Benzinga - In 2021, Piedmont Lithium Inc (NASDAQ: PLL) acquired an equity interest in Atlantic Lithium (OTC: ALLIF), a London-based junior mining company with a deal that would see Piedmont garnering the ability to earn a 50% ownership interest in Atlantic Lithium’s Ghanaian lithium portfolio.
The deal, in which which Piedmont committed to investing over $100 million, had initially guided for profits and revenues to begin flowing through Piedmont’s Tennessee facility in 2025.
But, according to short seller Blue Orca Capital, the deal is fantasy.
What Happened: Blue Orca on Wednesday issued a short report on Piedmont, saying the Ghana deal is textbook corruption and Ghana’s Parliament will likely not ratify Atlantic’s mining licenses. Any promise of near-term revenue from its much-hyped Tennessee facility are dead on arrival, the short report said.
Benzinga has contacted Piedmont Lithium for comment on the short seller's allegations.
The Allegations: Atlantic Lithium obtained its mining licenses in Ghana by making secret payments and promises to the immediate family of a high-level Ghana politician, Asiedu Nketia, also known as General Mosquito.
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Atlantic Lithium allegedly paid and promised tens of millions of dollars in potential royalties to a company secretly owned by General Mosquito's son, the short seller said, calling it "textbook" evidence of corruption.
Atlantic Lithium's mining licenses will not be ratified by Ghana's Parliament — which still needs to approve and ratify the licenses — so it can build the lithiumn mine the short report said. In Ghana and other African countries, mining licenses obtained through corrupt payments to high-level politicians and officials are often revoked.
Dead On Arrival: Piedmont's Tennessee facility may be dead on arrival without the spodumene supply from Atlantic Lithium's Ghana mine, according to Orca.
Supply of spodumene is scarce, and there is no longer enough near-term spodumene production available for offtake, Orca said, particularly the large quantities that Piedmont needs to feed the Tennessee facility's capacity.
A former Piedmont senior-level executivetold Orca that Piedmont has no other options and is "locked-in" with Ghana to make the Tennessee facility work, the report said.
Piedmont's valuation is based on its claim that it will leverage spodumene from Ghana to become a fully integrated lithium hydroxide producer. Yet with the loss of the offtake agreement and the possibility of facing corruption charges, it is unclear whether Piedmont will ultimately receive the conditional government funding, Orca said.
PLL Price Action: Shares of Piedmont Lithium Inc are trading 5.11% higher to $60.06 Wednesday, according to data from Benzinga Pro, while over-the-counter shares of London-based Atlantic Lithium are down 45.93% at 25 cents.
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