Pilbara Minerals taking advantage of hot lithium market

Australian spodumene lithium producer Pilbara Minerals has reported record output from its Pilgangoora mine in Western Australia as demand and prices continue to rise.

Pilbara Minerals' Pilgangoora mine in the Pilbara region of Western Australia

Pilbara Minerals' Pilgangoora mine in the Pilbara region of Western Australia

Pilgangoora, outside Port Hedland, produced 77,820 dry metric tonnes of spodumene concentrate in the March quarter, up from 63,712t in the December quarter.

The operation ran at full capacity of 330,000t per annum during February and March.

Pilbara boss Ken Brinsden said spodumene was in "relatively short supply" and the company had been fielding lots of enquiries.

Tantalite concentrate sales jumped to 47,831 pounds from 18,541lb in the December quarter.

Pricing continued to improve through the quarter, but Brinsden said there was still a lag.

Pilbara chief financial officer Brian Lynn said the company had taken the opportunity to re-look at its pricing mechanism.

Under the previous pricing structure, Pilbara would receive the average price for the December half for the March quarter.

"Clearly in a rising market, that's quite punitive," Lynn said.

Pilbara will move to provisional pricing, which will allow for adjustments at the time of shipping which are more in line with the spot market.

Shipments that were provisionally priced in the March quarter achieved a sale price of about $410/dmt, with price adjustments to occur during the current quarter.

"The expectation is that when all those cargoes get priced, which will begin in April, the final price will be around about $535/t," Lynn said.

In March, the company received a letter of credit ahead of an April spot sale, implying a headline price of $655/dmt.

Unit cash costs for the quarter were US$383 per dry metric tonne CIF China, up $32 due to a stronger Australian dollar and an increase in freight costs from $25 per wet metric tonne in January to $47/wmt in March.

Lynn said freight costs had fallen to $35-40/wmt this month.

The company continues to target cash costs of $320-350/dmt.

On the growth front, site works began on Pilgangoora stage one improvement projects to increase production to roughly 380,000tpa.

The improvements are expected to cost A$22 million.

The company completed the acquisition of the neighbouring Altura lithium project and trialled ore from Altura through the Pilgangoora plant, returning strong recoveries and exceeding expectations.

The company will look at restarting the Altura plant (now known as Plant 2) after some modifications, but expects to reveal more about its plans in the coming weeks.

Pilbara also expects to shortly update the market on the potential expansion of the Pilgangoora plant (Plant 1).

Brinsden said Pilbara was happy with its progress "in every regard".

Partner POSCO this month approved a proposed 43,000tpa chemical conversion facility in South Korea.

Pilbara has an offtake deal over the plant and also the right to participate, initially at 21% with the option to increase to 30%.

Brinsden said the ball was now in Pilbara's court and he expected the company to make a decision on its participation in the facility during the current quarter.

Macquarie said this week it expected Pilbara to move into downstream processing via the POSCO deal by FY24.

"POSCO's formal approval of the development was a positive surprise and we now assume Pilbara will do likewise, allowing construction to commence by the end of this year," it said.

"Under the terms of the joint venture, Pilbara funding requirement expected to be modest, and could enable an acceleration of the stage two expansion of Pilgangoora, which presents upside risk to our base case."

Macquarie has an outperform rating for Pilbara with a $1.50 price target.

Shares in Pilbara traded as high as $1.33 last week, but closed 3.8% lower today at $1.25, valuing the company at $3.6 billion.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.


Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.


Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.


Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.


Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.