Partners in arms, Piedmont Lithium [ASX:PLL] and Atlantic Lithium [ASX:A11], have been forced to defend themselves against another short-seller attack on lithium dealings.
US short-seller Blue Orca put forward serious claims on Thursday, alleging PLL’s and A11’s agreement to secure lithium spodumene supplies has been tainted by ‘textbook’ corruption on Atlantic’s part.
As a result, Blue Orca believes the lithium partners are unlikely to see any spodumene concentrate produced from the Tennessee Lithium Plant, which has been planned for 2025.
Atlantic ultimately denies the short-seller’s allegations, and today Piedmont released its own response, backing its partner’s words and highlighting the short-seller’s questionable interest in its stock.
Nevertheless, PLL’s share price was slammed by more than 5% on Friday morning, and A11 plunged even further, by more than 16%:
Source: TradingView
Blue Orca challenges Piedmont and Atlantic’s morality and ambition
Today, Piedmont released its own reply to the short attack on its and Atlantic’s operations in Ghana, reiterating that Atlantic denies the allegations contained in the report and ‘outrightly refutes the allegations of impropriety’.
In summarising the attack in question, Blue Orca had laid claims that the Ewoyaa Lithium Project is not likely to result in receiving spodumene concentrate for Piedmont’s Tennessee lithium plant from 2025 — which has been the expectation of both the mining partners.
But why is that?
The short-seller said that ‘tens of millions’ of dollars — or in reality, $730,000 plus production royalties — were paid to a family member of Johnson Asiedu Nketiah’s immediate family — Mr Nketiah being a Ghanian politician and Chairman of the National Democratic Congress.
Piedmont said that Atlantic’s recent application for a mining licence excludes two licences purchased as part of the acquisition of Joy Transporters, which were referred to in Blue Orca’s report, and, according to PLL, don’t form part of Atlantic’s defined resources.
Interestingly, Piedmont also pointed out that ‘the publisher of the Short Report discloses that it has a short interest in Piedmonts shares and therefore stands to realise significant gains from a decline in Piedmont’s share price’.
Shares for both Piedmont and Atlantic were paused in a trading halt yesterday as they contemplated their response to the short seller’s claims of ‘textbook corruption’.
Atlantic and Piedmont have said they will seek legal advice to address the claims made by the report.
This is not the first time a short seller has thrown a blanket over lithium stocks.
J Capital challenged geothermal lithium corporation Vulcan Energy Resources [ASX:VUL] in 2021 when the short-seller accused Vulcan of misrepresenting inputs to a pre-feasibility study for its Upper Rhine geothermal brine.
In July 2022, the same short seller took on Lake Resources [ASX:LKE] for allegedly paying financial advisory businesses $41.5 million in shares for favourable research results.
Atlantic’s predicament represents a case of possible high-level corruption, which, true or not, will continue to have a sobering impact on both lithium companies involved.
The extent of the impact will no doubt surface once an investigation and legal proceedings bring more information to light.
Australia faces big changes — are you prepared?
Australia has serviced 30 years of abundant, robust trade…but that’s now broken, and it’s unlikely to be pieced together the way it once was.
The global supply chain has been twisted — that’s why there’s less on our supermarket shelves, inflation is running rampant, and banks are closing branches.
The change is all around us, and the clues and signs are everywhere.
Jim Rickards, one of the world’s top financial and geopolitical analysts, has joined the dots nobody else has — certainly not the mainstream media.
He says no one is talking about how this could end the Australian economy as we know it as soon as within the next 12 months.
But if you can learn the patterns and get yourself ready for change — this could put you ahead of the curve.
If you want to know more about the biggest geoeconomic shift of our lifetime, click here.
Regards,
Mahlia Stewart,
For Money Morning
