Q1 2025 Piedmont Lithium Inc Earnings Call
Carrie: Thank you for standing by. My name is Carrie and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2025 Piedmont Lithium earnings conference call.
Carrie: All lines have been placed on mute to prevent any background noise [inaudible]
Carrie: After the speakers remarks, there will be a question and answer session.
Carrie: If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.
Speaker Change: Thank you. I would now like to turn the call over to Mr. John Koslow and investor relations at Piedmont Lithium. Please go ahead.
John Koslow: Thank you and good afternoon. Welcome to Piedmont Lithium's first quarter 2025 earnings call. Joining us today from Piedmont Lithium are Keith Phillips, President and Chief Executive Officer, and Michael White, Chief Financial Officer.
John Koslow: People provide an introduction and review key updates from the quarter, and Michael will then review our financial results.
John Koslow: Keith will provide closing commentary before we transition to a Q&A session.
John Koslow: As a reminder, today's discussion will contain forward-looking statements related to future events and expectations that are subject to various assumptions and caveats.
John Koslow: 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 violence.
John Koslow: In addition, we have included non-GAAP financial metrics in this presentation and reconciliation to the most directly comparable GAAP financial measure can be found in today's earnings release and the appendix to today's slide presentation.
John Koslow: Any references to EBITDA, mean adjusted EBITDA? References to shipments or shipments of spasming concentrate and tons or dry metric tons.
John Koslow: Copies of our earnings release and presentation in addition to a replay of this call will be available on our website at PiedmontLithium.com
Keith Phillips: With that, I'll turn the call over to Keith Phillips. Keith?
Keith Phillips: Thanks, John , and thank you all for joining us today. 2025 has opened with considerable volatility in lithium markets. Prices have fluctuated as the industry continues to navigate shifts in global supply and demand, macroeconomic uncertainty, and evolving policy landscapes.
Keith Phillips: Despite this backdrop, our team remained focused on what we can control, delivering operational and commercial excellence, maintaining capital discipline, and positioning our business for long term success.
Keith Phillips: We ship 27,000 tons to customers to start the year. North American Lithium produced a little over 43,000 tons at a client from the record production level seen in the second half of 2024.
Keith Phillips: Variable weather conditions impacted millionalization, but the team reacted quickly to mitigate the effects on a go-forward basis.
Keith Phillips: On the corporate side of the business, we continue to advance toward the merger recite on a mining that we announced in November . We achieved several notable milestones recently and I will spend time at the end of the call providing more detail on the merger process and why we are so excited about the transaction.
Keith Phillips: First, let's move on to slide forward to discuss the quarter at NAL in more detail.
Keith Phillips: NAL saw a 15% quarter-over-quarter declining production through March and produced approximately 43,000 tons to start the year.
Keith Phillips: Importantly, the operation remains on track to meet the guidance provided by Sionna Mining called for production of 190 to 210,000 tons, where their year ended June 30, 2025.
Keith Phillips: The challenges encountered in Q1 were largely driven by volatile weather patterns to begin the year, with a stretch of warming wet days followed by a cold snap resulting in freezing conditions and hurting performance principally in the crushing circuit.
Keith Phillips: While this type of weather pattern is atypical, it's exactly what we and our partners that say on a plan for when installing the crust or dome to allow bypassing of the crushing circuit.
Keith Phillips: The Crust Door Dome's capacity is roughly one and a half days in mill feed, so additional mobile crossing capacity was deployed to support the primary crossing activities as needed.
Keith Phillips: There were several positive developments at NAL during the quarter, including the operation setting a record 72% recovery in March, thanks to process optimization.
Keith Phillips: In April , Sion announced the final drill results from the 2024 Exploration Program, and the focus now turns to producing an update that Noel resorts estimates for the asset.
Keith Phillips: The program confirmed mineralization outside of the existing MRE and supports our belief that NAL is in the early stages of its life with significant potential to expand its resource base, extend my life and scale production over time.
Keith Phillips: Now, let's turn to slide five for an update on the state of the Lithium market.
Keith Phillips: While recent price volatility has captured headlines, it's important to recognize that these fluctuations are not new or unique to the industry. The market is always in cyclical and periods of pricing pressure have historically preceded sharp rebounds driven by structural demand growth.
Keith Phillips: Demand Fundamentals remain strong. EV adoption continues to accelerate and grid storage applications are growing across the globe.
Keith Phillips: While there are plenty of Lithium projects in the pipeline to meet this growing demand, the low pricing we've experienced in the past two years is beginning to have an impact.
Keith Phillips: Greenfield developments are generally moving more slowly, including our own due to the financing challenges associated with current pricing. In due course, we expect this growing demand and slowdown in project development to ultimately lead to tighter lithium market conditions and stronger pricing.
Speaker Change: I'd like to take a moment to focus on developing a secure supply chain for critical minerals in North America, and I'll talk more about that on slide 6.
Speaker Change: As technology and the global demand for energy evolve, it is clear that national energy dominance cannot be achieved without critical minerals.
Speaker Change: and the global supply demand imbalance becomes even more apparent when looking at North America. Lithium demand will continue to accelerate across the region driven by the growth in EV and ESS demand and massive investments in battery manufacturing.
Speaker Change: The reality is that today North America is heavily reliant on imported Lithium and current production levels are nowhere near what's needed to be future demand.
Speaker Change: At the same time, OEM's and battery manufacturers are seeking reliable IRA complaint sources as a supply, creating a clear opportunity for projects like ours.
Speaker Change: Trade policy is also emerging as a key factor shaping the market outlook. Recent and proposed tariffs could significantly alter supply chains and increase the strategic value of local supply.
Speaker Change: As policy continues to evolve in support of energy security and ensuring we believe assets in the U.S. and Canada will be increasingly favored by customers in capital markets.
Speaker Change: Now, we'll turn a call over to Michael White to discuss our financial results.
Thanks, Keith, and good afternoon.
Speaker Change: We shipped approximately 27,000 dry metric tons for the quarter and recognized $20 million in revenue. This is down from the previous quarter where we shipped approximately 55,700 dry metric tons and recorded 45.6 million in revenue.
Speaker Change: While our shipments and revenue declined sequentially, this was expected due to variations in customer requirements and in line with our guidance.
Speaker Change: Our fourth quarter gap net loss was 15.6 million for a loss of 71 cents per share and adjusted net loss was 10.1 million for a loss of 46 cents on an adjusted per share basis.
Speaker Change: Included in our gap results were 3.6 million and unrealized loss on equity securities related to Atlantic Lithium.
Speaker Change: 1.4 million of transaction costs related to our proposed merger with Saiona Mining, 300,000 related to restructuring charges associated with our 2024 cost savings plan, and approximately 200,000 and other items.
Speaker Change: We ended the year with $65.4 million in cash compared to $87.8 million in cash at the start of 2025.
Speaker Change: Now moving to Slide 9 to discuss our realized pricing in more detail.
Speaker Change: Our Realized Prize for Metric Ton was $741 for the quarter. On an SC6 equivalent basis, our Realized Prize for Metric Ton equated to $823.
Speaker Change: While Lithium prices improved from the lows seen in the second half of 2024, the backwards-looking nature of our customer contracts and the decline in pricing since the end of March have had a negative impact on our realized pricing to begin the year.
Speaker Change: Despite the decline, we are pleased to report a relatively strong price for the quarter in the context of the soft market and pricing reported by other producers.
Speaker Change: Now moving to slide 10 to discuss our sources and uses of cash.
Speaker Change: Operating cask flows for the quarter were negative 19 million driven by timing of working capital associated with sales of Spodgaming Concentrate and our net loss.
Speaker Change: Operating cash flows improved $9 million from the first quarter of 2024 as we made large cash payments in Q1 2024 to settle 2023 spot sales where the final price settlement was less than the provisional payment we received.
Speaker Change: Additionally, our net loss narrowed versus the comparable period as we are recognizing the benefits of our 2024 cost savings plan which we completed at the end of last year.
Speaker Change: Cash outclothes for our joint ventures as well as capital expenditures for approximately two million in aggregate for the first quarter and met the low end of our Q1 guidance range.
Speaker Change: We anticipate an increase in cash contributions to our joint ventures and funding additional capital expenditures this quarter. However, the levels will remain modest as we look to preserve balance sheet strength.
Speaker Change: While our cash balance decreased from 88 million at the end of Q4 to 65 million at the end of Q1, we do not expect to see this type of degradation in the second quarter of 2025 as the timing of working capital associated with sales of Spodgaming Concentrate is driving short-term cash movements.
Speaker Change: Further to this point, we expect our cast balance at the end of the second quarter to be similar to our cast balance of 65 million at the end of Q1 of this year.
Speaker Change: Let's move to slide 11 where we provide our updated 2025 outlook for shipments, capital expenditures, and investments in joint ventures.
Speaker Change: We expect to ship 8,000 to 20,000 dry metric tons in the second quarter of 2025 with the variance related to a planned shipment which is estimated to depart at the end of the quarter.
Speaker Change: We expect any shipments that leave after the end of Q2 to be accretive to Q3 shipment totals and will not impact our four-year shipping outlook of 113,000 to 130,000 dry metric tons.
Speaker Change: Our 2024 shipping schedule is back in loaded and at times lumpy, but this is not dissimilar to 2024. As always, certain factors, including shipping constraints and customer requirements, may impact the timing of future shipments.
Speaker Change: For our CAPEX Outlook, we have reduced our full-year range from 6 to 9 million down to 4 to 6 million.
Speaker Change: This is the result of direct actions taken in relation to our land position for our Carolina Lithium project whereby we have either deferred or opted out of certain land purchases that no longer make sense, especially during the continued Lithium downturn.
Speaker Change: Joint venture investments and advances are expected to be in the range of 2 to 4 million and a second quarter and approximately 7 to 13 million for full year 2025. This compares to 26 million and 2024.
Speaker Change: Our outlook is subject to changes in market conditions and may vary materially. With that, I'll turn the presentation back over to Keith.
Keith Phillips: Thank you, Michael. Turning the slides 13, I'd like to provide a status update on our merger with Sionna Mining. After announcing the deal in mid-November, we've been hard at work progressing the deal towards completion.
Keith Phillips: This is a complex transaction, but we've been very pleased with the progress made to date, and we continue to work diligently with our counterparts at Sion. We recently made several announcements related to progress, including the new name for the combined company, Elevra Lithium, and the names of the nominees to the Elevra Board of Directors.
Keith Phillips: The deal has received regulatory clearance from investment Canada and Hartscott Rdino in the United States. CIFIUS also completed their review and indicated that it will take no further action with respect to the transaction.
Keith Phillips: Members of the Piedmont and Sionna teams have been engaged in detailed integration planning, making sure that the company is ready to execute as a lever on day one. There are roughly a dozen different work streams focused on everything from corporate branding to project prioritization to measuring corporate synergies.
Keith Phillips: We are in the SEC review process now and continue to expect that shareholder votes for both companies will occur in the coming weeks and the deal will close in mid 2025.
Keith Phillips: When we announce the transaction, we announce that Piedmont shareholders would receive 527 ordinary shares of the honor mining for each share of Piedmont Lithium common stock held for 5.27 Sion of shares for each Piedmont CDI.
Keith Phillips: This ratio was devised to result in an approximate 50-50 split between shareholders of Piedmont and
Keith Phillips: After a review, the parties agreed that a reverse-box split or share consolidation in Australian parliaments make sense as part of the transaction in order to improve a lever's appeal to institutional investors.
Keith Phillips: Reverse whip will occur at the Sauna level and be subject to their shareholder's approval.
Keith Phillips: Sion of Shareholders will receive one new lever share per 150 Sion of Share's own, and this will obviously impact the number of lever shares that Piedmont shareholders will receive in the merger.
Keith Phillips: Additionally, Sionna is proposing a 1 for 10 ADR ratio for the American Depository Shares that will be listed on Nasdaq.
Keith Phillips: A summary is laid out here on page 14, and there will be more detail included in the merger circular, we send to shareholders in coming weeks. Importantly, while these proposals will impact a number of shares of standing, they are not expected to have any valuation impact.
Speaker Change: I'd like to conclude this afternoon's call with the brief comments on the benefits to Piedmont Lithium shareholders from our planned merger with Sao Anamining.
Keith Phillips: On slide 15, you've outlined some of the key benefits of bringing together our two complementary businesses.
Speaker Change: We believe the merger will create a larger, simpler and stronger company.
Speaker Change: With all of the tons produced at NAL coming under control of one company, a lever will have increased relevance within the market and be a more attractive supplier of the industry. The combination also unlocks value for Piedmont shareholders by enabling the possible expansion of the NAL complex.
Speaker Change: The strong growth results we've seen at NAL indicate the possibility for meaningful resource and reserve expansion, hopefully leading to the possibility of an attractive brown field expansion spreading fixed costs over a larger operating base and further enhancing the economics of the operation.
Speaker Change: The transaction also brings mobile land into our portfolio. Based on recent drill results reported by Sionna, mobile land is a transformative growth project, large, high-grade, scalable. It's exactly the kind of asset customers are looking for, secure, reliable, sustainable with heat supply in North America.
Speaker Change: On the corporate side, we expect to realize synergies of approximately 50 to 20 million annually in the merger secured committed funding of approximately $43 million from resource capital funds. RCF has a significant history of delivering substantial returns and contributing to the advancement of critical mineral project development.
Speaker Change: Lastly, a unified corporate structure will consolidate strong operational credentials, streamlined decision-making, reduced duplication in federal line operational and strategic priorities across all assets.
Speaker Change: In summary, we believe the law turned fundamentals for Lithium remains strong and the combination of Piedmont and Sayonath to form the lever lithium will create a business that can operate through the cycles and generate sustained value for our shareholders. With that, we can turn the call over to Q&A.
Speaker Change: At this time, all I'd like to remind everyone if you would like to ask a question, please press star then the number one on your telephone keypad. Again, for any questions or comments, please press star when now. We'll pause for just a moment to compile a Q&A roster.
Speaker Change: Your first question will come from Noel Parks with Tully Brothers.
David Deckelbaum, Michael White, David Deckelbaum,
Hi, good afternoon.
They know, how are you?
Speaker Change: Good, thanks, good. You know, of course, uncertain use of the word of the day or the month, but you just mentioned tariffs and the effect they could have on supply chains and
Speaker Change: Do you anticipate a direct effect that could, in fact North America are you thinking more of the ripple effects as other supplies, their economics change, you know, as depending on how the tariffs are applied.
Speaker Change: Yeah, no good question. I think from a long-term perspective, it would be, and we're early innings here in terms of what may happen in terms of tariffs.
Speaker Change: whether they become a factoring global economics in a way that haven't been for several decades or not. In the long term, who knows, but I think having North American projects is critical and positive from that perspective, certainly to the extent that there are tear up orders up around the U.S. That's positive in the Caroline Lithium. [inaudible]
Speaker Change: for the Carolina Lithium Project. In the near term with production and Quebec can mean between ourselves and.
Speaker Change: Tesla, that's right between ourselves and Saiana, we ship most of the material to Asia. It's not impacted by tariffs. Ship it into the US. We'll be impacted by tariffs as I think I might have said last quarter that price is like. [inaudible]
Speaker Change: prices as low as they are. The chair of burden isn't that significant and we don't think it will affect customer's decisions on.
Speaker Change: where the material goes, but it's certainly a factor everybody's watching. And as a reminder, obviously the tariff falls on the customer by a rip material, not on us.
Directly.
any impression it's made, any shifts in terms of... Um...
Speaker Change: Just reception to the Kelly and Lithium project on the ground, and locally, for what I understand, there's also a good bit going on with
Speaker Change: You know, interest rates, real estate, and sort of everything in that area in the country. So just one of you had detected anything in the last couple months.
Speaker Change: No, I would say neutral on that. I think the tone in the government of the DC of the importance of critical mineral, that's very positive for us at many levels.
Speaker Change: We think that will be positively seen locally as well. Just given the market we're in, you are focused in Caroline, our primary focus right now remains.
Speaker Change: Completing the permitting process, so we've got our mind permit. We're feeling good about the air permit for this year.
Speaker Change: to positive signals recently on that. So that's good. So really buttoning up the permitting before we would approach the rezoning process anyway. And then we're just faced with the reality, which I think everybody in the industry is that was. [inaudible]
Speaker Change: Spiderman Price is at these levels. It's really not a great time to push the button on a project.
Speaker Change: on projects anyway. It's kind of ironic on the one hand it's probably never been a better time to go to Washington to get support for a project. On the other hand, the Lithium market conditions today which I can't imagine can persist indefinitely are challenging so it's just not a great time to be funding a project.
Right. Thanks a lot. Bye-bye.
Thanks, Noel. Thanks, Noel.
Speaker Change: And once again, ladies and gentlemen, for any questions or comments, please press star one now.
Hmm.
Speaker Change: There are no further questions at this time. I'll turn it back over to management for any closing remarks.
Thank you very much, moderator, and thanks everybody for listening.
Speaker Change: Thank you for your participation and that's all for today's conference call. You may now disconnect.
Thank you.