PLL and Sayona Mining Set to Merge to Form Leading Lithium Producer

Zacks Equity Research

Tue, Nov 19, 2024, 9:15 AM 3 min read

The deal combines Piedmont Lithium and Sayona Mining’s complementary businesses and is expected to position the new entity as a leader in North American lithium production. MergeCo will have three high-quality development projects and the potential for brownfield expansion at North American Lithium (“NAL”).

The PLL-Sayona merger has been unanimously approved by the board of directors of both companies. However, the completion of the transaction is subject to shareholder approval of both companies, as well as regulatory approvals. It is expected to close in the first half of 2025.

The transaction will result in an approximate 50%-50% equity holding of shareholders of Piedmont and Sayona in the combined company. MergeCo will be domiciled in Australia but will maintain a listing on Nasdaq.

PLL-Sayona Merger Offers Solid Synergies & Growth Potential

NAL is the largest lithium operation in North America and one of the world’s few active hard rock spodumene operations supplying the market. It is jointly owned by Piedmont (25%) and Sayona Mining Limited (75%). NAL finished ramping up in June 2024 and is targeting 226,000 metric tons a year of spodumene concentrate production.

The Piedmont-Sayona merger will create a simpler and stronger lithium business, positioning it well to grow through cycles. It will have low capital intensity with a lower cost base. Shared benefits of synergies, in the form of optimized logistics and procurement, will help lower operating costs. Marketing synergies are expected through expanded customer relationships. A strengthened balance sheet will also help MergeCo to fund and accelerate growth plans.

There has been a downtrend in lithium prices due to slowing demand growth for EVs, inventory glut and increased supply. Despite short-term market pressures, the long-term prospects for lithium remain robust. Demand for lithium, a core component of EV batteries, is expected to accelerate on the back of significant global EV adoption, driven by government mandates and consumer preference for greener alternatives. The increasing adoption of lithium-ion batteries in energy storage systems also contributes to this demand surge.