The Piedmont Lithium Inc (ASX: PLL) share price has returned from its trading halt and dropped into the red.
At the time of writing, the lithium developer's shares are down 4% to 84 cents.
Why is the Piedmont Lithium share price under pressure?
Investors have been selling down this lithium share on Friday in response to a short seller report from Blue Orca. This report was covered in greater detail here yesterday.
Blue Orca alleges that Atlantic Lithium Ltd (ASX: A11) obtained key Ghana mining licenses by making secret payments and promises of payment to the immediate family of a high-level Ghana politician.
The short seller believes this will mean that the Ghanian government will not ratify Atlantic Lithium's mining licenses, causing significant issues for Piedmont Lithium.
Blue Orca summarises:
We are short Piedmont because without Atlantic's Ghana supply, Piedmont and any promise of near-term revenue from its much-hyped Tennessee facility are dead on arrival. Without Ghana, industry experts and even a former Piedmont senior executive have confirmed that Piedmont is unlikely to find a source of replacement spodumene.
Piedmont Lithium responds
This morning, Piedmont Lithium has responded to the allegations. It notes that Atlantic Lithium "outrightly refutes the allegations of impropriety made by the Short Report."
The company also notes that "Atlantic's recent application for a Mining License for its lithium project in Ghana excludes the two licenses purchased as part of its acquisition of Joy Transporters Ltd referred to in the Short Report, which do not form part of Atlantic's defined resources for its Ghana lithium project."
In addition, the company revealed that it believes its Tennessee facility could find alternative sources of spodumene should it be required. It commented:
Piedmont has the right to purchase 50% of Atlantic's production of spodumene concentrate from its Ghana lithium project, at market prices on a life-of-mine basis, and to earn a 50% interest in the Ghanaian projects. Piedmont currently contemplates utilizing spodumene concentrate from this offtake agreement as partial feed for its proposed Tennessee Lithium hydroxide plant.
However, if for any reason Piedmont does not exercise its right to this offtake supply, the Company is confident that alternative sources of spodumene concentrate would be available to feed the Tennessee facility, as current and future spodumene producers seek to feed the growing U.S. electric vehicle market and qualify for the benefits available under the Inflation Reduction Act of 2022.
