Pilbara Minerals Ltd (ASX: PLS)

Lift from lithium trends: Pilbara Minerals’ stock surged up 4.5% on November 08, 2017 continuing with the rally of about 125% in last three months with lithium industry trends taking a better shape in 2017 wherein the demand is outstripping supply, and as a result, the prices are moving up. PLS is also getting a boost from the lately finalised binding off-take agreement and equity subscription with China’s Great Wall Motor Company in a move to underpin the Stage 2 expansion of its 100% owned Pilgangoora Lithium-Tantalum Project. The off-take agreement was signed for 75,000tpa and up to 150,000tpa of Stage 2 chemical grade spodumene concentrate in return for Stage 2 debt financing support, and a $28m equity subscription for shares. This has been of great significance in the industry considering the punching in of investment into an upstream supplier of lithium raw materials in Australia. The group has unrestricted cash balance of $78.95m (against 30 June 2017 figure of $87m), at 30 September 2017, which is still sufficient for its on-going activities. Further, PLS’ efforts on equity raising launched in the June 2017 Quarter seem to be supporting the Pilgangoora Project development. Given the scenario, lithium trends and price run-up, a “Hold” on the stock looks appropriate at the current price of $0.93
 

Altura Mining Ltd (ASX: AJM)

Commissioning scheduled for March quarter 2018: Altura, on the other hand, was found to be moving down 4.5% on November 08, 2017, which might be owing to some profit booking. The stock has otherwise moved up 147% in last three months at the back of favourable lithium sector dynamics. The group still seems to have the fizz to witness momentum given the successful A$26 million capital raising to fund studies on a Stage 2 expansion to double production in order to meet the ongoing demand of its offtake partners. Its Pilgangoora project is being developed to be the next significant producer of lithium concentrate with commissioning expected in March quarter 2018 followed by first sales in June quarter 2018. The low Life of Mine (LOM) strip ratio of 2.9:1 is said to give Altura the advantage of having low operational mining cost. It is also worth noting that the group’s 2017 loss was less than the 2016 loss given the significant impairment costs and non?lithium related exploration costs written off in 2016. It might be prudent to wait for further developments while we give a “Hold” on the stock at the current price of $0.425

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