0001728205-22-000034.txt : 20220804 0001728205-22-000034.hdr.sgml : 20220804 20220803211431 ACCESSION NUMBER: 0001728205-22-000034 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 62 CONFORMED PERIOD OF REPORT: 20220630 FILED AS OF DATE: 20220804 DATE AS OF CHANGE: 20220803 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Piedmont Lithium Inc. CENTRAL INDEX KEY: 0001728205 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 364996461 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38427 FILM NUMBER: 221134318 BUSINESS ADDRESS: STREET 1: 42 E CATAWBA STREET CITY: BELMONT STATE: NC ZIP: 28012 BUSINESS PHONE: (704) 461-8000 MAIL ADDRESS: STREET 1: 42 E CATAWBA STREET CITY: BELMONT STATE: NC ZIP: 28012 FORMER COMPANY: FORMER CONFORMED NAME: Piedmont Lithium Ltd DATE OF NAME CHANGE: 20180116 10-Q 1 pll-20220630.htm 10-Q pll-20220630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-Q
__________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission File Number 001-38427
___________________________________________________________
pll-20220630_g1.jpg

PIEDMONT LITHIUM INC.
(Exact name of Registrant as specified in its Charter)
_________________________________________________________________________________________
Delaware36-4996461
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
42 E Catawba Street
Belmont, North Carolina
28012
(Address of principal executive offices)(Zip Code)
    
Registrant’s telephone number, including area code: (704) 461-8000
___________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, par value $0.0001 per sharePLL
The Nasdaq Capital Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒     No ☐
1

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒     No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No ☒
As of July 29, 2022, there were 17,964,863 shares of the Registrant’s common stock outstanding.
2

Table of Contents
3

Part I - Financial Information
Item 1.    Financial Statements.
PIEDMONT LITHIUM INC.
CONSOLIDATED BALANCE SHEETS

(Unaudited)
June 30,
2022
December 31,
2021
Assets
Cash and cash equivalents$139,033,696 $64,244,983 
Other current assets4,460,334 2,514,602 
Total current assets143,494,030 66,759,585 
Property, plant and mine development, net53,693,669 40,055,354 
Other non-current assets11,624,524 4,561,122 
Equity investments in unconsolidated affiliates64,233,609 58,872,710 
Total assets$273,045,832 $170,248,771 
Liabilities and Stockholders’ Equity
Accounts payable$1,613,013 $1,262,744 
Accrued expenses3,990,970 5,425,498 
Current portion of long-term debt504,855 762,189 
Other current liabilities29,906 99,587 
Total current liabilities6,138,744 7,550,018 
Long-term debt, net of current portion349,415 914,147 
Total liabilities6,488,159 8,464,165 
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock; $0.0001 par value, 100,000,000 shares authorized; 17,964,863, and 15,894,395, shares issued and outstanding at June 30, 2022, and December 31, 2021, respectively
1,796 1,589 
Additional paid-in capital378,789,754 255,131,836 
Accumulated deficit(111,418,935)(92,683,000)
Accumulated other comprehensive loss(814,942)(665,819)
Total stockholders’ equity266,557,673 161,784,606 
Total liabilities and stockholders’ equity$273,045,832 $170,248,771 
The accompanying notes are an integral part of these unaudited financial statements.
4

PIEDMONT LITHIUM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Operating expenses:
Exploration and mine development costs
$882,874 $3,477,327 $1,050,712 $7,302,336 
General and administrative expenses7,461,365 4,002,054 13,039,370 6,687,431 
Loss from operations(8,344,239)(7,479,381)(14,090,082)(13,989,767)
Other (expense) income:
Interest (expense) income, net(33,926)(63,216)(76,322)(129,085)
Loss from foreign currency exchange(47,759)(25,749)(24,649)(25,532)
Loss before taxes and equity earnings(8,425,924)(7,568,346)(14,191,053)(14,144,384)
Income tax expense (benefit)    
Loss from equity investments in unconsolidated affiliates, net of tax(1,155,379)(64,626)(4,544,882)(64,626)
Net loss$(9,581,303)$(7,632,972)$(18,735,935)$(14,209,010)
Basic and diluted net loss per weighted-average share$(0.53)$(0.48)$(1.10)$(0.95)
Basic and diluted weighted-average number of shares outstanding17,930,926 15,753,324 17,019,262 14,926,734 
The accompanying notes are an integral part of these unaudited financial statements.
5

PIEDMONT LITHIUM INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)


Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net loss$(9,581,303)$(7,632,972)$(18,735,935)$(14,209,010)
Other comprehensive loss, net of tax:
Equity investment loss in unconsolidated affiliates(342,767)(31,288)(149,123)(31,288)
 Other comprehensive loss, net of tax(342,767)(31,288)(149,123)(31,288)
Comprehensive loss$(9,924,070)$(7,664,260)$(18,885,058)$(14,240,298)
The accompanying notes are an integral part of these unaudited financial statements.
6

PIEDMONT LITHIUM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
20222021
Cash flows from operating activities:
Net loss$(18,735,935)$(14,209,010)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation11,208 2,752 
Stock-based compensation expense1,382,905 1,018,296 
Noncash lease expense60,919 74,979 
Loss on sale of property, plant and mine development11,542  
Unrealized loss on investment23,824  
Loss on equity investments in unconsolidated affiliates4,544,882 64,626 
Changes in operating assets and liabilities:
Other assets(1,969,142)(1,172,736)
Accounts payable(486,145)305,200 
Accrued expenses and other current liabilities(2,697,909)1,192,448 
Net cash used in operating activities(17,853,851)(12,723,445)
Cash flows from investing activities:
Capital expenditures(11,533,913)(13,136,824)
Advances on Ghana Project(7,099,355) 
Equity investments in unconsolidated affiliates(10,054,904)(16,358,412)
Net cash used in investing activities(28,688,172)(29,495,236)
Cash flows from financing activities:
Proceeds from issuances of common stock, net of issuance costs122,059,476 114,087,891 
Proceeds from exercise of stock options93,326 216,151 
Principal payments on long-term debt(822,066)(370,707)
Net cash provided by financing activities121,330,736 113,933,335 
Net increase in cash74,788,713 71,714,654 
Cash and cash equivalents at beginning of period64,244,983 70,936,994 
Cash and cash equivalents at end of period$139,033,696 $142,651,648 
Supplemental disclosure of cash flow information:
Noncash capital expenditures in accounts payable and accrued expenses$2,004,734 $ 
Cash paid for interest76,612 68,838 
Capitalized stock-based compensation122,418  
The accompanying notes are an integral part of these unaudited financial statements.
7

PIEDMONT LITHIUM INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
Common StockAdditional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmount
December 31, 202115,894,395 $1,589 $255,131,836 $(92,683,000)$(665,819)$161,784,606 
Issuance of common stock, net2,012,500 201 122,059,275 — — 122,059,476 
Stock-based compensation, net of forfeitures— — (85,908)— — (85,908)
Shares issued for exercise/vesting of share-based compensation awards22,631 3 (3)— — — 
Equity investment gain (loss) in other comprehensive loss— — — — 193,644 193,644 
Net loss— — — (9,154,632)— (9,154,632)
March 31, 202217,929,526 1,793 377,105,200 (101,837,632)(472,175)274,797,186 
Stock-based compensation, net of forfeitures— — 1,591,231 — — 1,591,231 
Shares issued for exercise/vesting of stock-based compensation awards35,337 3 93,323 — — 93,326 
Equity investment gain (loss) in other comprehensive loss— — — — (342,767)(342,767)
Net loss— — — (9,581,303)— (9,581,303)
June 30, 202217,964,863 $1,796 $378,789,754 $(111,418,935)$(814,942)$266,557,673 
Common StockAdditional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’
Equity
SharesAmount
December 31, 202013,914,731 $1,375 $137,249,496 $(57,125,635)$(796,565)$79,328,671 
Issuance of common stock, net1,750,000 175 114,087,716 — — 114,087,891 
Stock-based compensation expense— — 406,488 — — 406,488 
Shares issued for exercise/vesting of share-based compensation awards13,356 — 30,452 — — 30,452 
Net loss— — — (6,576,038)— (6,576,038)
March 31, 202115,678,087 1,550 251,774,152 (63,701,673)(796,565)187,277,464 
Stock-based compensation— — 611,808 — — 611,808 
Shares issued for exercise/vesting of stock-based compensation awards81,446 — 185,699 — — 185,699 
Conversion of performance rights5,000 — — — — — 
Foreign currency translation adjustments— — — — (31,288)(31,288)
Net loss— — — (7,632,972)— (7,632,972)
June 30, 202115,764,533 $1,550 $252,571,659 $(71,334,645)$(827,853)$180,410,711 
The accompanying notes are an integral part of these unaudited financial statements.
8

PIEDMONT LITHIUM INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.DESCRIPTION OF COMPANY
Nature of Business
Piedmont Lithium Inc. (“Piedmont Lithium,” “we,” “our,” “us,” or “Company”) is a development stage company centered on building a multi-asset, integrated lithium business which will provide lithium hydroxide, a critical material, to the electric vehicle and battery manufacturing supply chains in the United States (“U.S.”), support the creation of a clean energy economy in North America and help secure America’s energy independence. Our projects are strategically located in Canada, Ghana, and the southeastern U.S. Our wholly owned, Carolina Lithium Project is located on the renowned Carolina Tin-Spodumene Belt in North Carolina. Our investments in Canada and Ghana add geographic diversity and provide the opportunity for near-term production and revenue. We plan to develop and integrate our resources and operations with the aim of bringing production online consecutively in 2023 (Quebec, Canada), 2024 (Ghana), 2025 (LHP-2) and 2026 (Carolina Lithium). The location of our domestic and international lithium assets, combined with our two planned U.S. lithium hydroxide plants, uniquely positions Piedmont Lithium to be a large, low-cost, sustainable producer of lithium products.
Change in Fiscal Year-End
Effective January 1, 2022, we changed our fiscal year end from June 30 to December 31. The six-month period from July 1, 2021 to December 31, 2021 served as a transition period. Our fiscal year for 2022 commenced on January 1, 2022 and will end on December 31, 2022. See our Transition Report on Form 10-KT (“Transition Report”) filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2022.
Basis of Presentation
The accompanying unaudited consolidated financial statements and related notes have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and in conformity with the rules and regulations of the SEC applicable to interim financial information. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Unless otherwise indicated, all references to “$” are to U.S. dollars, and all references to “AUD” are to Australian dollars. Our reporting currency is U.S. dollars. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to such rules and regulations. Therefore, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-KT for the six-month transition period ended December 31, 2021. These unaudited consolidated financial statements reflect all adjustments and reclassifications that, in the opinion of management, are considered necessary for a fair statement of the results of operations, financial position and cash flows for the periods presented. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2022, for any other interim period or for any other future fiscal year.
Certain prior period amounts have been reclassified to conform with the current period presentation.
Piedmont Lithium acquired all of the issued and outstanding ordinary shares of Piedmont Lithium Limited (“Piedmont Australia”), our Australian predecessor and currently a wholly-owned subsidiary, pursuant to a Scheme of Arrangement under Australian law, which was approved by Piedmont Australia’s shareholders on February 26, 2021 and by the Supreme Court of Western Australia on May 5, 2021 (collectively referred to as “Redomiciliation”). As part of the Redomiciliation, we changed our place of domicile from Australia to the state of Delaware in the United States, effective May 17, 2021.
Piedmont Australia’s ordinary shares were listed on the Australian Securities Exchange (“ASX”), and Piedmont Australia’s American Depositary Shares (“ADSs”), each representing 100 of Piedmont Australia’s ordinary shares, were traded on the Nasdaq Capital Market (“Nasdaq”). Following the approval of the Redomiciliation, we moved the primary listing of our shares of common stock from the ASX to Nasdaq and retained an ASX listing via Chess Depositary Interests (“CDIs”), each representing 1/100th of a share of common stock of Piedmont Lithium Inc.
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All issued and outstanding shares of our common stock and per share amounts have been retroactively adjusted in these consolidated financial statements to reflect the 100:1 ratio and share consolidation. Shares of our common stock issued in connection with the Redomiciliation trade on Nasdaq under the symbol “PLL.”
Risk and Uncertainties
We are subject to a number of risks similar to those of other companies of similar size in our industry, including but not limited to, the success of our exploration and development activities, construction and permitting delays, the need for additional capital or financing to fund operating losses, competition from substitute products and services from larger companies, protection of proprietary technology, litigation, and dependence on key individuals.
We have accumulated deficits of $111.4 million, and $92.7 million as of June 30, 2022 and December 31, 2021, respectively. We have incurred net losses and utilized cash in operations since inception, and we expect to incur future additional losses. We have cash available on hand and believe this cash will be sufficient to fund our operations and meet our obligations as they come due for at least one year from the date these consolidated financial statements are issued. In the event our cash requirements change during the next twelve months, management has the ability and commitment to make corresponding changes to our operating expenses, as necessary. Until commercial production is achieved from our planned operations, we will continue to incur operating and investing net cash outflows associated with, among other things, funding capital projects, development-stage technical studies, permitting activities associated with our projects, funding our commitments in Quebec and Ghana, maintaining and acquiring exploration properties and undertaking ongoing exploration activities. Our long-term success is dependent upon our ability to successfully raise additional capital or financing or enter into strategic partnership opportunities. Our long-term success is also dependent upon our ability to obtain certain permits and approvals, develop our planned portfolio of projects, earn revenues, and achieve profitability.
Our consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and allocations that affect amounts reported in the consolidated financial statements and related notes. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets, fair value of stock-based compensation awards, income tax uncertainties, valuation of deferred tax assets, contingent assets and liabilities, legal claims, asset impairments and environmental remediation. Actual results could differ due to the uncertainty inherent in the nature of these estimates.
We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Significant Accounting Policies
Exploration and Mine Development Costs
We incur costs in resource exploration, evaluation and development during the different phases of our resource development projects. Exploration costs incurred before the declaration of proven and probable reserves, which primarily include exploration, drilling, engineering, metallurgical test-work, and compensation for employees associated with exploration activities, are expensed as incurred. We have also expensed as incurred engineering costs attributable to the evaluation of land for our future lithium hydroxide conversion plants and spodumene concentrator, development project management costs, feasibility studies and other project expenses that do not qualify for capitalization. After proven and probable reserves are declared, exploration and mine development costs necessary to bring the property to commercial capacity or increase the capacity or useful life are capitalized.
Mine Development
Mine development assets include engineering and metallurgical test-work, drilling and other related costs to delineate an ore body, and the removal of overburden to initially expose an ore body at open pit surface mines. Costs incurred before mineral resources are classified as proven and probable reserves are expensed and recorded to “Exploration and mine development costs” in our statements of operations. Capitalization of mine development project costs that meet the definition of an asset begins once mineral resources are
10

classified as proven and probable reserves. Drilling and related costs are capitalized for an ore body where proven and probable reserves exist and the activities are directed at obtaining additional information on the ore body or converting mineralized material to proven and probable reserves. All other drilling and related costs are expensed as incurred. The cost of removing overburden and waste materials to access the ore body at an open pit mine prior to the production phase are referred to as pre-stripping costs. Pre-stripping costs will be capitalized during the development of an open pit mine. The removal, production, and sale of de minimis salable materials may occur during the development phase of an open pit mine and are assigned incremental mining costs related to the removal of that material. Mine development assets will be depleted using the units-of-production method based on estimated recoverable metric tons in proven and probable reserves. To the extent that these costs benefit an entire ore body, they will be depleted over the estimated life of the ore body. As of June 30, 2022, we had no projects in the production phase, and we did not record depletion expense for any of our mine development assets.
For a further discussion of our significant accounting policies, see “Note 2—Summary of Significant Accounting Policies” within Part II, Item 8 of our Transition Report for the six-month period ended December 31, 2021.
Recently Issued and Adopted Accounting Pronouncements
We have considered the applicability and impact of all recently issued accounting pronouncements and have determined that they were either not applicable or were not expected to have a material impact on our consolidated financial statements.
2.PROPERTY, PLANT AND MINE DEVELOPMENT
Property, plant and mine development, net, is presented in the following table:
June 30,
2022
December 31,
2021
Mining interests$47,622,685 $39,303,043 
Mine development2,044,891  
Land688,829 688,829 
Facilities and equipment111,058 107,248 
Construction in process3,249,534  
Property, plant, and mine development53,716,997 40,099,120 
Accumulated depreciation(23,328)(43,766)
Property, plant, and mine development, net$53,693,669 $40,055,354 
Depletion of mine development and mining interests does not commence until the assets are placed in service. As of June 30, 2022, we have not recorded depletion expense for any of our mine development or mining interests assets.
The vast majority of our construction in process relates to capitalized costs associated with our Carolina Lithium Project.
Depreciation expense is presented in the following table and is included in “General and administrative expenses” in our consolidated statements of operations:
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Depreciation expense$6,146 $1,376 $11,208 $2,752 

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3.EQUITY INVESTMENTS IN UNCONSOLIDATED AFFILIATES
We apply the equity method to investments when we have the ability to exercise significant influence over the operational decision-making authority and financial policies of the investee. We account for our existing investments in Atlantic Lithium Limited (“Atlantic Lithium”), Sayona Mining Limited (“Sayona”), and Sayona Quebec Inc. (“Sayona Quebec”), a subsidiary of Sayona, as equity method investments. Our share of the income or loss from Atlantic Lithium, Sayona and Sayona Quebec is recorded on a one-quarter lag.
The following is a summary or our equity method investments as of June 30, 2022:
Sayona
We own an equity interest of approximately 14% in Sayona, an Australian company publicly listed on the ASX, and have formed a strategic partnership with Sayona to explore, evaluate, mine, develop, and ultimately produce spodumene concentrate in Quebec, Canada.
Sayona Quebec
We own an equity interest of 25% in Sayona Quebec for the purpose of furthering our investment and strategic partnership in Quebec, Canada with Sayona. The remaining 75% equity interest is held by Sayona. Sayona Quebec holds a 100% interest in the existing lithium mining operations of North American Lithium.

We have a long-term supply agreement with Sayona Quebec, under which Sayona Quebec will supply Piedmont Lithium the greater of 113,000 metric tons per year or 50% of spodumene concentrate production on a life-of-mine basis. In the event Sayona and Piedmont Lithium jointly construct and operate a lithium conversion plant, then spodumene concentrate produced from North American Lithium would be preferentially delivered to that conversion plant upon start of operations. Any remaining spodumene concentrate not delivered to a jointly owned conversion plant would first be delivered to Piedmont lithium up to Piedmont Lithium’s offtake right and then to third parties. Purchases are subject to market pricing with a price floor of $500 per metric ton and a price ceiling of $900 per metric ton.
Atlantic Lithium Limited
We own an equity interest of approximately 10% in Atlantic Lithium, an Australian company publicly listed on the Alternative Investment Market of the London Stock Exchange and have formed a strategic partnership with Atlantic Lithium to explore, evaluate, mine, develop, and ultimately produce spodumene concentrate in Ghana. We have the right to acquire a 50% equity interest in Atlantic Lithium’s Ghanaian-based lithium portfolio companies (collectively, “Atlantic Lithium Ghana”), which are wholly-owned subsidiaries of Atlantic Lithium, through future staged investments.
We have a long-term supply agreement whereby Atlantic Lithium will sell 50% of spodumene concentrate produced in Ghana for the life of the mine to Piedmont Lithium, subject to us exercising our ability to acquire an equity interest of 50% in Atlantic Lithium Ghana through expected future staged investments. See Note 5—Other Assets.
The following tables summarize the carrying amounts, including changes therein, of our equity method investments:
Three Months Ended June 30, 2022
Sayona
Sayona QuebecAtlantic LithiumTotal
Balance at beginning of period$16,945,836 $26,193,877 $14,583,345 $57,723,058 
Additional investments1,029,617 6,979,080  8,008,697 
Loss from equity method investments(857,847)(125,759)(171,773)(1,155,379)
Share of loss from equity method investments included in other comprehensive loss  (342,767)(342,767)
Balance at end of period$17,117,606 $33,047,198 $14,068,805 $64,233,609 
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Three Months Ended June 30, 2021
Sayona
Sayona QuebecTotal
Balance at beginning of period$9,316,394 $ $9,316,394 
Additional investments1,974,425 5,067,593 7,042,018 
Loss from equity method investments(64,626) (64,626)
Share of loss from equity method investments included in other comprehensive loss(31,288) (31,288)
Balance at end of period$11,194,905 $5,067,593 $16,262,498 
Six Months Ended June 30, 2022
Sayona
Sayona QuebecAtlantic LithiumTotal
Balance at beginning of period$18,256,488 $25,215,851 $15,400,371 $58,872,710 
Additional investments1,075,921 8,978,983  10,054,904 
Loss from equity method investments(2,279,318)(1,192,396)(1,073,168)(4,544,882)
Share of income (loss) from equity method investments included in other comprehensive loss64,515 44,760 (258,398)(149,123)
Balance at end of period$17,117,606 $33,047,198 $14,068,805 $64,233,609 
Six Months Ended June 30, 2021
Sayona
Sayona QuebecTotal
Balance at beginning of period$ $ $ 
Additional investments11,290,819 5,067,593 16,358,412 
Loss from equity method investments(64,626) (64,626)
Share of loss from equity method investments included in other comprehensive loss(31,288) (31,288)
Balance at end of period$11,194,905 $5,067,593 $16,262,498 
As of June 30, 2022
Sayona
Sayona QuebecAtlantic Lithium
Fair value of equity investments where market values from publicly traded entities are readily available$174,859,526 Not publicly traded$28,246,608 
The following tables present summarized financial information included in our share of income (loss) from equity method investments noted above for our significant equity investments. The balances below were compiled from information provided to us by each investee and are presented in accordance with U.S. GAAP:
Three Months Ended
June 30, 2022June 30, 2021
Sayona
Sayona QuebecAtlantic Lithium
Sayona
Revenue$ $ $ $ 
Net loss from operations(5,224,405)(503,037)(1,733,332)(324,754)
Other comprehensive loss, net of tax  (3,458,798)(157,224)
Comprehensive loss(5,224,405)(503,037)(5,192,130)(481,978)
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Six Months Ended
June 30, 2022June 30, 2021
Sayona
Sayona QuebecAtlantic Lithium
Sayona
Revenue$ $ $ $ 
Net loss from operations(13,812,789)(4,769,583)(10,829,140)(324,754)
Other comprehensive income (loss), net of tax390,967 179,041 (2,607,447)(157,224)
Comprehensive loss(13,421,822)(4,590,542)(13,436,587)(481,978)
4.FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
We follow FASB ASC Topic 820, “Fair Value Measurement and Disclosure,” which establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows:
Level 1:Quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2:Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived from observable market data by correlation or other means.
Level 3:Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.
Measurement of Fair Value
Our financial instruments consist primarily of cash and cash equivalents, investments in equity securities, trade and other payables, and long-term debt as follows:
Long-term debt—As of June 30, 2022 and December 31, 2021, we had $0.9 million and $1.7 million, respectively, of principal debt outstanding associated with seller financed loans. The carrying value of our long-term debt approximates its estimated fair value.
Investments in equity securities—As of June 30, 2022 and December 31, 2021, we had $0.5 million and $0.5 million, respectively, of investments in equity securities which are recorded at fair value based on Level 3 inputs. See Note 5—Other Assets.
Other financial instruments—The carrying amounts of cash and cash equivalents and trade and other payables approximate fair value due to their short-term nature.
Level 3 activity was not material for all periods presented.
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5.OTHER ASSETS
Other current assets consisted of the following:
June 30,
2022
December 31,
2021
Investments in equity securities$489,687 $513,511 
Prepaid assets and other receivables3,970,647 2,001,091 
Total other current assets$4,460,334 $2,514,602 
As of June 30, 2022, our investments in equity securities consisted of common shares in Ricca Resources Limited (“Ricca”), which we acquired as part of a spin-out of Ricca from Atlantic Lithium. Ricca is a private company focused on gold exploration in Africa. The decrease in fair value of our investment in equity securities during the six months ended June 30, 2022 was due to currency revaluation of our common stock held in Ricca and is recorded in “Loss from foreign currency exchange” in our consolidated statements of operations.
Other non-current assets consisted of the following:
June 30,
2022
December 31,
2021
Advances on Ghana Project$11,409,528 $4,310,173 
Other non-current assets214,996 190,030 
Operating lease right-of-use assets 60,919 
Total other non-current assets$11,624,524 $4,561,122 
We have a strategic partnership between Piedmont Lithium and Atlantic Lithium that includes Atlantic Lithium Ghana. Under our partnership, we entered into a project agreement to acquire a 50% equity interest in Atlantic Lithium Ghana as part of two phases of future staged investments by Piedmont Lithium in the Ghana Project over an approximate period of three to four years.
We are currently in phase one, which allows us to acquire a 22.5% equity interest in Atlantic Lithium Ghana by funding approximately $17.0 million for exploration and definitive feasibility study expenses. Our future equity interest ownership related to phase one is contingent upon completing a definitive feasibility study and making an election to proceed with phase two. Phase two allows us to acquire a 27.5% equity interest in Atlantic Lithium Ghana upon completion of funding approximately $70.0 million for capital costs associated with the construction of the Ghana Project. Any cost under runs or overruns beyond the initial commitment for each phase will be shared equally between Piedmont Lithium and Atlantic Lithium. Upon completion of phases one and two, we will have a total equity interest of 50.0% in Atlantic Lithium Ghana. Phase one funding costs are included in other non-current assets as an advance on our expected future investments into the Ghana Project.
Our maximum exposure to a loss as a result of our involvement in the Ghana Project is limited to the total funding paid by Piedmont Lithium to Atlantic Lithium. As of June 30, 2022, we did not own an equity interest in Atlantic Lithium Ghana. We have made advanced payments totaling $3.3 million and $6.9 million during the three and six months ended June 30, 2022, respectively, and additional advance payments totaling $1.5 million beginning July 1, 2022 through the date of this filing.
6.EQUITY
We are authorized to issue up to 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share. We have no outstanding shares of preferred stock.
In March 2022, we issued 2,012,500 shares under our shelf registration statement with an issue price of $65.00 per share for gross proceeds totaling $130.8 million. Share issuance costs associated with the U.S. public offering totaled $8.8 million and were accounted for as a reduction in the proceeds from share issuances in the consolidated balance sheets.
In March 2021, we issued 1,750,000 shares with an issue price of $70.00 per share for gross proceeds of $122.5 million. Share issuance costs associated with the U.S. public offering totaled $12.8 million and were accounted for as a reduction in the proceeds from share issuances in the consolidated balance sheets.
As of June 30, 2022, we had $369.2 million remaining under our shelf registration statement, which expires on September 24, 2024.
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7.STOCK-BASED COMPENSATION
Stock Incentive Plans
In March 2021, our Board adopted, in connection with the Redomiciliation, the Piedmont Lithium Inc. Stock Incentive Plan (“Incentive Plan”). The Incentive Plan authorized the grant of stock options, stock appreciation rights, restricted stock units and restricted stock, any of which may be performance-based. Our Compensation Committee determines the exercise price for stock options and the base price of stock appreciation rights, which may not be less than the fair market value of our common stock on the date of grant. Generally, stock options or stock appreciation rights vest after three years of service and expire at the end of ten years. Performance rights awards (“PRAs”) vest upon achievement of certain pre-established performance targets that are based on specified performance criteria over a performance period. As of June 30, 2022, 2,296,996 shares of common stock were available for issuance under our Incentive Plan.
We include the expense related to stock-based compensation in the same financial statement line item as cash compensation paid to the same employee. Additionally, and if applicable, we capitalize personnel expenses attributable to the development of our mine and construction of our plants, including stock-based compensation expenses. We recognize share-based award forfeitures as they occur.
Stock-based compensation related to all stock-based incentive plans is presented in the following table:
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Components of stock-based compensation:
Stock-based compensation$1,591,231 $611,808 $2,356,086 $1,018,296 
Stock-based compensation forfeitures  (850,763) 
Stock-based compensation, net of forfeitures
$1,591,231 $611,808 $1,505,323 $1,018,296 
Presentation of stock-based compensation in the consolidated financial statements:
Exploration and mine development costs$219,939 $262,794 $2,000 $393,941 
General and administrative expenses1,290,732 349,014 1,380,905 624,355 
Stock-based compensation expense, net of forfeitures(1)
1,510,671 611,808 1,382,905 1,018,296 
Capitalized stock-based compensation(2)
80,560  122,418  
Stock-based compensation, net of forfeitures
$1,591,231 $611,808 $1,505,323 $1,018,296 
__________________________
(1)For the three and six months ended June 30, 2022 and 2021, we did not reflect a tax benefit associated with stock-based compensation expense in the consolidated statements of operations because we had a full tax valuation allowance during these periods. As such, the table above does not reflect the tax impacts of stock-based compensation expense.
(2)Capitalized stock-based compensation relates to direct labor costs associated with our Carolina Lithium Project and are included in “Property, plant and mine development, net” in our consolidated balance sheets.
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A summary of activity relating to our share-based awards was as follows:
20222021
Stock Option AwardsRestricted Stock UnitsPerformance Rights AwardsStock Option AwardsRestricted Stock UnitsPerformance Rights Awards
January 1272,504 51,277 30,000 443,694  65,000 
Granted135,957 17,437 29,120 50,000   
Exercised, surrendered or vested(15,000)(14,285) (18,906)  
Forfeited or expired(19,458)(17,209)    
March 31374,003 37,220 59,120 474,788  65,000 
Granted58,949 7,972 10,348 33,004 36,745  
Exercised, surrendered or vested(37,500)(9,219) (115,288) (5,000)
Forfeited or expired(719)     
June 30394,733 35,973 69,468 392,504 36,745 60,000 

As of June 30, 2022, we had remaining unvested stock-based compensation expense of $7.7 million to be recognized through December 2024.

As of June 30, 2022, there were 69,468 unvested PRAs, which expire over the next three years and are subject to certain milestones related to construction, feasibility studies and supply agreements.
8.LOSS PER SHARE
Basic and diluted net loss per share is reflected in the following table:
Three Months Ended
June 30,
Six Months Ended
June 30,
2022202120222021
Net loss$(9,581,303)$(7,632,972)$(18,735,935)$(14,209,010)
Weighted-average number of common shares used in calculating basic and dilutive earnings per share(1)
17,930,926 15,753,324 17,019,262 14,926,734 
Basic and diluted net loss per weighted-average share$(0.53)$(0.48)$(1.10)$(0.95)
__________________________
(1)For the three and six months ended June 30, 2021, the weighted-average number of common shares used in calculating basic and dilutive earnings per share was adjusted to reflect the impact of the exchange ratio caused by the Redomiciliation.

For the three and six months ended June 30, 2022 and 2021, potentially dilutive shares were not included in the calculation of diluted net loss per share because their effect would have been anti-dilutive due to net losses in those periods. The anti-dilutive shares are presented in the following table:
June 30,
20222021
Stock options394,733 392,504 
RSUs35,973 36,745 
PRAs69,468 60,000 
Total potentially dilutive shares500,174 489,249 
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9.INCOME TAXES

For the three months ended June 30, 2022, and 2021, we recorded an income tax provision of $0 on a loss before taxes of $9.6 million, and a provision of $0 on a loss before taxes of $7.6 million, respectively. For the six months ended June 30, 2022, and 2021, we recorded an income tax provision of $0 on a loss before taxes of $18.7 million, and an income tax provision of $0 on a loss before taxes of $14.2 million, respectively. The effective tax rate and the federal statutory rate were 0% for the three and six months ended June 30, 2022 and 2021 and were primarily related to the full valuation allowance on net deferred tax assets.

As of June 30, 2022, we maintained a full valuation allowance against our net deferred tax assets. We continually review the adequacy of the valuation allowance and intend to continue maintaining a full valuation allowance on our net deferred tax assets until there is sufficient evidence to support reversal of all or a portion of the allowance. Should our assessment change in a future period, we may release all or a portion of the valuation allowance at such time, which would result in a deferred tax benefit in the period of adjustment.
10.SEGMENT REPORTING
We report our segment information in the same way management internally organizes the business in assessing performance and making decisions regarding allocation of resources in accordance with ASC Topic 280, “Segment Reporting. We have a single reportable operating segment which operates as a single business platform. In reaching this conclusion, management considered the definition of the Chief Operating Decision Maker (“CODM”), how the business is defined by the CODM, the nature of the information provided to the CODM, how the CODM uses such information to make operating decisions, and how resources and performance are accessed. The results of operations provided to and analyzed by the CODM are at the consolidated level, and accordingly, key resource decisions and assessment of performance are performed at the consolidated level. We have a single, common management team and our cash flows are reported and reviewed at the consolidated level only with no distinct cash flows at an individual business level.
11.COMMITMENTS AND CONTINGENCIES
Legal Proceedings

We are involved from time to time in various claims, proceedings, and litigation. We establish reserves for specific legal proceedings when we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated.

In July 2021, a lawsuit was filed against us in the U.S. District Court for the Eastern District of New York on behalf of a class of putative plaintiffs claiming violations of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The complaint alleged, among other things, that we made false and/or misleading statements and/or failed to make disclosure relating to proper and necessary permits. In February 2022, the Court appointed a lead plaintiff in this action, and the lead plaintiff filed an amended complaint in April 2022. We intend to move to dismiss the amended complaint on various grounds, with our moving papers due in July 2022, and we intend to vigorously defend against these claims should the amended complaint survive. Although there can be no assurance as to the outcome, we do not believe these claims have merit. The potential monetary relief, if any, is not probable and cannot be estimated at this time, accordingly, we have not recorded a liability for this matter.

On October 14, 2021, Vincent Varbaro, a purported holder of the Company’s American Depositary Shares and equity securities, filed a shareholder derivative suit in the U.S. District Court for the Eastern District of New York, purporting to bring claims on behalf of the Company against certain of the Company’s officers and directors. The complaint alleges that the defendants breached their fiduciary duties in connection with the Company’s statements regarding the timing and status of government permits for the Company’s Carolina Lithium Project in North Carolina, at various times between March 16, 2018 and July 19, 2021. No litigation demand was made to the Company in connection with this action. In December 2021, the parties agreed to a stipulation to stay the proceeding pending resolution of the motion to dismiss in the securities law matters described above, and the Court ordered the case stayed. We intend to vigorously defend against these claims. Although there can be no assurance as to the outcome, we do not believe these claims have merit. The potential monetary relief, if any, is not probable and cannot be estimated at this time; accordingly, we have not recorded a liability for this matter.

On July 5, 2022, Brad Thomascik, a purported shareholder of the Company’s equity securities, filed a shareholder derivative lawsuit in the U.S. District Court for the Eastern District of New York. On behalf of the Company, the lawsuit purports to bring claims against certain of the Company’s officers and directors. The complaint alleges that the defendants breached their fiduciary duties in connection with the Company’s statements regarding the timing and status of government permits for the Company’s Carolina Lithium Project in North Carolina at various times between March 16, 2018 and July 19, 2021. No litigation demand was made to the Company in connection with this action. The lawsuit focuses on the same public statements as the shareholder derivative suit described above. We intend to vigorously defend against these claims. Although there can be no assurance as to the outcome, we do
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not believe these claims have merit. The potential monetary relief, if any, is not probable and cannot be estimated at this time; accordingly, we have not recorded a liability for this matter.
12.RELATED PARTIES
Ledger Holdings Pty Ltd, a company associated with a former non-executive director of the Company was paid $16,667 and $41,667 during the three and six months ended June 30, 2021, respectively, for services related to business development activities. These fees and associated payments were included in the former director’s remuneration. Effective June 1, 2021, the director's term ended.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in our Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in our Quarterly Report on Form 10-Q and those in the sections of our Transition Report on Form 10-KT for the six-month transition period ended December 31, 2021 entitled “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements,” and “Cautionary Note Regarding Disclosure of Mineral Properties.”
This management’s discussion and analysis is a supplement to our financial statements (including notes) referenced elsewhere in our Quarterly Report on Form 10-Q and is provided to enhance your understanding of our operations and financial condition. This discussion is presented in millions, and due to rounding, may not sum or calculate precisely to the totals and percentages provided in the tables.
Executive Overview
Piedmont Lithium, a development-stage company, is building a multi-asset, integrated lithium business to support the creation of a clean energy economy in North America and help secure America’s energy independence. Our global portfolio of assets is primed to source and manufacture lithium products that will mitigate the critical raw materials shortage confronting the U.S. electric vehicle and battery supply chains. Our lithium projects are strategically located in Canada, Ghana, and in the southeastern U.S. We plan to develop and integrate our resources and operations with the aim of bringing production online consecutively in 2023 (Quebec), 2024 (Ghana), 2025 (LHP-2) and 2026 (Carolina Lithium). Our equity investments in strategic partnerships that own lithium assets in Canada and Ghana add geographic diversity and provide the opportunity for near-term production and revenue. Our wholly-owned Carolina Lithium Project is located on the renowned Carolina Tin-Spodumene Belt in North Carolina. The location and promise of our domestic and international lithium assets, combined with our two planned U.S. lithium hydroxide plants, uniquely position Piedmont Lithium to be a large, low-cost, sustainable producer of lithium products. The geology, geography, proximity, and planned production timeline of our operations should allow us to deliver a valuable and continuous supply of high-quality, sustainably produced lithium hydroxide from spodumene concentrate. Piedmont Lithium is poised to play an important role in supporting the increasing industry demand for lithium in North America as the economies shift towards the electrification of transportation and energy storage.
Strategy
Our strategy is to become a leading producer of lithium hydroxide in North America through diverse, sustainable, and technically advanced operations. We believe our global portfolio of hard rock lithium assets should support a level of estimated lithium hydroxide production, all from spodumene concentrate, that will dramatically expand current North American production. American demand for large vehicles and the custom of driving relatively long distances, combined with automakers’ plans for and commitments to electric vehicle production, will continue to expand the demand for North American lithium hydroxide.
We believe that spodumene concentrate represents the lowest-risk and most commercially scalable raw material source for the production of lithium hydroxide. Our plan to produce battery-grade lithium hydroxide from spodumene concentrate will use the innovative Metso:Outotec alkaline pressure leach flow sheet combined with a number of processes commonly used in the lithium industry today. As part of our strategy, we will continue to evaluate new technologies and opportunities to expand our resource base and production capacity.
We have four key capital projects that are being developed on a measured timeline to provide the potential for both near-term cash flow and long-term value maximization. When fully operational, we will have an estimated lithium hydroxide manufacturing capacity of 60,000 metric tons per year, versus total estimated 2021 U.S. production of 15,000 metric tons per year. Our hydroxide conversion capacity is supported by production and offtake rights of approximately 500,000 metric tons of spodumene concentrate per year.

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Developing An Integrated Lithium Production Business: Key Projects and Timing
Quebec Projects—We own an equity interest of 25% in Sayona Quebec, which owns the full interests in the Quebec Projects including North American Lithium, the Authier Project and the Tansim Project. These projects are located in the Abitibi region of Quebec, Canada. Additionally, we own an equity interest of approximately 14% in Sayona, the parent company of Sayona Quebec.

In June 2022, Piedmont Lithium and Sayona Mining formalized restart plans for North American Lithium in Quebec. This will feature significant operational upgrades totaling approximately $80 million aimed at improving product quality and plant utilization. Long-lead equipment has been ordered and detailed design engineering has commenced, and we expect operations at North American Lithium to commence in the first half of 2023, subject to the receipt of remaining permit transfers and approvals for the project. The restart project will be entirely funded from pro-rata cash contributions by Sayona and Piedmont Lithium, with each party having completed significant capital raises in the first half of 2022.

We also hold an offtake agreement with Sayona Quebec to purchase the greater of 113,000 metric tons per year of spodumene concentrate or 50% of production from the North American Lithium and Authier projects for the life of the mine. Purchases are subject to market pricing with a price floor of $500 per metric ton and a price ceiling of $900 per metric ton. In the event Sayona and Piedmont Lithium jointly construct and operate a lithium conversion plant, then spodumene concentrate produced from North American Lithium would be preferentially delivered to that conversion plant upon start of operations. Any remaining spodumene concentrate not delivered to a jointly owned conversion plant would first be delivered to Piedmont lithium up to Piedmont Lithium’s offtake right and then to third parties.
Ghana Project—We own an equity interest of approximately 10% in Atlantic Lithium and have the ability to earn a 50% equity interest in Atlantic Lithium’s Ghanaian lithium portfolio. The Ghana Project is Atlantic Lithium’s flagship project in the Cape Coast region of Ghana, approximately 70 miles via a national highway to a major port for transport to our planned U.S.-based lithium hydroxide plant for conversion. The resource, which is comprised of high-grade, course grained spodumene, is expected to be fully permitted in 2023. We expect construction of the mine and concentrator to begin in 2023 and production of spodumene concentrate to begin in 2024.

In addition to our equity investment, we hold an offtake agreement with Atlantic Lithium to purchase 50% of the spodumene concentrate produced by the Ghana Project for the life of the mine at prevailing market prices.
U.S.-Based Lithium Hydroxide Plant (LHP-2)—We are currently working toward concluding the site selection process for a projected 30,000 metric tons per year, lithium hydroxide plant referred to as LHP-2. We expect to announce the site selection in the third quarter of 2022. We have commenced front-end engineering design of the LHP-2 Project with an expected completion in early 2023, and we expect to publish a feasibility study before the end of 2022. Construction of the facility is expected to begin in the first half of 2023, subject to receipt of permits, with first production targeted for 2025. Under our current plans, we expect that LHP-2 will be the largest lithium hydroxide plant in North America and the first of its kind, using the innovative Metso:Outotec technology. Raw material supply for the conversion plant is expected to be sourced principally from the Company’s Ghanaian operations.
Carolina Lithium Project—Our wholly-owned, fully integrated Carolina Lithium Project (“Carolina Lithium”) is a development stage, hard rock lithium project located within the Carolina Tin-Spodumene Belt, in close proximity to lithium and byproduct markets. Carolina Lithium consists of a proposed mine, concentrator, and lithium hydroxide conversion plant. A feasibility study completed in December 2021 estimated a project capital investment requirement of approximately $988 million and the project is expected to produce 30,000 metric tons of lithium hydroxide per year. Given the quality of this asset, integration of the operation, strong infrastructure, and proximity to lithium and byproduct markets, we believe Carolina Lithium will enable us to be one of the lowest cost producers in the world.

We are currently engaged in permitting, rezoning, and financing activities with state and local representatives for Carolina Lithium. Our goal is to obtain the necessary permits and rezoning in 2023, commence construction in 2024, and begin production of lithium hydroxide in 2026. For further discussion of permitting for our Carolina Lithium Project, see Part I, Item 1. “Business.—Permits,” included in our Transition Report for the six-month period ended December 31, 2021, and our Form 10-Q for the quarter ended March, 31, 2022.
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Highlights for the Six Months Ended June 30, 2022
In March 2022, we raised $122.1 million in net proceeds through the issuance of 2,012,500 shares of common stock under our shelf registration statement primarily for purposes of advancing each of our projects including:
Our pro-rata equity contribution to the restart of North American Lithium;
Completion of a definitive feasibility study and final investment decision for the Ghana Project;
Front-end engineering design and permitting activities for our LHP-2 project once site selection is finalized; and
Land acquisitions, permitting activities, and local approvals for the Carolina Lithium Project.
In February 2022, we completed a preliminary economic assessment for a proposed merchant lithium hydroxide conversion plant (LHP-2) to expand our planned manufacturing capacity in the U.S. to 60,000 metric tons of lithium hydroxide per year. The results of our preliminary economic assessment demonstrate the potential for us to expand our lithium hydroxide manufacturing business from our existing spodumene concentrate offtake agreements with Atlantic Lithium and Sayona Quebec as well as from market sources.
In May 2022, our partner, Sayona, published a pre-feasibility study for the restart of spodumene concentrate operations for North American Lithium. We are currently exploring marketing options for spodumene concentrate production contemplated in our offtake agreement with Sayona, which provides Piedmont Lithium the right to purchase the greater of 50% of production or 113,000 metric tons per year from North American Lithium.
In June 2022, Piedmont Lithium and Sayona Mining formalized restart plans for North American Lithium in Quebec. This will feature significant operational upgrades totaling approximately $80 million aimed at improving product quality and plant utilization. Long-lead equipment was ordered, and detailed design engineering commenced in late 2021 based on our jointly planned timeline. Operations at North American Lithium are expected to commence in the first half of 2023, subject to remaining permit transfers and approvals. The restart project will be entirely funded from pro-rata cash contributions by Sayona and Piedmont Lithium, with each party having completed significant capital raises in the first half of 2022.
In June 2022, we applied for a loan for our LHP-2 Project with the Department of Energy under the Advanced Technology Vehicle Manufacturing Program (“ATVM”) Program.
In June 2022, we received a conditional invitation to due diligence for our Carolina Lithium Project from the Department of Energy for our ATVM loan application. The conditional invitation requires, among other things, that our Carolina Lithium Project is rezoned to industrial zoning.

Change in Fiscal Year End
Effective January 1, 2022, we changed our fiscal year end from June 30 to December 31. The six-month period from July 1, 2021 to December 31, 2021 served as a transition period. Our fiscal year 2022 commenced on January 1, 2022 and will end on December 31, 2022. See our Transition Report filed with the SEC on February 28, 2022.
Critical Accounting Polices and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes in the significant accounting policies followed by us during the six months ended June 30, 2022 from those disclosed in our Transition Report for the six-month period ended December 31, 2021.
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COVID-19 Response
To protect the health and safety of our employees, contractors, visitors and communities, we implemented a comprehensive plan in response to the COVID-19 pandemic. Our plan included policies and protocols governing issues such as close contact exposure and contraction of COVID-19 and other communicable diseases, providing employees with additional personal protective equipment, and allowing our employees to work remotely. We have provided paid time off for employees impacted by COVID-19, reimbursed employees for costs associated with COVID-19 testing, provided time for employees to get vaccinated, and encouraged flexible work schedules to accommodate personal and family needs. Our business was not materially impacted by negative impacts from COVID-19. We will continue to monitor guidelines and recommendations from the U.S. Center for Disease Control and Prevention (CDC) and the World Health Organization (WHO) as well as from local, state and federal governments.
Components of our Results of Operations
Exploration and Mine Development Costs
We incur costs in resource exploration, evaluation and development during the different phases of our resource development projects. Exploration costs incurred before the declaration of proven and probable ore reserves, which primarily include exploration, drilling, engineering, metallurgical test-work, site-specific reclamation, and compensation for employees associated with exploration activities, are expensed as incurred. We have also expensed as incurred engineering costs attributable to the evaluation of land for our future chemical plant and concentrator, development project management costs, feasibility studies and other project expenses that do not qualify for capitalization. After proven and probable ore reserves are declared, exploration and mine development costs necessary to bring the property to commercial capacity or increase the capacity or useful life will be capitalized.
General and Administrative Expenses
General and administrative expenses relate to overhead costs, such as employee compensation and benefits for corporate management and office staff including accounting, legal, human resources and other support personnel, professional service fees, insurance, and costs associated with maintaining our corporate headquarters. Included in employee compensation costs are cash and stock-based compensation expenses.
Other (Expense) Income
Other (expense) income consists of interest income (expense), and foreign currency exchange gain (loss). Interest income consists of interest earned on our cash and cash equivalents. Interest expense consists of interest incurred on long-term debt related to noncash acquisitions of mining interests financed by the seller as well as interest incurred for lease liabilities. Foreign currency exchange gain (loss) relates to our foreign bank accounts and marketable securities denominated in Australian dollars.
Loss from Equity Investments in Unconsolidated Affiliates, Net of Tax
Loss from equity investments in unconsolidated affiliates, net of tax, reflects our proportionate share of the net loss resulting from our investments in Sayona, Sayona Quebec and Atlantic Lithium. These investments are recorded under the equity method and adjusted each period, on a one-quarter lag, for our share of each investee’s loss.
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Results of Operations
Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021
Three Months Ended
June 30,
20222021$ Change% Change
Exploration and mine development costs$882,874 $3,477,327 $(2,594,453)(74.6)%
General and administrative expenses7,461,365 4,002,054 3,459,311 86.4%
Loss from operations(8,344,239)(7,479,381)(864,858)11.6%
Other (expense) income(81,685)(88,965)7,280 (8.2)%
Loss from equity investments in unconsolidated affiliates, net of tax(1,155,379)(64,626)(1,090,753)*
Net loss$(9,581,303)$(7,632,972)$(1,948,331)25.5%
__________________________
* Not meaningful.
Exploration and Mine Development Costs
Carolina Lithium entered the development stage in December 2021. As such, direct costs incurred in the three months ended June 30, 2022 were capitalized and recorded to “Property, plant, and mine development, net” in the consolidated balance sheets. Direct costs incurred in the three months ended June 30, 2021 were recorded to “Exploration and mine development costs” in the consolidated statements of operations.
Exploration and mine development costs decreased $2.6 million, or 74.6%, to $0.9 million in the three months ended June 30, 2022 compared to $3.5 million in the three months ended June 30, 2021. The decrease was primarily due to the capitalization of direct costs totaling $2.3 million during the three months ended June 30, 2022, as discussed above.
Excluding the impact of capitalizing direct costs of $2.3 million in the three months ended June 30, 2022, exploration and mine development costs decreased $0.3 million, or 9.2%, to $3.2 million in the three months ended June 30, 2022 compared to $3.5 million in the three months ended June 30, 2021. The decrease in costs was primarily driven by a decline in drilling activities, partially offset by an increase in engineering, permitting and metallurgical testwork activities and an increase in employee compensation expenses related to additional headcount in the three months ended June 30, 2022 compared to the three months ended June 30, 2021.
General and Administrative Expenses
General and administrative expenses increased $3.5 million, or 86.4%, to $7.5 million in the three months ended June 30, 2022 compared to $4.0 million in the three months ended June 30, 2021. The increase in general and administrative expenses was primarily due to increased professional fees, including legal and accounting services, consulting services, and insurance expense as we became subject to U.S. public company requirements as part of the Redomiciliation. Employee compensation costs also contributed to higher general and administrative expenses due to the hiring of additional management and support staff at our headquarters in Belmont, North Carolina. Stock-based compensation expense was $1.3 million and $0.3 million in the three months ended June 30, 2022 and June 30, 2021, respectively.
Other (Expense) Income
Other (expense) income was less than $0.1 million in the three months ended June 30, 2022 and June 30, 2021. The slight decrease in other expense was due to an increase in foreign currency exchange income as well as a decrease in interest expense.
Loss from Equity Investments in Unconsolidated Affiliates
Loss from equity investments in unconsolidated affiliates, net of tax, was $1.2 million in the three months ended June 30, 2022 compared to $0.1 million in the three months ended June 30, 2021. The loss reflects our proportionate share of the net loss resulting from our investments in Sayona, Sayona Quebec, and Atlantic Lithium. Due to the timing of our equity investments in Sayona Quebec and Atlantic Lithium, we did not have income or loss from these equity investments in the three months ended June 30, 2021.
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Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021
Six Months Ended
June 30,
20222021$ Change% Change
Exploration and mine development costs$1,050,712 $7,302,336 $(6,251,624)(85.6)%
General and administrative expenses13,039,370 6,687,431 6,351,939 95.0 %
Loss from operations(14,090,082)(13,989,767)(100,315)0.7 %
Other (expense) income(100,971)(154,617)53,646 (34.7)%
Loss from equity investments in unconsolidated affiliates, net of tax(4,544,882)(64,626)(4,480,256)*
Net loss$(18,735,935)$(14,209,010)$(4,526,925)31.9 %
__________________________
* Not meaningful.
Exploration and Mine Development Costs
For purposes discussed above, direct exploration and mine development costs incurred in the six months ended June 30, 2022 were capitalized and recorded to “Property, plant, and mine development, net” in the consolidated balance sheets. Direct costs incurred in the six months ended June 30, 2021 were recorded as expense to “Exploration and mine development costs” in the consolidated statements of operations.
Exploration and mine development costs decreased $6.3 million, or 85.6%, to $1.1 million in the six months ended June 30, 2022 compared to $7.3 million in the six months ended June 30, 2021. The decrease was primarily due to the capitalization of direct costs totaling $5.2 million in the six months ended June 30, 2022.
Excluding the impact of capitalizing direct costs of $5.2 million in the six months ended June 30, 2022, costs decreased $1.1 million, or 14.8%, to $6.2 million in the six months ended June 30, 2022 compared to $7.3 million in the six months ended June 30, 2021. The decrease in costs was primarily driven by a decline in drilling activities, partially offset by an increase in engineering, permitting and metallurgical testwork activities and an increase in employee compensation expenses related to additional headcount in the six months ended June 30, 2022 compared to the six months ended June 30, 2021.
General and Administrative Expenses
General and administrative expenses increased $6.4 million, or 95.0%, to $13.0 million in the six months ended June 30, 2022 compared to $6.7 million in the six months ended June 30, 2021. The increase in general and administrative expenses was primarily due to increased professional fees, including legal and accounting services, consulting services, and insurance expense as we became subject to U.S. public company requirements as part of the Redomiciliation. Employee compensation costs also contributed to higher general and administrative expenses due to the hiring of additional management and support staff at our headquarters in Belmont, North Carolina. Stock-based compensation expense was $1.4 million and $0.6 million in the six months ended June 30, 2022 and June 30, 2021, respectively.
Other (Expense) Income
Other (expense) income decreased $0.1 million, or 34.7% from $0.1 million in the six months ended June 30, 2022 compared to $0.2 million in the six months ended June 30, 2021. The decrease in other expense was due to an increase in foreign currency exchange income as well as a decrease in interest expense.
Loss from Equity Investments in Unconsolidated Affiliates
Loss from equity investments in unconsolidated affiliates, net of tax, was $4.5 million in the six months ended June 30, 2022 compared to $0.1 million in the six months ended June 30, 2021. The loss reflects our proportionate share of the net loss resulting from our investments in Sayona, Sayona Quebec, and Atlantic Lithium. For purposes discussed above, we did not have income or loss from equity investments in Sayona Quebec or Atlantic Lithium in the six months ended June 30, 2021.
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Liquidity and Capital Resources
Overview
As of June 30, 2022, we had cash and cash equivalents of $139.0 million compared to $64.2 million as of December 31, 2021. As of June 30, 2022, our cash balances held in the U.S. totaled $137.5 million, or 98.9%, and the remaining $1.6 million, or 1.1%, of our cash balances were held in Australia. Our cash balances in Australia can be repatriated to the U.S. with inconsequential tax consequences.
Our predominant source of cash has been generated through equity financing from issuances of our common stock. Prior to 2022, we had entered into noncash seller financed debt agreements to acquire land for Carolina Lithium. Since our inception, we have not generated revenues, and as such, have principally relied on equity financing to fund our operating and investing activities and to fund our debt payments.
Our primary uses of cash during the six months ended June 30, 2022 consisted of: (i) equity investments in Sayona Quebec mainly for the operational restart of North American Lithium totaling $9.0 million; (ii) purchases of real property and associated mining interests of $8.3 million and exploration and development expenditures of $3.2 million for Carolina Lithium; (iii) advances to Atlantic Lithium for exploration and evaluation activities related to phase one of the Ghana Project totaling $7.1 million; and (iv) working capital. As of June 30, 2022, we had working capital of $137.4 million.
As of June 30, 2022, we had long-term debt of $0.3 million, net of the current portion of $0.5 million, related to seller financed debt, as discussed above.
In March 2022, we issued 2,012,500 shares of our common stock at $65.00 per share for $130.8 million. We received cash proceeds of $122.1 million, which is net of $8.7 million in share issuance costs associated with the U.S. public offering under our shelf registration statement. As of June 30, 2022, we had $369.2 million remaining under our shelf registration statement, which expires on September 24, 2024.
Outlook
We expect our current cash balances to fund our planned cash expenditures in 2022 primarily related to: (i) funding for the Quebec Projects in Canada; (ii) funding for phase one of the Ghana Project; (iii) land acquisition costs, engineering, permitting and construction activities associated with our LHP-2 Project; (iv) costs associated with our Carolina Lithium Project including, but not limited to, land and associated mineral rights acquisitions and continued permitting, engineering and testing activities; and (v) working capital requirements. Our funding for the Quebec Projects primarily relates to the restart of North American Lithium, which we expect will begin production of spodumene concentrate in the first half of 2023, subject to remaining permit transfers and approvals.