Piedmont Lithium Stock (PLL): Should I Buy It Now?

By Amit Chowdhry ● September 30, 2020
  • Should you buy Piedmont Lithium stock (NASDAQ: PLL) now? Here is some information to help you decide.

Australia-based lithium mining company Piedmont Lithium (NASDAQ: PLL) recently signed a deal for the supply of spodumene concentrate (“SC6”) from Piedmont’s North Carolina deposit to Tesla. As part of the deal, Tesla is going to procure around one-third of Piedmont’s planned production of lithium ore mineral over a five-year period on a fixed-price binding purchase commitment from the delivery of the first product.

The deal may be extended by a mutual agreement for a second five-year term.

One-third of Piedmont’s planned SC6 production represents 160,000 tons per annum for the initial five-year term as well as an additional quantity to be delivered at Tesla’s option. The SC6 sales are expected to generate between 10-20% of Piedmont’s total revenues from its proposed integrated mine-to-hydroxide project for the initial five-year term. And the agreement is conditional upon Tesla and Piedmont agreeing to a start date for spodumene concentrate deliveries between July 2022 and July 2023 based on the development schedules of both parties.

The deal with Tesla represents the start of the company’s first US domestic lithium supply chain and disruption to the current value chain. And the agreement highlights the importance of Piedmont’s unique American spodumene deposit and confirms the trend toward spodumene as the preferred feedstock for the lithium hydroxide required in high-nickel batteries said Keith D. Phillips, President and Chief Executive Officer.

“We will now accelerate our mine/concentrator development to support Tesla’s plans, work to further expand our mineral resources, and potentially increase our planned annual spodumene concentrate production capacity. We will simultaneously be advancing our plans to produce lithium hydroxide in North Carolina, using a combination of internally produced spodumene concentrate as well as material sourced from other producers around the world,” explained Phillips.

Investor Reaction To The Deal

After this deal was announced, shares of Piedmont Lithium (NASDAQ: PLL) surged about 90%. One month ago, PLL was trading at $6.06 and the stock price hit as high as $54.50 on September 28. Now it is trading at between $23-$26 or so.

Piedmont Lithium Stock (PLL): Should I Buy It Now?

Here is some pertinent information to help you decide whether to buy Piedmont Lithium stock:

Price Target Activity

This week, ROTH Capital Partners analysts rated Piedmont Lithium with a “Buy” with a price target of $41.

Piedmont Lithium Stock (PLL) Performance:

Here is how the Piedmont Lithium (PLL) stock price performed over certain periods of time (as of about 11:30 AM ET today):

1-Day: -1%

5-Day: +129.8%

1-Month: +314.2%

6-Month: +356.5%

YTD: +203.4%

1-Year: +263.2%

2-Year: +134.9%

Since 2017 IPO: +31.9%

Based on the company news, stock performance, price target activity, and analyst consensus report, I plan to add PLL to my portfolio and steadily increase my position for the long-haul using a buy-and-hold strategy at various price points.

Disclosure: I wrote this article myself and I do not have any business relationship with any company whose stock I write about. I am not a financial advisor and all articles are my opinion. You should do your own due diligence and consider talking to a financial professional before investing.