By Sam Boughedda
Activist investment firm Blue Orca Capital revealed it is short Piedmont Lithium (NASDAQ:PLL) in a note on Wednesday.
Piedmont is an Australian mining company that, in 2021, invested $100 million in Atlantic Lithium Ltd (LON:ALLA) to secure spodumene from Atlantic's mine in Ghana. In addition, Piedmont has a spodumene supply agreement with Tesla (NASDAQ:TSLA), which was amended in January.
However, Blue Orca claims that after investigating source documents and Ghana corporate records, it found that Atlantic "obtained key Ghana mining licenses by making secret payments and promises of payment to the immediate family of a high-level Ghana politician."
Piedmont shares hit a low of $53.35 in early Wednesday trading but have since recovered and are now around the $59.90 mark, up 4.8% on the day.
"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," Blue Orca wrote.
However, they do not believe that authorities in Ghana will "ratify Atlantic's mining licenses tainted by corruption," based on "precedents in Ghana and around Africa."
"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," Blue Orca stated.