Barely a month has passed since my last post on Piedmont Lithium (OTC: PLLLY, ASX:PLL) and in addition to a strong (20% gain) performance in the ASX listed shares a great deal has come to pass: (1) The company has published positive results from its exploration work on its North Carolina property; (2) it has taken its first step towards its goal of a full US listing in 1Q18 with an ADR listing on Nasdaq International; and (3) it has raised A$16m (USD12.4m) of new equity through a private placement of shares from its main current listing in Australia. These developments have increased the company’s value considerably due the dilution effect of the 22% increase in issued shares, but at the same time have reduced its risk profile as its larger cash position will enable it to move forward more quickly to achieve its goal of defining and funding a new lithium mine in the heart of historic NC lithium country, and confirm my view that PLLLY will emerge as a major new name in the lithium space in the near future.
The funding which was announced Monday (30 October) was a placing of 100m shares in the ASX shares at A$0.16, a 7% discount to the 30 VWAP on the shares, and 18% discount to the last closing price. Investors in the deal, which was reportedly oversubscribed, were institutional and sophisticated investors in Australia, United States, Canada and the United Kingdom.
The additional shares from this issue increase its existing share count from 454m to 554m (fully diluted 634.4m), yielding a market capitalization of A$110m (USD86.6m), with approximately A$18m (USD13.9m) in reserves. These additional funds will enable PLLLY to ramp up its activities in the exploration and development of its North Carolina property. In the short term these include continued acquisition of additional land to expand its footprint in NC, the completion of its phase 2 drilling campaign, the completion of a maiden JORC estimate, and the commencement of a Preliminary Economic Assessment (PEA) for the development of a mine all targeted to occur by the end of 2017.
Early next year PLLLY has a full US listing in its sights; we look forward to more detailed plans for 2018 being published by the company. The announcement on 12 October of an ADR listing on Nasdaq International is a first step towards a full listing, and with the addition of more US names to its share register through this recent placement, the company’s US profile seems likely to gain some momentum.
I believe that PLLLY -- a conventional, plain vanilla spodumene pegmatite on private land similar to those found in Western Australia (eg. Pilbara Minerals (OTC: PILBF, ASX: PLS), Altura Mining (OTC: ALTAF, ASX: AJM), Neometals (OTC: RDRUY, ASX: NMT), Mineral Resources (ASX: MIN) and Kidman (ASX: KDR) -- will be compared quite favorably to other US-focused lithium explorers, such as Global Geoscience (GSC.AX) another Australian listed story with a USA asset. GSC has an unconventional boron-lithium clay resource on federal land in Nevada. GSC’s market capitalization is currently A$284m (USD220m), more than two and a half times that of PLLLY.
The shares will be driven largely be news from PLLLY’s exploration project in North Carolina in the near term. PLLLY are currently in the midst of their Phase 2 drilling campaign and the indications so far from this activity are promising. On 27 September PLLLY reported that it has identified 4 kilometers of mineralization at its project based on assays available to date. The mineralization encountered is occurring at shallow depths with fairly consistent intercepts (around 20 meters) of spodumene bearing pegmatite dykes containing high grade zones of around 1.5%, with all corridors identified open along trend and at depth. The announcement added that due to these strong results PLLLY have extended the current drill campaign by 3,000 meters to a total of 12,300 meters.
PLLLY expect to produce more assay results shortly, to be followed by an Exploration Target in December 2017 and Maiden Resource in early 2018, all of which should be positive for the performance of the shares.
Disclosure: I am/we are long PLLLY.