The Sayona Mining Ltd (ASX: SYA) share price is under significant pressure on Thursday.
In morning trade, the lithium miner's shares are down 19% to 5.2 cents.
Why is the Sayona Mining share price sinking?
Investors have been hitting the sell button today after Piedmont Lithium Inc (ASX: PLL) revealed that it has offloaded its entire holding in the company.
According to the release, Piedmont Lithium has agreed to sell 1,152.2 million Sayona Mining shares for 5.2 Australian cents per share through a secondary block sale via Canaccord Genuity. The sale will result in gross proceeds of approximately $59.9 million, or US$39.4 million.
While its selling price represents a premium to the 20-day volume weighted average price (thanks to a recent rally), it is still a huge discount to where the Sayona Mining share price last traded.
The lithium miner's shares ended Wednesday's session at 6.4 cents, which means the sale price is a whopping 18.75% discount.
Following this transaction and some smaller recent public market share sales, Piedmont advised that it will no longer hold any shares of Sayona. But, importantly, the sale has no impact on Piedmont's joint venture or offtake position with Sayona Quebec.
Why is it selling?
Management advised that the decision to divest its Sayona Mining shares aligns with its commitment to maintaining a prudent balance sheet while simultaneously minimising dilution of Piedmont's shareholders.
It believes this action strategically positions Piedmont for the long term. CEO Keith Phillips said:
This transaction underscores our commitment to delivering long-term value for Piedmont shareholders. We acquired our initial Sayona shares as part of our strategic investment in the Sayona Quebec joint venture and will recognize a meaningful gain on the investment.
We remain fully committed to our joint venture with Sayona, with a particular focus on the ongoing ramp up of North American Lithium, the largest lithium operation in North America. Our 25% joint venture interest and associated offtake agreement are core assets of Piedmont, and we look forward to continuing to work closely with our partners at Sayona to supply IRA-qualified lithium resources critical to the U.S. electric vehicle supply chain.
