The Pilbara Minerals Ltd (ASX: PLS) share price has emerged from its trading halt this morning with a bang.
At the time of writing the lithium developer's shares are up over 13% to 94 cents.
What happened?
This morning Pilbara Minerals announced that it has entered into a broad-based strategic relationship with leading South Korean industrial conglomerate POSCO.
According to the release, the agreement includes a long-term off-take, strategic funding, and joint venture participation in a downstream conversion plant in South Korea. Management believes the latter provides Pilbara with a first-mover position in this fast-growing market.
As per the agreement, POSCO has made an immediate upfront A$79.6 million direct equity investment at a premium of 97 cents per share.
With Stage 1 of its Pilgangoora development fully funded, the proceeds from the equity investment will be applied to accelerate plans to bring the 5Mt per annum Stage 2 expansion of the project into production as soon as possible.
As I recently mentioned, a pre-feasibility study outlined a compelling business case for commencing the expansion of the project to 5Mtpa of production and processing capacity.
That study indicated that the project would be a robust, high margin project with current forecast life-of-mine revenue of $11.5 billion and life of mine Project EBITDA of $6.5 billion over an estimated 17-year mine life.
Should you invest?
Whilst I have a preference for lithium miners that are already pulling the metal out of the ground and generating revenue such as Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE), I do think that Pilbara Minerals is worthy of consideration after this recent investment.
But with the future price of lithium a matter of fierce debate at the moment, it is worth remembering that the lithium miners are amongst the most volatile on the market and prone to wild swings.
