Piedmont Lithium PLL and Sayona Mining Limited have entered into an all-stock merger agreement to form a unified company, MergeCo, which will be focused on hard rock lithium production.

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.

Piedmont’s Shares Underperform Industry

PLL’s shares have lost 58.2% in the past year compared with the industry’s 9.7% decline.

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PLL’s Zacks Rank & Stocks to Consider

Piedmont currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS, Agnico Eagle Mines AEM and New Gold NGD, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.44 per share, which indicates year-over-year growth of 36%. The consensus estimate for 2025 earnings has moved 6.3% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.1%. CRS’ shares have gained 163% in a year.

The consensus estimate for Agnico Eagle Mines’ 2024 earnings is pegged at $4.03 per share. The consensus estimate for 2024 earnings has moved 44% north in the past 60 days. The estimate indicates year-over-year growth of 80.7%. It has an average trailing four-quarter earnings surprise of 19.2%. AEM’s shares have gained 65% in a year.

The Zacks Consensus Estimate for New Gold’s 2024 earnings is pegged at 17 cents per share. The estimate has moved 42% north in the past 60 days and indicates year-over-year growth of 143%. It has an average trailing four-quarter earnings surprise of 430%. NGD’s shares have gained 114% in a year.

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Piedmont Lithium Inc. (PLL) : Free Stock Analysis Report

Carpenter Technology Corporation (CRS) : Free Stock Analysis Report

Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report

New Gold Inc. (NGD) : Free Stock Analysis Report

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