Pilbara Minerals Rockets Higher On Lithium Expansion
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Shares in lithium miner Pilbara Minerals jumped almost 12% yesterday at one stage yesterday after the company said a pre-feasibility study demonstrated the the case for more than doubling production at its Pilbara mine in WA.
First production from the company’s Pilgangoora Lithium-Tantalum project in Western Australia is expected in the middle of this year with a capacity of 2 million tonnes a year.
But now Pilbara says the study showed a “compelling” case for more than doubling that to 5 million tonnes a year, for an extra cost of $207 million.
Pilbara Minerals said the study forecast the expanded production target would create a high-margin project with an expected life-of-mine value of $A11.5 billion and earnings before interest, amortisation and depreciation of $A6.5 billion over the estimated 17-year lifetime of the mine.
The expanded operation will enable production of as much as 800,000 tonnes a year (tpa) of 6% spodumene (lithium) concentrate, up from the 330,000tpa planned in the $274 million stage one development which is nearing completion.
A final decision on the expansion will be made in the September quarter.
The company’s Sydney-listed shares were 9.4% higher at the close at 87 cents.
Ken Brinsden, Pilbara’s CEO said in a statement the expansion plan was supported by the “remarkable growth occurring in the market”, adding that it was “deemed to be the optimal production rate to unlock the full value of the deposit and maximise the financial returns to shareholders”.
Global demand for lithium as an ingredient for electric car batteries has grown in recent years as interest in the vehicles has risen. “The exponential growth which is occurring across the lithium-ion supply chain as the industry in China and elsewhere gears up for transformational growth to meet demand from the automotive and energy storage sectors is now becoming better understood,” Mr Brinsden said.
Chinese carmaker Great Wall Motor took a 3.5% stake in the Australian miner last September to secure a supply of lithium for production of electric vehicles for five years.
Pilbara says the expansion is supported by Pilbara’s Chinese customers General Lithium, Ganfeng and Great Wall.
Mineral Resources is the only exporter of spondumene a lithium-rich rock, through Port Hedland at the moment (there are two other exporters, one through Esperance and another through Kwinana at Fremantle).
MinRes shipped 425,896 tonnes of spodumene, a lithium-rich rock, exported in December was the highest since Mineral Resources started exporting the commodity in April.
Mineral Resources says it plans to export 4.25 million tonnes of spodumene in 2017-18.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.