Piedmont (PLL) Amends Lithium Supply Agreement With Tesla
Piedmont Lithium Inc. PLL announced that it amended its agreement with Tesla Inc. TSLA to supply spodumene concentrate ("SC6") from North American Lithium.
Under the new agreement, Piedmont will supply about 125,000 metric tons of lithium concentrate to Tesla, starting from the second half of 2023 through the end of 2025. Piedmont's pricing will be determined by market prices at the time of each shipment, unlike the previous agreement with locked-in prices.
The new agreement is enforceable for a term of three years with the option to renew for another three years.
Piedmont and Tesla announced their original deal for SC6 supply in September 2020. At the time, lithium prices were at an all-time low, as the pandemic had struck a blow to EV demand, when supply was plentiful. Since then, lithium prices have increased a fair amount and, thus, manufacturers have been forced to raise their prices.
Piedmont expects to restart SC6 production at North American Lithium in the first half of this year, and first commercial shipments to start in the third quarter of 2023.
The company plans to source SC6 from Sayona Mining Ltd.’s North American Lithium project in Quebec. According to Piedmont's offtake agreement with Sayona Quebec, Piedmont is entitled to purchase the greater of 113,000 metric tons per year or 50% of SC6 production. Piedmont’s SC6 purchases from Sayona Quebec are subject to floor and ceiling prices.
The agreement helps ensure that Quebec's critical resources stay in North America. As a result, the deal aids the Inflation Reduction Act's goal to strengthen the U.S. supply chain, the clean energy economy and global decarbonization.
Piedmont is a development stage company focused on building a multi-asset, integrated lithium business. It provides lithium hydroxide to the electric vehicle and battery manufacturing supply chains in the United States.
In the third quarter of 2022, PLL reported a loss of 36 cents per share, faring better than the Zacks Consensus Estimate of a loss of 37 cents per share. The Zacks Consensus Estimate for 2022 is pegged at a loss of $1.72 per share. The consensus estimate has been unchanged in the past 60 days. The company has a four-quarter trailing surprise of negative 40.5%, on average.
Price Performance
Piedmont's shares have lost 17.1% in the past year compared with the industry’s decline of 8%.
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Zacks Rank & Stocks to Consider
PLL currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are CalMaine Foods CALM, and Reliance Steel RS. CALM currently flaunts a Zacks Rank #1 (Strong Buy) and RS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CalMaine Foods’ 2022 earnings per share is pegged at $12.28, suggesting 351.5% growth from the year-ago reported figure. Earnings estimates have moved 51.6% north in the past 60 days. CALM has a trailing four-quarter earnings surprise of 15.3%, on average. Its shares have gained 43.2% in the past year.
The Zacks Consensus Estimate for Reliance Steel’s earnings per share is pegged at $28.65 for the year 2022, indicating a year-over-year growth rate of 29.5%. The consensus estimate for RS’ earnings has been revised 0.2% upward in the past 60 days. It has a trailing four-quarter average surprise of 13.6% on average. RS has gained 20.8% in a year.
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