Atlantic Lithium (ALL ), an Africa-focused lithium explorer, issued a statement in response to yesterday's report by Blue Orca Capital regarding Atlantic's partner Piedmont Lithium. The report resulted in a short attack on NASDAQ-listed Piedmont which sunk both Atlantic and Piedmont's share prices yesterday.
Atlantic shares lost 40% of their value, dropping to 21p as a result of the short attack. Its AIM-traded shares were briefly suspended until this morning, when the company issued a clarifying statement regarding the unsubstantiated report by Blue Orca Capital. Shares resumed trading at 8:15 AM on March 9 in London and have since recovered 34% to 31p. Shares were trading at c. 37p prior to the short attack.
Atlantic denied Blue Orca Capital's allegations and explained that it holds valid prospecting licences with operating permits for all of its current activities, in accordance with the Ghanaian government and the Minerals Commission's requirements:
Atlantic's Ewoyaa lithium project sits within the Mankessim licence (owned by Barari DV Ghana, which is 90%-owned by Atlantic) and Mankessim South licence (owned by Green Metals Resources, which is 100%-owned by Atlantic). The two subsidiary companies lodged applications for a mining license for Ewoyaa with Ghana's Minerals Commission as announced on 13 October 2022.
The mining licence application excludes Atlantic's Joy Transporters licences which do not form part of Atlantic's defined resources for the Ewoyaa project. Atlantic acquired 100% of Joy Transporters in March 2020. Atlantic explained that no revenue was anticipated from the Joy Transporters licences, and subsequently no royalty will be payable to the original seller.
Atlantic said it believes the Minerals Commission will grant a mining license for the for the Ewoyaa lithium project and Ghana's Parliament will ratify the mining license in due course.
Atlantic said it "outrightly refutes" Blue Orca's allegations of impropriety and will seek legal advice to address the claims.
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As explained above, Blue Orca's allegations against Piedmont are unfounded and should not be considered by existing and prospective investors. We expect Atlantic shares to continue their recovery as the dust settles from the US-originated short attack. Following the rollercoaster ride to 21p yesterday, Atlantic's shares are now back up to 31p, but still have some way to reach yesterday's opening price of 37.5p.
In our view, Atlantic's flagship Ewoyaa lithium project holds much potential as Ghana's first lithium-producing mine, having secured a US$103m funding via the aforementioned partnership with Piedmont Lithium. The project, located approximately 100km southwest of the capital of Accra, has proven to produce a premium SC6 product suitable for conversion to battery-grade lithium carbonate and hydroxide.
Earlier this month, Atlantic announced a much improved mineral resource estimate (MRE) for Ewoyaa of 35.3Mt at 1.25% Li2O, including 28Mt or 79% in the high-confidence Measured and Indicated categories.
Ewoyaa's recently announced pre-feasibility study forecasts significant profitability potential for a 2 Mtpa operation, producing an average of 255,000 tpa of 6% Li2O spodumene concentrate (SC6) over a 12.5-year life of mine (LOM), based on an earlier MRE.
Specifically, the pre-feasibility study delivers LOM revenues exceeding US$4.84bn, a post-tax NPV8 of US$1.33bn, and IRR of 224% over 12.5 years. Capital costs were US$125m with a short payback period of less than 5 months , and average LOM EBITDA was US$248m/year. The study used average annualised US$1,359/dry metric tonne SC6 pricing and US$1,200/dry metric tonne long-term pricing.
The next step for Ewoyaa is a definitive feasibility study (DFS) targeted for Q2 2023, to evaluate an extended mine life and increased throughout, to further enhance the project's economics.
Ewoyaa has great ESG credentials - a local highly skilled workforce, low power requirements, and strategic location with adjacent power infrastructure, within 1km of a national highway, and 110km of the operating deep-sea port of Takoradi. For ESG minded mining investors, Atlantic is a company to .
Ewoyaa is funded to production through Atlantic's agreement with Piedmont. Atlantic summarised its Q4 activities at Ewoyaa in its recently issued trading update.