LA Private

Pilbara Minerals: strong lithium market resilience

Pilbara Minerals (ASX:PLS) has managed to overcome uncertainties surrounding the impact of the 2022-2023 lithium price slide. The company’s June quarter and full-year production report revealed that fears of significant damage were unfounded, as it experienced only a minor drop in revenues due to lower prices.

Demand for Pilbara’s key lithium product remains steady, and the company aims to achieve an annual rate of one million tonnes by early 2025.

During the 2022-2023 financial year, Pilbara reported an impressive 64% increase in production, reaching 620,100 tonnes compared to 377,900 tonnes in the previous year. The company sold 607,000 tonnes of spodumene in the year to June, benefitting from an 87% higher average realized price of $US4,449 per tonne (approximately $A6,580), resulting in a record revenue of $A4 billion for the year.

Although the June quarter experienced some price weakness, Pilbara managed to maintain strong performance. Spodumene production rose by 10% quarter-on-quarter to 162,800 tonnes, and spodumene sales increased by 22% to 176,300 tonnes.

Despite a decline in lithium prices during the quarter, Pilbara Minerals’ average realized price dropped from $US4,840 per tonne in the March quarter to $US3,256 per tonne in the three months to June 30. Consequently, revenue for the June quarter fell by 18% to $A844 million.

Looking ahead, Pilbara Minerals anticipates a partnership agreement for downstream lithium processing within the next five months, utilizing the unallocated product from the P1000 Project at the Pilgangoora lithium mine in WA. Additionally, the company has commenced a partnership process for a potential downstream joint venture, targeting up to 300,000 tonnes per annum of future unallocated spodumene concentrate from the P1000 expansion.

Pilbara Minerals has ambitious longer-term goals, aiming to achieve one million tonnes per year of spodumene production at Pilgangoora. It has already completed the procurement of long-lead items to support this expansion and issued tenders for bulk earthworks and concrete. The company plans to reach the one-million-tonne target by the March quarter of 2025.

The financial outlook is promising, with Pilbara Minerals’ cash balance increasing by 24% to $A3.3 billion at June 30, 2023, compared to $A600 million at the end of June 2022.

Despite a slight setback in Friday’s market sell-off, Pilbara shares had a strong performance, reaching over $5 during the week. The shares remained up more than 2% for the week and over 30% for the year to date.