Pilbara Minerals Limited

Pilbara Minerals Limited (ASX: PLS) is engaged in exploration and development of mineral resources, primarily at the Pilgangoora Project.

About Pilgangoora Lithium-Tantalum Project: The project is fully owned by the company and has a mine life of 23 years to date. Stage 1 of the project comprised the production of 330,000tpa of spodumene concentrate and 321,000 Ibspa of tantalite concentrate. Shipping of the produce comprised of approximately 6% from the spodumene concentrate and more than 5% of the tantalite concentrate. Under stage 1 of the project, the company witnessed consistent growth in production over the financial year 2019 with plant throughput, utilisation, and product grade continuously meeting the expectations.


Spodumene Concentrate Production (Source: Company Reports)

June Quarter Updates: During the quarter ended 30 June 2019, the company reported spodumene concentrate production of 63,782 dry metric tonnes, as compared to 52,196 dry metric tonnes in the previous quarter. During the quarter, the company shipped 43,214 dry metric tonnes of spodumene concentrate, as compared to 38,562 dry metric tonnes in March quarter. Sales of Tantalite concentrate stood at 38,538 lbs, as compared to 30,356 lbs in the previous quarter.


Production and Shipment (Source: Company Reports)

During the quarter, the company mined 336,648 wet metric tonnes of ore. Waste mined during the quarter was reported at 2,859,062 wet metric tonnes.


Ore Mined and Processed (Source: Company Reports)

Update on Pilgangoora Project: The company continued to progress on the mining activities at the Pilgangoora Project. The company witnessed development at the “Central Pit” that will support further access to ore faces and additional blending options for the processing plant. The company notified that the production at the Pilgangoora Project would see moderation during the September quarter to accommodate the revised production requirements of customers.

Corporate Update: The period also saw due diligence between the company and POSCO, a South Korean conglomerate for the formation of a downstream joint venture. The underlying purpose of the joint venture is to develop a 40ktpa lithium hydroxide and carbonate chemical conversion facility in South Korea. The final documents for the agreement are expected to be finalised in the coming weeks.

Cash Position: The company has a cash balance of A$63.6 million as at 30 June 2019, as compared to A$103.9 million as at 31 March 2019. The company engaged in the continuous ramp-up and optimisation of the Pilgangoora Project’s process plant that led to cash operating costs of USD$528/dmt CFR China. By the fourth quarter of FY20, the costs are expected to be in the range of USD$320 to USD$350/dmt.

Processing Performance: During the quarter, processing performance was in line with the expectations with plant utilisation and throughput achieving the target requirements. The company completed further works to support improved recovery and plant performance.

Stock Recommendation: The stock of the company generated negative returns of 13.27% and 44.08% over a period of 1 month and 3 months, respectively. In the quarter ended 30 June 2019, the company reported the highest quarterly production to date at 63,782 dmt with product quality remaining strong. In addition, the period was characterised by excellent plant throughput and utilisation that helped achieve Stage 1 plant design criteria during the quarter. Apart from the above, the company also provided details on improvement projects for H2CY19 which involve process controls, de-bottlenecking opportunities, and fines product flotation circuit optimisation. Considering the performance in the June quarter and further plans in the pipeline for the Pilgangoora Project, we, therefore, give a “Buy” recommendation on the stock at the current market price of $0.460, up 8.235% on 08 August 2019, owing to the release of an update by the world's largest lithium producer, Albemarle Corp, on upbeat quarterly profit estimates and higher earnings' guidance for FY19.

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