Executive Summary / Key Takeaways

• The impending merger with Sayona Mining to form Elevra Lithium is set to establish a dominant North American lithium producer, unlocking significant operational synergies and expansion potential at NAL and integrating the high-grade Moblan project.
• Piedmont's strategic consolidation of U.S. lithium hydroxide capacity at its Carolina Lithium project, leveraging its unique integrated mine-to-hydroxide model and IRA tax credits, positions it as a key player in domestic supply chain security.
• North American Lithium (NAL) has achieved steady-state operations with improving cost profiles and strong recovery rates, providing a foundational revenue stream and significant brownfield expansion opportunities.
• Despite current lithium market volatility and associated financial pressures, Piedmont has implemented aggressive cost-saving measures and capital discipline to preserve liquidity, strategically deferring major project FIDs until market conditions improve.
• The long-term outlook for lithium demand, driven by accelerating EV adoption and massive growth in energy storage systems, remains robust, positioning Piedmont to capitalize on an anticipated market rebound with its strategically located and technologically advanced assets.

The Quest for North American Lithium Dominance

Piedmont Lithium Inc. (NASDAQ:PLL) is strategically positioning itself as a cornerstone of North America's burgeoning clean energy economy. Founded in 2016, the company's mission is to become a leading domestic supplier of lithium products, focusing on hard rock spodumene concentrate as the most commercially scalable and lowest-risk raw material. This strategy is critical in an industry where global demand for lithium, driven by accelerating electric vehicle (EV) adoption and expanding energy storage systems (ESS), is projected to grow at a robust 15-20% CAGR over the next 5-10 years. Despite this immense demand, North America remains heavily reliant on imported lithium, with the U.S. currently producing only 2% of the world's supply compared to China's 60%. This imbalance underscores the strategic imperative for companies like Piedmont to fortify a secure, domestic supply chain.

Technological Edge and Integrated Operations: A Differentiated Approach

Piedmont's competitive advantage is deeply rooted in its technological and operational strategy, particularly its commitment to integrated production. At the heart of this is the Carolina Lithium Project in North Carolina, a wholly-owned initiative designed as a fully integrated spodumene ore-to-lithium hydroxide facility on a single site. This unique co-location minimizes transportation distances and leverages high-quality local infrastructure, low energy costs, and a skilled talent pool, all contributing to its expected position as a low-cost producer. The company's decision to consolidate the planned 30,000 metric tons per year (mtpa) lithium hydroxide capacity from its Tennessee Lithium project into a second train at Carolina Lithium aims to achieve up to 60,000 mtpa, deploying capital and technical resources more efficiently. The front-end engineering work from the Tennessee facility is directly transferable, showcasing a strategic reuse of intellectual capital. Furthermore, the U.S. Inflation Reduction Act's 45X tax credit, offering a 10% manufacturing credit on direct and indirect material costs, is expected to materially improve Carolina Lithium's after-tax economics.

Beyond Carolina, Piedmont's portfolio includes the North American Lithium (NAL) operation in Quebec, Canada, a brownfield asset that has demonstrated the benefits of expedited restart and lower development costs compared to greenfield projects. NAL achieved steady-state operations and full run rate in June 2024, ahead of forecast, with Q2 2025 production reaching 58,533 dmt of spodumene concentrate, boasting 93% mill utilization and a record 72% lithium recovery in March 2025. Cash operating costs, excluding inventory movements, reached a new low of $709 per ton in Q4 2024, with targets to further reduce this to sub-$700 per ton delivered to Quebec City. This operational efficiency is a direct result of process optimization and strategic investments like the crushed ore dome. The Ewoyaa Lithium Project in Ghana, another key asset, utilizes dense medium separation (DMS), which contributes to its relatively low capital expenditure per ton and potential for a fast construction and ramp-up timeline, drawing parallels to successful projects like Sigma Lithium (SGML).

Forging a Unified Front: The Elevra Lithium Merger

A pivotal strategic move for Piedmont is its proposed all-stock merger with Sayona Mining Limited , its joint venture partner at NAL, to form Elevra Lithium Limited. This combination is designed to create a "larger, simpler, and stronger company," aiming to be the largest current lithium producer in North America. The merger consolidates NAL's production under a single entity, enhancing market relevance and attractiveness to customers. It also unlocks significant value by enabling potential brownfield expansion at NAL, leveraging strong drill results that indicate substantial resource and reserve expansion. Such an expansion is anticipated to be the lowest CapEx per ton project in Quebec, benefiting from shared infrastructure and further improving operating costs. The merger also brings Sayona's high-grade Moblan project in Quebec into the portfolio, a transformative growth asset with a 2024 Definitive Feasibility Study (DFS) demonstrating a post-tax Internal Rate of Return (IRR) of 34% for 300,000 mtpa spodumene concentrate production. Corporate synergies of $15-20 million annually are expected from consolidated functions and improved logistics, further bolstering the combined entity's financial health. Regulatory approvals for the merger have been secured in the U.S. and Canada, with shareholder votes expected to finalize the transaction in August 2025.

Confronting Market Headwinds: Financial Performance and Strategic Discipline

The lithium market has experienced considerable volatility, with prices declining significantly in 2024 and early 2025, operating at levels "well below reinvestment economics" for new greenfield projects. This challenging backdrop is evident in Piedmont's recent financial performance. For the three months ended June 30, 2025, Piedmont reported revenue of $11.9 million, a 10.4% decrease year-over-year, despite a 44.3% increase in spodumene concentrate sales volume to approximately 20,200 dmt. This was primarily due to a steep decline in realized prices, which fell to $587 per dmt in Q2 2025 from $945 per dmt in Q2 2024. The company recorded a gross loss of $1.6 million for the quarter, reflecting a negative gross profit margin of 13.8%. The net loss for Q2 2025 was $9.7 million, contributing to a net loss of $25.4 million for the first six months of 2025.

Despite these headwinds, Piedmont has demonstrated robust financial discipline. The company implemented a comprehensive 2024 Cost Savings Plan, achieving $14 million in annual run-rate savings, exceeding its initial $10 million target. This involved a 48% workforce reduction by year-end 2024 and significant cuts in third-party spending. Capital expenditures have been drastically reduced, with the full-year 2025 CapEx outlook lowered to $4-6 million (from $6-9 million), and joint venture investments and advances projected at $7-13 million (down from $26 million in 2024). These reductions are a direct response to market conditions, including deferring or opting out of certain Carolina Lithium land purchases. As of June 30, 2025, Piedmont maintained a cash and cash equivalents balance of $56.1 million, supplemented by a fully-utilized $25 million Credit Facility. Management expects the cash balance at the end of Q2 2025 to be similar to Q1 2025, indicating a stabilization of liquidity.

Piedmont's commercial strategy has also adapted to market dynamics. In the second half of 2024, the company successfully leveraged the contango in lithium futures markets and strategically commingled shipments with Sayona Quebec to reduce transportation costs by up to $60 per ton CIF, leading to comparatively strong price realizations despite the overall market decline. This agile approach underscores management's focus on optimizing profitability even in a challenging environment.

Competitive Landscape: A North American Advantage

Piedmont operates in a competitive global lithium market dominated by established players like Albemarle Corporation (ALB) and Sociedad Química y Minera de Chile S.A. (SQM), which benefit from vast scale, diversified global operations, and mature supply chains. These incumbents typically exhibit stronger, more consistent profitability and cash flow generation due to their operational maturity. For instance, while Piedmont reported a TTM Gross Profit Margin of 7.59% and a Net Profit Margin of -50.61%, larger players like SQM reported a TTM Gross Profit Margin of 29% and a TTM Operating Profit Margin of 24% in 2024, highlighting the scale advantage.

However, Piedmont's strategic focus on North American assets provides a distinct competitive moat, particularly against these global giants. Its U.S.-based Carolina Lithium project, with its integrated mine-to-hydroxide model, is uniquely positioned to capitalize on the growing demand for IRA-compliant, secure domestic supply. This appeals directly to OEMs and battery manufacturers seeking to de-risk their supply chains. Against regional competitors like Lithium Americas Corp. (LAC), which also focuses on North American projects, Piedmont's integrated Carolina Lithium offers a differentiated value proposition by minimizing logistical complexities and costs. LAC, while also development-stage, reported a TTM Net Profit Margin of 0% in 2024, indicating similar challenges in achieving consistent profitability during development.

Piedmont's merger with Sayona Mining to form Elevra Lithium further solidifies its competitive standing. This combined entity will be the largest current lithium producer in North America, enhancing its relevance to customers and enabling greater economies of scale. The brownfield expansion potential at NAL, with its low CapEx per ton and prime Quebec location, offers a significant advantage over many remote, high-cost greenfield projects in the region. This strategic consolidation and focus on geographically advantageous, integrated, or expandable assets are critical in a market where "scale is crucial... to reduce unit operating costs, and improve downstream optionality."

Outlook and Risks: A Measured Path to Future Growth

Piedmont's outlook for 2025 reflects a measured approach, balancing market realities with long-term strategic objectives. The company projects full-year 2025 spodumene concentrate shipments of 113,000 to 130,000 dmt, with Q2 2025 shipments expected to be between 8,000 and 20,000 dmt. NAL is on track to meet Sayona Mining's (SYA) guidance of 190,000-210,000 tons for the year ended June 30, 2025, with further resource and reserve updates expected in 2025.

However, the development timelines for its major projects remain contingent on market conditions. A Final Investment Decision (FID) for Carolina Lithium is "very unlikely to happen in the next, say 24 months," as "ultimately, higher lithium prices will be required to support the development." Similarly, for the Ewoyaa project, while parliamentary ratification of its mining lease is expected in H1 2025 (triggering a $28 million investment from Ghana's MIIF), a full investment decision awaits a stronger market. Piedmont is actively pursuing strategic partnerships and government financing (like the ATVM loan program) for Carolina Lithium, and non-dilutive offtake funding for Ewoyaa, to minimize equity dilution.

Key risks include the persistent volatility of lithium prices, which directly impacts profitability and project funding viability. The proposed merger, while strategic, carries termination risks if shareholder approvals are not secured by September 30, 2025. Furthermore, evolving trade policies, such as the 10% U.S. tariff on Canadian critical minerals, could affect the economics of NAL's shipments to the U.S., although management believes its global customer base offers flexibility. The company's reliance on future equity or debt financing for its capital-intensive projects also presents a potential for shareholder dilution.

Conclusion

Piedmont Lithium stands at a critical juncture, transforming from a development-stage entity into a formidable North American lithium producer. The impending merger to form Elevra Lithium is a game-changer, consolidating assets, enhancing scale, and unlocking significant brownfield expansion potential at NAL, while bringing the high-grade Moblan project into the fold. This strategic consolidation, coupled with the integrated vision for Carolina Lithium and its inherent technological advantages, positions Piedmont to capitalize on the undeniable long-term demand for lithium, particularly within a U.S. market increasingly prioritizing domestic supply chain security.

While the current lithium market downturn presents significant challenges, Piedmont's disciplined cost management, strategic deferral of capital, and proactive commercial strategies demonstrate resilience. Investors should recognize that while short-term profitability may remain pressured by price volatility, the company's foundational assets, technological roadmap, and strategic moves are building a robust platform. The long-term investment thesis hinges on the inevitable market rebound and Piedmont's ability to execute its integrated, North American-centric strategy, leveraging its unique competitive advantages to become a dominant player in the global lithium landscape.