Company overview - Pilbara Minerals Limited is a strategic metals producer. The Company is engaged in the exploration, development and mining of mineral resources. It owns the Pilgangoora Lithium-Tantalite Project, which is located in the Pilbara region of Western Australia. The Pilgangoora Lithium-Tantalite Project is located approximately 120 kilometers southeast of Port Hedland in Western Australia. The Pilgangoora Lithium-Tantalite Project is a spodumene (lithium-mineral) deposit. It has a farm-in and joint venture agreement over approximately six tenements comprising its West Pilbara project. The Pilgangoora Lithium-Tantalite Project has an Indicated and Inferred Resource of approximately 128.6 metric tons grading over 1.22% lithium oxide containing approximately 1.57 metric tons of lithium oxide and over 40 metric pounds of tantalum pentoxide. Its subsidiaries include Tabba Tabba Tantalum Pty Ltd, Sturt Resources Ltd, Sturt Resources PNG Ltd, Star 15 Limited and New Global Limited.

PLS Details
Results from heavy media separation program exceeded DFS test work: Pilbara Minerals Ltd (ASX: PLS) has recently reported that their Heavy Media Separation (HMS) Pilot Plant test work program was completed on its flagship 100 per cent-owned Pilgangoora Lithium - Tantalum Project in WA. The final results showed significant improvements in the yield, lithia recovery and course product grades. These results further show the superior recovery and grade characteristics of the Pilgangoora resource and will be factored into the company’s upcoming revision to Pilgangoora project Reserves and updated Stage 1 project financial modelling. The updated Pilgangoora project Ore Reserves, improved metallurgical recovery results and final cost data arising from the Stage 1 project works will form the basis of the proposed Stage 2, 4Mtpa ore processing Definitive Feasibility Study (DFS). Moreover, the Pilot Plant HMS results for the Central, Western and East Domains show increase in both yield and recovery compared to the DFS, including a significant increase in recovery in the Eastern Domain from 44.6% to 67.7%, an increase of 23.1% producing a 6.26% Li₂O grade.
 

HMS Spodumene Concentrate (Source: Company Reports)
 
Further, the results are a significant improvement over the modelled test work results used in the 2Mtpa DFS and provide an increased level of confidence for the FEED program currently being conducted by RCR Tomlinson, Minnovo and Primero. Additionally, the Pilot Plant gravity program has commenced with the bulk (-0.50 mm) material from each of the Domains being combined with the (+0.50 – 3.35 mm) first stage floats generated from the HMS Pilot Plant Program. After tantalum recovery, this material will be subjected to the further Flotation Pilot Plant program, and the completion is expected by the end of March, 2017. These closing Pilot Plant programs would validate the DFS metallurgical test work program as well as confirm and improve the basis of design for the current FEED process.
 
Reserve Update and Proposed Stage 2 4Mtpa Definitive Feasibility Study (DFS): As per January 2017 Mineral Resource Upgrade, the updated resource represented a 22% increase in total resource tonnage as compared with the resource upgrade as of July 2016. Accordingly, the mineral resource upgrade comprised a total of 156.3 million tonnes grading 1.25% Li₂O (spodumene) and 128ppm Ta₂O₅ containing 1.95 million tonnes of lithium oxide and 44.2 million pounds of Ta₂O₅. Moreover, the total Measured and Indicated Resource had increased by 14% to 95.3 Mt grading 1.32% Li₂O (spodumene), 130ppm Ta₂O₅ and 0.55% Fe₂O₃, containing 1.26 Mt of lithium oxide and 27.3 million pounds of Ta₂O₅. Therefore, the recently published and expanded resource for the Pilgangoora project showed the improved metallurgical characteristics and the more detailed engineering design arising from the current stage 1 execute project, which would be assessed in a revised JORC reserve estimate. Additionally, the company previously published a Stage 2, 4Mtpa ore processing prefeasibility study for the Pilgangoora project, which demonstrated a very strong economic return. The additional engineering design and pilot scale testwork has further showed the merits of the Pilgangoora project and when combined with updated project reserves, support the continued study of expansion options at Pilgangoora beyond the current Stage 1 project. In addition, the further planning is underway for the delivery of the Stage 2, 4Mtpa DFS, and after the approval of PLS’s Board, it is expected that these results will be published during the second half of 2017.

Pilgangoora Project – Mineral Resource Estimate (using 0.5% Li₂O cut-off) (Source: Company Reports)
 
Other updates on the Pilgangoora Project: PLS’s key environmental approvals have been said to facilitate the commencement of major site works, which are in progress with the Department of Mines and Petroleum (DMP). Based on the expected assessment criteria, the approval of the PLS’s Native Vegetation Clearing Permit and Mining Proposal have been expected to be finished and received from the DMP by the end of March, 2017. Moreover, in anticipation of the commencement of major site construction works from April, the company has continued to liaise with its offtake partner Shandong Ruifu with respect to the commencement of the run-of-mine (ROM) direct shipping ore program. PLS has collected bulk samples to send to Ruifu for the optimization of their processing facility in China and has also commenced the application process to access the Utah Point Port facility at Port Hedland to facilitate bulk ship loading for the purposes of the ROM program. Further, PLS has also been advised that Ruifu have begun applications to progress the proposed prepayment facility. However, the progress of the ROM ore offtake agreement with Ruifu are subject to Pilbara’s access to the Utah Point port facility and Ruifu obtaining regulatory approval in China for payment of the prepayment facility. Additionally, RCR Tomlinson, Minnovo and Primero are well progressed with the final engineering design for Stage 1 of the processing plant (2Mtpa). The procurement activities are ongoing with a number of key packages currently in tender and/or planned for award over the coming weeks consistent with the delivery schedule. The site based construction works are now well underway with the following key areas now in progress. This includes PLS construction management team site office establishment, general site clearing and bulk earthworks for Stage 1 camp relocation, early remedial works on the major access road into the site to facilitate delivery, contractor mobilization and establishment for Stage 1 camp and contractor mobilizations and establishment for site based concrete batch plant facility. In addition, PLS has continued to work on the balance of the company’s funding requirements and offtake, inclusive of Lithium and Tantalum products. The company is also engaged with multiple industry participants, including advanced discussions and documentation for both Lithium and Tantalum concentrate offtake. Along with it, the potential funding streams are being progressed to support the balance of the Pilgangoora project funding, including offtake-linked and non-bank debt facilities. While well advanced, these funding options are still incomplete and are subject to further work over the coming weeks.
 
Development of the Sileach process: Lithium Australia is in a very strong position to develop Sileach on a global basis, due to the recent progress that includes the successful testing of spodumene concentrates from PLS, production of battery-grade lithium carbonate, and the resolution of process ownership issues in favor of Lithium Australia
 
December 2016 Quarter highlights: PLS has been granted the main mining lease for the Pilgangoora Lithium–Tantalum Project Mining Lease M45/1256 by the Western Australian Department of Mines and Petroleum (DMP) during the December quarter. The award of the Mining Lease was a key condition to the Pilgangoora mining proposal submission and subsequent final project permitting expected during the first Quarter of 2017, that has allowed major construction, development and mining activities to proceed. PLS has awarded the first stage of the 300-room camp relocation and re-establishment contract to OTOC Australia, subsequent to the end of the December quarter. The initial 60 rooms and common facilities are due to be completed by late March 2017, and the balance of the camp are due to be completed (subject to approvals and permitting) during the second quarter of 2017. The remaining contract packages for the Pilgangoora Project have been reported to be either under negotiation or will be the subject of tender processes shortly. 

Core Mining License at Pilbara Minerals’ Pilgangoora Project(Source: Company Reports)
 
Stock Performance: After demonstrating a subdued performance in the last six months, falling over 12.8% (as of March 20, 2017), the stock recovered over 4.4% in the last five days with improving sentiments. We believe this bullish momentum would continue in the coming months and we give a “Buy” recommendation on the stock at the current price of – $ 0.48

 
PLS Daily Chart (Source: Thomson Reuters)

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