Sayona Mining Acquires Piedmont Lithium

By Melanie Burton and Roshan Thomas

MELBOURNE (Reuters) – Australia’s Sayona Mining is set to acquire U.S.-based Piedmont Lithium in an all-stock deal aimed at consolidating its Canadian operations and enhancing its presence in the North American electric vehicle market, as announced on Tuesday.

Details of the Deal

Under the agreement, the two companies will merge to form a lithium business, with Sayona becoming the parent company. The transaction involves a 6% premium for Piedmont, based on the closing share prices of both companies on Monday.

This merger is part of a trend among lithium companies responding to a market impacted by rapid supply growth, which has outstripped demand, particularly as electric vehicle adoption has lagged behind expectations.

Post-merger, the combined entity is set to have an estimated pro forma market capitalization of $623 million, with shareholders from both companies holding nearly equal stakes.

Leadership Statements

Sayona CEO Lucas Dow expressed enthusiasm regarding the merger's potential to expedite growth plans and enhance strategic flexibility.

Funding and Joint Ventures

To finance the deal, Sayona plans to raise A$40 million ($26.04 million) via a capital raise and another A$69 million through a conditional share placement with private equity firm Resource Capital Funds (RCF). Piedmont will also issue shares valued at $27 million.

Both companies are partners in a joint venture in Quebec, North American Lithium (NAL), which recently ramped up production to target an output of 226,000 metric tons of spodumene concentrate per year, selling half of that to Piedmont. In the September quarter, NAL operated at a loss, but its streamlined structure could facilitate government or customer support, according to a fund manager. Piedmont’s clients include South Korea’s LG Chem.

Piedmont is further pursuing a project in North Carolina and exploring spodumene assets in Ghana in partnership with Atlantic Lithium, an Australian-listed firm. Sayona also holds lithium assets in Western Australia.

There are rising expectations for continued consolidation in the sector, which follows Rio Tinto’s $6.7 billion bid for Arcadium Lithium last month.

($1 = 1.5378 Australian dollars)