The Piedmont Lithium Inc (ASX: PLL) share price won't be going anywhere on Thursday.
This morning, the lithium developer requested a trading halt.
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Piedmont Lithium share price halted
According to the trading halt request, the company has requested the trading halt so it can respond to a short-seller report from Blue Orca.
In addition, fellow lithium share Atlantic Lithium Ltd (ASX: A11) has also been halted for the same reason.
What is the report claiming?
Blue Orca notes that Piedmont Lithium's newly announced Tennessee conversion facility is aiming to produce battery grade lithium through a supply deal from a lithium mine in Ghana.
However, while the company claims that this will lead to revenues and profits flowing from Tennessee in 2025, the short seller believes that this "is a fantasy."
Blue Orca alleges that Atlantic Lithium obtained key Ghana mining licenses by making secret payments and promises of payment to the immediate family of a high-level Ghana politician. This follows an investigation of source documents and Ghana corporate records.
The research firm claims that Atlantic Lithium paid and "promised tens of millions of dollars in potential royalties to a company secretly owned by the son of a leading politician known as General Mosquito." He previously served in Ghana's Parliament as Chair of the Mines and Energy Committee.
In light of this, its analysts don't believe that authorities in Ghana will ultimately ratify Atlantic Lithium's mining licenses. It commented:
In our opinion, evidence of Atlantic's payments to the son of a high-level politician for mining licenses is textbook evidence of corruption. Atlantic still needs Ghana's Parliament to approve and ratify its mining licenses and permits in order to build the lithium mine. Based on precedents in Ghana and around Africa, including a recent decision by Ghana's highest court, we do not believe that authorities in Ghana (including the Parliament) will ratify Atlantic's mining licenses tainted by corruption.
Why is it short Piedmont Lithium?
Given that Blue Orca alleges that Atlantic Lithium has been acting corruptly, readers may be wondering why Piedmont Lithium is being shorted. It explained:
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.
In addition, the research firm suspects that the company could lose its US$141.7 Million grant from the US Department of Energy, which was announced late last year. It adds:
Additionally, FOIA requests we obtained from the Department of Energy ("DOE") suggest that the spodumene from Ghana was important to Piedmont's grant proposal, meaning that the loss of the offtake agreement, and questions surrounding Piedmont's own potential liability under the FCPA and other anti-corruption statutes, raise doubt about whether Piedmont will ultimately receive the conditional government funding.
The Piedmont Lithium share price is expected to remain in its halt until Monday when the company releases its response to these allegations.
