Pilbara Minerals Ltd

Exceptional results of the Stage 2, 5Mtpa PFS:Pilbara Minerals Ltd (ASX: PLS) stock surged 9.4% on February 13, 2018 after the company announced for outstanding and compelling results from 5Mtpa stage 2 PFS (Pre-Feasibility Study). The post-tax NPV of $2.1bn with strong internal rate of return of 56% has been highlighted. The result will lead to the expansion of the Pilgangoora Lithium-Tantalum project and processing capacity within months of starting production of spodumene concentrate from the Stage 1, 2Mtpa operation in mid-2018. The exceptional results of the Stage 2, 5Mtpa PFS also reflect the strong financial and technical merits of the expansion project and paves the way for further definitive assessment through an ongoing DFS, which is targeted to complete in mid CY 2018. Further, the PFS results re-affirm the Pilgangoora Project’s scale, high margin project with current projected life-of-mine revenue of A$11.5 billion (real) and life of mine Project EBITDA of A$6.52 billion (real) over an estimated 17-year mine life. For the first 5 years of operations, the revenues are expected to be A$3.12 billion generating Project EBITDA of A$1.85 billion (real) inclusive of ramp up in both Stage 1 and Stage 2. Additionally, after DFS, PLS has planned the Final Investment Decision in Q3 2018, start of construction by Q4 2018 and commissioning from Q4 2019. In addition, PLS had already announced the strategic off-take and financing arrangements with Ganfeng and Great Wall Motor Company for the expansion of Stage 2 and these support the present developments. Meanwhile, PLS stock has fallen 21% in three months as on February 12, 2018 given the lithium sector volatility. Based on the above developments and medium-term view on lithium prices, we give a “Hold” recommendation on the stock at the current price of $0.87
 
 

Pilgangoora Project (Source: Company Reports)
 
Alongside PLS, other lithium sector stocks, Galaxy Resources Ltd (ASX: GXY), Orocobre Ltd (ASX: ORE), Altura Mining Ltd (ASX: AJM) and Kidman Resources Ltd (ASX: KDR) moved up 7.17%, 6.9%, 8.95%, and 3.1%, respectively on February 13, 2018 with the lithium sector again gaining some strength with improvement in sentiments.
 

Independence Group NL

Promising update at Lake Mackay Joint Venture: Up 4.6% on February 13, 2018, Independence Group NL (ASX: IGO) has notified that JV partner, ABM Resources NL has provided an update on activities on the Lake Mackay Joint Venture that is managed by Independence Group. Particularly, the orientation airborne EM survey at Grapple, Springer and Bumblebee has been elucidated to optimise the system to be used to screen the broader target corridor at Lake Mackay. A large area for on-ground exploration has been now identified with 2018 program having the potential to rapidly and cost effectively identify additional Grapple and other style targets on the remainder of the Lake Mackay Project based on the finding that the new soil anomaly is substantially larger than previously defined over Bumblebee and Grapple, and  has coincident silver, copper, cobalt, and zinc responses. Meanwhile, IGO’s balance sheet has been strengthened with net debt reduced from A$164m at the start of FY 2018 to A$120m. We have a “Hold” position on the stock given the 154.95 price to earnings level, at the current price of $4.75

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