Atlantic Lithium (LON: ALL) (OTCQX: ALLIF) shares are down 15%. ALL shares are also down 25% on the two days – the base problem being that the government of Ghana seems to be getting greedy. And who could have guessed that that sort of thing might happen? Or, on the other hand, this is why some places are considered to be reputable mining jurisdictions and some others aren’t. In some places we can rely upon a government to stick to the contract they’ve agreed to before all the money is spent exploring and proving a mine, in some others we cannot. 

The actual announcement today isn’t the cause of the problems: “Further assay results received for 5,444m of infill and exploration reverse circulation (“RC”) drilling completed at Ewoyaa as part of the broader 18,500m 2023 planned drilling programme.” No, those results are fine. Even rather good in fact. The actual problem is the announcement from yesterday: “The Company acknowledges comments made by Ghana’s Minister for Lands and Natural Resources, Hon. Samuel A. Jinapor, which relate to potential implications for mining companies from the introduction of the new policy, including changes to the mining royalty rate and the state’s carried interest in minerals projects.”

It’s possible to think of this as a bait and switch. Offer decent contracts to get the exploration and development work done then offer very much worse terms once all that spending has been completed. The worse terms have to be agreed to given all that spending already done.

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Atlantic Lithium share price from Google Finance

We’ve had words before about Atlantic Lithium: “Atlantic Lithium (LON: ALL) shares are up 15% but then they’ve also fallen near 50% in recent days to leave the price down overall. The cause of this is a short selling report from Blue Orca. Their particular interest is not in Atlantic Lithium but in Piedmont Lithium, a major shareholder and hopeful business partner. Piedmont wants the putative output from Atlantic’s Ghana lithium mine to feed its processing plant in the US. If the mine doesn’t open then Piedmont is both out of luck and some chunk of money.

Blue Orca’s claim is that the mining licences in Ghana were obtained by the illegal deployment of cash and brown envelope payments. They are therefore unlikely to stand and Atlantic, and therefore Piedmont, are out of luck. Of course, the idea of bribery in West Africa brings to mind Captain Renault, we’re all shocked, shocked. “

Imagine, just for a moment, that Blue Orca is correct here. The latest news seems to be that once bought Ghanaian politics doesn’t stay bought. Wouldn’t say this surprised about West Africa. But then that’s just us being cynics – of course no bribery took place. 

If this were all in a reliable jurisdiction then it’s wildly profitable for Atlantic: “The DFS is here. The surprise, to us, is that ALL shares have fallen upon this publication. Because by the numbers shown Ewoyaa is wildly, hugely, profitable. Yes, we know, we’ve muttered about how we don’t expect the lithium price to hold up and all that. So much supply is to come to market that the price will inevitably revert to long term averages and so on. But the surprise, to us at least, is how conservative Atlantic Lithium is being about that future price.“

Our read on this is that Ghana, the government, is coming back for a second bite at the cherry. It could be all about bribery, this is West Africa. Given the ability to delay why not try for another payment? But even if we assume that’s not true – as, of course, it isn’t because bribery never does happen these days – the government is still coming back for more royalties and shares and copayments. 

In effect, Atlantic Lithium’s problem is that the Government of Ghana is getting greedy.