 2017 moving into 2024 in this seasonally slow months of January the EV industry, 69% year over year growth globally.

And that growth is not just happening in China in the U S. One 4 million Evs were sold in 2023, representing a 50% increase from 2022 and North American EV sales grew by 41% year over year in January.

So I would say, we're moving from a period of exceptional growth to tremendous growth.

As you can see in the EV sales bar chart penetration rates are expected to grow each year, but it's not just the number of evs being sold the size of each battery is also important particularly in the U S where drivers want to go long distances larger batteries, obviously require more lithium.

The energy storage segment is also presenting a new channel of demand once nascent market energy storage has become a significant market for lithium producers and esf's demand is expected to grow almost 50% in 2024.

<unk> has already surpassed demand from the traditional portables market, where the commercialization of the lithium ion battery began.

All that is to say we are still in the early stages of a decades long revolution.

Moving to the next slide let's look at what it will take to support the development of this American supply chain today, China produces more than 80% of the world's lithium hydroxide, there's widespread recognition across the industry that the U S is woefully behind in both critical minerals production and in downstream battery and EV manufacturing.

You mentioned the massive investments that are being made by battery manufacturers in the U S. Those plants are going to need approximately 780000 metric tons of lithium hydroxide, which is 40 times more than the current domestic production capacity. So we should expect significant shortfalls in lithium here in the U S. Over the next five to 10 years, our strategy is to position <unk>.

To take advantage of the near term and long term market dynamics by combining focused cost saving actions with prudent growth in our project portfolio.

Onto the next slide our financing strategy is centered on maintaining financial strength, while minimizing equity dilution to beat my shareholders at the corporate level, we have taken a series of actions to fortify our financial position, we initiated a cost savings plan aimed at reducing run rate cash expenses by $10 million in 2024, we reduce our head count by 2000 <unk>.

Percent earlier this year, while this was a difficult decision. We believe we maintained a strong core of employees capable of executing our long term strategy for the next bull market.

We also reduced our equity ownership in our joint venture partners.

Transition should occur in 2024, and we hope it will lead to price realizations that are both stronger and more stable.

On the next slide will discuss how we think about funding our business in future operations with the goal of minimizing delusion to Piedmont shareholders where possible.

We ended 2023 72 million of cash and have since taken action to strengthen our balance sheet through the sales I say on an Atlantic stock for net proceeds of approximately $49 million.

As we think about our projects there are numerous funding options available and we continue to evaluate what makes the most sense.

At North American lithium in addition to the operating cost improvements expected. This year. We are working with say 100 to evaluate a number of project level of funding opportunities could alleviate pressure on the partners to fund operations and sustaining capital projects. Nal is currently unencumbered with no debt no royalties and other than the Piedmont Arctic agreement no committed uptake.

Needless to say funding options at Nal are plentiful.

As discussed earlier, we expect 2024 funding at a lawyer to be modest we're hopeful go to the project receives all approvals later this year. So the construction could begin in 2025, and we are assessing several known to losing funding options here as well we intend to apply for project financing from the development Finance Corporation, which could provide a majority of the capital for the project in our lifetime line I'll take agreement.

50% of lawyers production may be able to underpin substantial customer financing for the project or strategy for funding R. U S projects remains the same maximize project that funding via the department of Energy's Atvs loan program and fund project equity largely through contributions from potential strategic partners.

Given their locations in the United States strategic interest in the project is robust but to maximize value for Piedmont shareholders. The right time to put this financing in place is when lithium markets have begun to recover.

Before turning to Q&A, we wanted to share slide that put Piedmont alongside some of its equity market peers, mostly spodumene companies trading in the U S and in Australia.

As a multi project company Piedmont is sometimes seen as a little complicated a model and value, but I would just highlight a couple of things.

At approximately $150 million or enterprise value is by far the lowest amongst his peer group I'd contrast that with our significant spodumene reserve base in our large planned spodumene of lithium hydroxide production volumes versus the peer group. Our hope is that if we can develop our projects while minimizing delusion to our shareholders that we will see our valuation move closer to.

These pure benchmarks.

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

No opening before.

Okay.

[noise]. Thank you so much we are now say keeling.

<unk>, if you'd like to ask a question. Please pastime number one on your telephone keypad.

Question comes from David <unk>.

Yeah mine is now open.

[noise]. Thanks cases team. Thanks for taking my questions. This afternoon and for all the prepared remarks.

Okay.

Curious if you could give us some color.

Sure your view on the market and the eventual outlet I take the plans that Piedmont has to kind of whether this downturn.

I'm curious as you think about projects, especially in the United States.

Characterize the environment for for Offtake and customers have you seen a marked shift.

Customer sentiment and the potential ability to secure I'll pick agreements over the last several months now in conjunction with this lithium price downturn.

Hey, Thanks, David Thanks for the comments and thanks for the question no I think any customer interest remains very high.

Amber accompanies having offtake running processes to secure prepaid off stage for different projects Atlanta.

A lawyer.

L. A is doing it.

We continue to have very healthy conversations with people, but I think for the U S. Projects. We have you know these are big projects they require a lot of capital.

For us it's really about you know what the right time to be asking people to write significant checks.

Those are loans or equity checks and realistically what we think is maybe the bottom of the market is in the ideal time to do that so we've had a lot of good conversations with people. We continue those were meeting with folks at at all times, but we don't feel a lot of pressure to do those for those projects forward aggressively in this market.

It will be patient with that.

I appreciate that color Keith.

Maybe just talking about.

You highlighted that the funding is plentiful, but I you know I guess.

With prices are low price proration really being the question here at this situation.

And.

Prolongs now with a spasm in pricing environment sort of the.

800, and $900 a ton range for S D six.

What what do you think like the most likely likely responses for an I L over the next year to year.

Just to manage through that process.

You'll listen we're we're assuming we expect prices to improve in due course.

Modeling, we think conservatively, which is a price to stay at the current level I think as we think about nal in this operation to review with say on is ongoing.

We're very optimistic about the outcome.

The capital improvement projects, and where cash costs go. So number one we think the cash cost of the project will improve meaningfully during the course of this year.

Secondly, with with our customers and with other prospective customers were having.

I would say.

Constructive conversations about.

Bud pricing central for pricing arrangements et cetera to very strategic asset you know this is north America is only significant spodumene producer.

Materials, obviously I already qualified if matters to people.

So I think there's I think there's a chance you'll see something and I would say the joint venture itself has unallocated tonnage of 75 or $80000 a year. That's very valuable there are people, who want that material, who and we haven't secured that yet we frankly haven't been focused on it. Neither cyano, we've been focused on the operating side, but there's a real opportunity there to bring in capital.

So our hope is that we.

We get through this capital program, we see operating costs improve as expected.

And we are no breaky, then we would love to be breakeven at these prices and positioned to capitalize on a future recovery cycles. In this industry don't necessarily last that long up or down.

So you'd hate to be taking 12 or 18 months back up if there was a recovery.

Absolutely.

I appreciate all the responses and all the information that they thank you.

Thanks.

Our next question comes from <unk> B T I G E L.

Okay.

Hey, thank thank you and good afternoon, and thanks for taking my questions.

Thank you for all the detail on Carolina, lithium and I I guess as we think about you know.

Having received a Adi number for which I guess addresses the ground water and you know the sentiment.

Control you know how.

How much what else should we be thinking about before we get the permit completion is is that guy are those kind of the final hurdles are there are there is should we expect some more back and forth you know over the next few quarters.

Yeah, It's a good question.

<unk> always reserves is right to continue to ask questions up until they render a decision on our permit so it's not inconceivable that additional questions <unk> com.

I would say is if we look at the trend of the number of questions that need received.

<unk> starting.

The fall of 2021 until now.

They each reduced the number in successive Adi. So this last round as to what we would consider very straightforward somewhat technical questions in nature that require us to make some updates to our design drawings and return it back to the state and I'm hopeful that we will be including the process.

Not too distant future.

Okay, great. Thank you for that and just you know realizing that lithium pricing is volatile letting you know, let's just assume a more positive outlook and a recovery here in the next couple of years and as we think about Ghana, taking F. I D and trying to gauge Capex you know you.

Noted that the $124 million.

<unk> Ferghana.

If we if.

If we kind of look and just use the curve as a guide and how should we think about the the the split and timing.

[noise] yolie of that $124 million.

In Capex for for Piedmont for Ferghana.

Yeah, what I would say is that management at Atlantic is working very hard on approvals or the William project.

There are a number of them.

Clear D T a permit.

Mailings permit ratification of mine Lee.

Settlement action plan among others their expectations that they will receive all of those approvals within this calendar year.

Starting.

2025 10 is.

Back with all those for those in hand to start funding our obligations towards construction.

Okay, great. Thank you for the time everybody.

Thanks, Craig.

Mmm.

[noise] next question comes from Bill Peterson and J P. Morgan Your line is now.

Good afternoon, everyone and thanks for taking the questions.

I guess coming to the any optimization efforts and I might've missed it but I guess, how much of the cast caution proven.

One basis could you see it.

Once the strategic initiatives like the crust for them and.

<unk> alright implemented.

You want to take that Patrick Yeah, I would say you know on a on a trend basis we.

To see as much as.

Four or $500 Canadian per ton cask cost from where we were in the second half of last year to where we might expect to be at the end of this year. Once we're at full Ram taking into consideration the.

Other optimization activities.

It's obviously, a pretty significant immediate them the absence stomach crushed door.

<unk>, we just take a lot of downtime in the plant.

Crossing facility needs maintenance, so the elimination of that should increase production meaningfully with no more people know more power et cetera.

So unit production costs should improve quite significantly.

Yeah. Thanks for that and then I guess as we think about 2024, I know, you're obviously prefer L. T. A vs spot, but how should we think about the mixed as we progress through 2024, I guess, realizing we have at least one spot here in the first quarter and then let the pricing structure <unk> progressively Ah.

Yeah, you're right. So we made a spot shipment in January it was initially scheduled for December.

Focus right now is very much on transitioning to transitioning our shipments to our longterm customers and having the joint venture take its central share of the material and sell them on the spot market until we have a long term uptick agreement in place for that so ultimately it depends on how fast our customers can take the material.

They each have uhm.

One of them has a lithium hydroxide plan of their own they're gonna be ramping up this year. The other is taking it through it twirling facility.

Square and it really depends on how fast they can take it and we we intend to provide clear guidance on shipment volume hopefully in our first quarter earnings release, once we have more clarity on that and right now it's just premature.

<unk>, Yeah, we do have the eligibility.

Eligibility to take 126000 tons of this year are normal hundred 13000 tons plus the 13 that was delayed into January.

We still hope to do that we would hope that the vast majority of that his contract shipment and right now we're kind of foresee maybe one or two more spot treatments over the course of the year maybe not.

Depending on how fast our customers can take the material.

And if I might just add you know if you think about operations that N a L and the commitment from Piedmont, what I would say is the greater part of our expenses and supported the joint venture are front loaded in the <unk>.

First half of the year.

Should be complete in sort of the April may timeframe. So we expect to have.

Forgetting reduce financial commitments to the joint venture in the second half of the year and as Keith said, we really backloaded, the lifting schedule between ourselves and the joint venture tons towards our customer contracts under long term agreements in the second half of this year, so conditions from our perspective sharing group.

Okay. Thanks for sharing the insects.

Thank you.

Our next question comes from Greg Jones from BMO capital markets Your line.

<unk>.

Hi, good afternoon <unk>, Thanks for taking my question.

Thanks, Greg.

With the cash balance <unk> $72 million in the plans that you're describing submitted minds capital spend into 2024.

Sure any color on the decision to back the holding Thursday Ona within.

Within the quarter versus continuing to hold given where where's your prices across the sector has been recently.

Yeah, Great Great question listen we thought about this off and on we frankly considered selling stay on it in Atlantic shares months and years ago at higher prices and in retrospect that would've been a good thing to do but as we can head into 2024, and we thought about the environment, we're in and the uncertainty we face I mean, we're very bull.

<unk>.

Seemingly bullish medium term I don't have it I have a fairly cloudy crystal ball for the next quarter or two and we just thought there was an opportunity you know in the Atlantic situations, we have an opportunity to sell those shares at a pretty significant premium.

In this I don't want.

Situation there shares obviously are treated really well this year and traded it up recently.

And then he can part.

The good news and the mobile and DFS. So there was an opportunity for us monetize those and really take funding.

Funny at the Piedmont level, I wouldn't say off the table, but you know there's a lot of people ask me what are you going to run out of money. When you when you need to raise equity and frankly, we think we just did you by selling it.

Island of shares in the Atlantic Sheers and totally raised.

Around 50, almost $50 million U S dollars, that's a lot for us and it kind of positions us to get comfortably into 2025.

Without having to worry about dilution at the Piedmont level.

Thanks.

On the Q3 call there was some discussion around the strategic partnering process, an ATM loan application that's underway for Tennessee, and I think the commentary at the time.

That could potentially take nine to 12 months to to reach a resolution or or a conclusion there.

With today's release there was also mentioned in the Carolinas essentially approaching a conclusion on the permanent inside.

How do you think about the timing of the staging of those too.

Officers or project.

Timeline sort.

Sort of come together at the same point.

Have you is to.

Staging one versus the other or or how do you think about the timelines currently.

Yeah, It's a it's a great question, we think about it a lot.

We were feeling optimistic about the about the kind of Carolina permitting process now, whereas sort of six.

Six plus months ago, as we were getting permitted in Tennessee. It appeared that was that was certainly the project to move forward most quickly and fat in first and we entered into the ATM discussions we entered into a series of strategic discussion I guess I would say the department of Energy's aware of and interested in both of the projects.

Take the strategic parties are interested in both of the projects, we'll see how the Carolina permitting process evolves here over the next several weeks or months and in.

In this market, we're not in a hurry I mean these are big projects ultimately their billion dollar plus projects. This isn't the best time to try to fund them.

But we've we've laid the groundwork where in touch with all of the strategic parties that we care and there are a number of them. We have a great relationship with the daily. So those are process. Once we decide once we have more clarity on each of the project's timeline you will make will make a clear decision then and hopefully that happens over the next couple of months.

Great. Thanks, very much that's all for me.

Thanks, a lot Greg.

Our next question comes from your <unk> Your language now okay.

Hi, good afternoon.

Oh.

Just got a few things I wanted to run by you.

Talking about the energy storage market and of course, we certainly see lithium pricing cycles before.

If we look ahead to.

Pulling out her out of this down cycle.

Sort of what that source of demand.

How that might serve.

Perfect I guess the shape of the curve I'm heading out of it. So I just thinking about the contrast between now and say the last rebound.

Yeah. That's a good question you know candidly, we don't we have Piedmont don't spend a lotta time directly thinking about the energy storage market is not where our focus has been we're focused on easy business and customers.

Customers, we have now and the customers were spending time with a strategic parties are all aligned with.

Frankly.

Spodumene concentrated to lithium hydroxide for for vehicles. So having said that <unk> is a really important part of the overall lithium kind of macro story is growing more quickly is at an earlier stage, but is growing more quickly than heavy demand.

Lithium so it's really helpful. I mean to some extent lithium units are fungible.

Extent, they're committed in the field of energy storage storage solutions, that's great for demand generally and I think it will have an impact.

And I hate the share of lithium going into the Esfs business is growing even though demand for each of the other components like a visa is also growing very quickly, but but yes. That's growing more quickly. So you're right. It was an insignificant part of the market or less significant part of the part of the market three years ago. When the market began to turn four years ago now and then.

Will certainly be a bigger part going forward.

Great Thanks and uhm.

I guess when you talk about sort of Nonword refunding options and you talk a little bit about about timing it may not be ideal, but I guess when you talk about potential partners.

Looking at sort of the medium term it just wondering is sort of.

The right environment.

Okay difficult piece of of what potential funders might be thinking about or are they just more sort of big picture macro assuming that we have sort of a.

Near term Choppiness and pricing and then returned to a more normal lifestyle.

Your pricing.

Oh for sure like a <unk>.

<unk> lack of whatever financing you have any thoughts on that.

Yeah.

I hope I answered the question.

You are kind of where you are getting out I guess I would say it made the strategic parties were talking to tend to be.

Very large companies.

No motive business the battery business.

Other businesses mining and oil and gas or their variety of parties.

These are big projects that they tend to attract your big companies withdrawn balance sheets for whom.

And the financing environment that might affect a smaller company like ourselves is somewhat less significant so.

And these are companies, often who who who have made very significant commitment to their own two capital projects.

They need for which they needed supply divide there building <unk> plants or they're building battery plants or the building cathode plans.

Spending all the money to build those plants and being unable to secure supply is.

Yeah. It was a serious issue for them. So there's a real focus on it. So I don't think it is having quite a significant impact on on those discussions and and really we don't have anybody on the strategic side, telling us to slow down they don't need the material is quite the opposite people are wondering why don't why don't you do a deal with me now for us the issues, you're a little more.

M a.

Hey, we're having we're having the deliberation about Carolina versus Tennessee timing, just given the pace of permitting and everything else.

The there's the process of going through the Atvs Malone process, which is a multi month process obviously.

And it is really whether you whether this is a time, we think we want to kind of lock in equity and debt commitments for a project that is <unk>.

Large in a market that's not as attractive as wasn't coupla years ago, and not as attractive as we think it will be a coupla years from now so we're just being patient I mean, one of the threshold questions. We think about every day, we're all shareholders.

And is you were focused on building a business successfully at the end of the day, we want to do it in a very prudent way.

While minimizing dilution to our shareholders Full-stop. So we're.

We're not gonna race into $1 billion across project, where we give away a lot more value in a bear market that we might be.

We might be able to preserve and stronger market.

Great and just the last one you talked about some of the encouraging drilling results up at.

<unk>, so that sounds like it it offers the potential for some upside to pass expectations I wondered if maybe a little bit of postmortem were so focused on on current production and shipments but.

Last year, the ramp up to the the restart the plant and everything I Wonder if.

Possibly you could sort of post mortem on.

How that period relative to expectations anything anything else encouraging about the <unk> stuff, but.

It might be a good crew to what further development stages might look like.

Yeah, I'll take a crack at that listen we are.

10 months into production at N L.

These are.

Ejected generally take a year or two to ramp I think we feel really good about the ramp me. The only thing that we should happen differently is pricing.

We started a process and a bullish market pricing kind of fell month over month over month, which just makes it more challenging but I think the team on the ground is doing an exceptional job it's a great team.

Some components of the team that was there years ago, but really a fresh new leadership team has done a great job and I would highlight north American lithium it's a special asset. It's it's been around for awhile. It was started really in 2012, 13, 14, Redfin retrospect way too early before the easy market had developed.

So it had a couple of false starts, but I think it's an asset now that is scale. It has a big resource it's got big upside based on that drove results. It's in production is basically was built and some of the final capital is going into it now and you contrast that with Greenfield projects, where there's a lot of capital to raise and all the ramp process. We.

We're almost done with every other project has to go through you think about Greenfield spodumene projects or others. They just want advice of necessity take time to ramp some more than others. So I think we're at the tail end of that and I'm hopeful at the tail end of that coming into a period, where operating costs will continue to improve with these capital projects being done and the price of the begin to recover.

There is an opportunity for very substantial profitability of that asset.

Pretty soon so we're excited about that.

Great. Thanks, a lot.

Thanks, Thanks, a lot at all.

[laughter].

Right now we don't have any questions.

<unk> I would now like to hand back over to the management for that <unk>.

Thank you all.

Very much for joining us today and for your interest and he's not lithium as I noted at the top of the call our earnings release and presentation as well as a replay of the call will be available at our website.

We thank you and have a good day.

Thank you for attending today's call have a wonderful day.