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Piedmont Lithium share price: What’s behind 2021’s 118% run up?

‘Piedmont is at the nexus two important megatrends – the electrifications/ decarbonization of the economy, and the regionalisation of supply chains.’

Can the Piedmont share price continue rising?

The Piedmont Lithium share price (ticker: PLL) has been on a tear in the new year, rising over 100% since January, closing out Monday's session at US$62.66 per share. In the last year the stock is up an even more substantial 838%.

Below we look at some of the potential catalysts behind this mammoth run.

Tesla, Tesla, Tesla!

Bullish trade activity around the stock was first sparked when Piedmont announced it had struck a lithium supply agreement with Tesla (ticker: TSLA) in late 2020, with the stock trading up to US$40 per share in response. Prior to that, PLL spent most of 2020 trading below US$10 per share.

Under the five year supply agreement, Piedmont is set to supply one third of its annual 160,000 tonnes of spodumene concentrate production to the electric automaker – an integral component in Lithium-ion batteries.

The spodumene concentrate will be sold at a fixed rate and the supply agreement may be extended for an additional five years.

Beyond the Tesla deal, upwards share price momentum has been retained into the new year, with the company releasing a positive March quarterly. The company also announced plans to shift its primary listing from Australia to the United States, which may have positively impacted the share price.

Under the US listing, which has now been finalised, the company sold 1.75 million American Depository Shares (ADSs), at US$70.00 per share, raising US$122.5 million in the process.

Each US ADS represents 100 ordinary ASX-listed Piedmont shares and on both exchanges, the company trades under the ticker PLL.

Analysts Like What they See

In the wake of the Tesla deal and the US-listing, analysts have maintained a positive view on the stock, with PLL carrying a Buy rating on average, according to MarketWatch.

Going forward, the average target price of $84.72 per share (also according to MarketWatch), suggests analysts expect further upside from current price levels.

Discover the Top ASX Lithium Stocks to Watch in 2021 here.

Other Points of Interest

Beyond everything discussed above, here are some other key takeaways from the March quarterly:

  • Piedmont upgraded its mineral resource estimate by 40% at its primary Carolinas operations. The Mineral Resource estimate now stands at 39.2 million tonnes, with a grade of 1.09%Li2O.
  • The company is set to acquire a 19.9% stake in Sayona Mining, a miner which controls a number of lithium assets primarily located in Canada.
  • Piedmont said it had initiated a Definitive Feasibility Study for its ‘integrated North Carolina lithium operations.'
  • The company expanded its senior management team and appointed Mr David Klanecky as Executive Vice President and COO during the quarter.

Commenting on that release, Piedmont CEO, Keith D. Phillips said:

'This was an eventful quarter, as we positioned Piedmont to be the United States' first greenfield lithium project in over 50 years.'

'Piedmont is at the nexus two important megatrends – the electrifications/ decarbonization of the economy, and the regionalisation of supply chains. We are advancing our business with the right assets, in the right location, with the right people, all at the right time.'

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