Pilbara Minerals share price leaps on positive lithium price update

The company has shaken on better pricing terms with offtake partners.

| More on:
Cheerful businesspeople shaking hands in the office.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Pilbara Minerals share price is soaring 2.85% to trade at $3.97 right now  
  • Its gains come on news the company has upped its pricing among major offtake customers to around US$6,300 a tonne
  • Meanwhile, the expected cost of its major Pilgangoora expansion has jumped 36% to around $404 million

The Pilbara Minerals Ltd (ASX: PLS) share price is in the green on Wednesday on news of the company's lithium offtake pricing and its project expansions.

The S&P/ASX 200 Index (ASX: XJO) lithium favourite announced good news of pricing with major offtake customers and updated the market on its expansion activities.

The Pilbara Minerals share price is up 2.85%, trading at $3.97 at the time of writing.

Created with Highcharts 11.4.3Pilbara Minerals PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

Let's take a closer look at today's news from the ASX 200 lithium producer.

What's driving the Pilbara Minerals share price today?

Offtake pricing increased

Pilbara Minerals today revealed an increase in the price it will sell its lithium products to major offtakers.

Its new average price will equate to around US$6,300 per dry metric tonne (CIF China) on a SC6.0 (6% lithia content) equivalent basis, based on today's market pricing reference data.

The increased pricing applies to all shipments the company sends to its major offtake customers from December.

For reference, Pilbara Minerals' realised sales price over the September quarter equated to a reference price of US$4,813 per dry metric tonne on a SC6.0 basis.

Meanwhile, its latest Battery Materials Exchange auction heralded a bid equivalent to US$8,299 per dry metric tonne, inclusive of freight, on a SC6.0 basis.

Pilbara Minerals CEO and managing director Dale Henderson commented:

The improved pricing outcomes are expected to further improve cash-flow generation from the Pilgangoora Project, helping the business to continue on its rapid growth trajectory into 2023 and beyond.

Pilgangoora expansion update

The Pilbara Minerals share price might also be getting a boost from news of its expansion project.

The P680 expansion project aims to increase Pilgangoora's annual nameplate production capacity from around 580,000 tonnes to 680,000 tonnes. The company green-lit the project in June.

Today, however, the company announced the expected cost of the expansion has jumped 36%. It's now expected to cost around $404 million – up from previous estimates of $297.5 million.

That's mainly due to higher material and equipment costs, costs to maintain its delivery schedule, greater engineering work, and a tight labour market. Henderson said:

Our strong balance sheet and the current cash generating capacity of the Pilgangoora Project enables the company to continue the timely delivery of the P680 project, notwithstanding the capital escalation.

The expansion's primary rejection facility is on track for completion in the 2023 September quarter. After that, the crushing and ore sorting facility is expected to kick off in the 2024 March quarter.

Finally, Pilbara Minerals has approved $38.3 million of pre-final investment decision funding for the P1000 Expansion Project.

The expansion could see the Pilgangoora Project's total spodumene concentrate production capacity reach a million tonnes annually. A final investment decision has been flagged for the upcoming March quarter.

Should you invest $1,000 in De Grey Mining Limited right now?

Before you buy De Grey Mining Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and De Grey Mining Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Miner looking at a tablet.
Resources Shares

BHP shares are up 9% in a month. Are they still good value?

Is Australia’s largest miner a big opportunity?

Read more »

Three miners wearing hard hats and high vis vests take a break on site at a mine as the Fortescue share price drops in FY22
Resources Shares

Did you catch what happened with the big 3 ASX 200 mining stocks in April?

BHP, Rio Tinto, and Fortescue all reported their latest mining results in April.

Read more »

Miner looking at a tablet.
Resources Shares

After its earnings result, what's Macquarie's price target on Fortescue shares?

Let’s dig into what Macquarie thinks of Fortescue after its quarterly update.

Read more »

Two mining workers on a laptop at a mine site.
Resources Shares

The Mineral Resources share price is down 72% in a year. Time to pounce?

Two top experts ran their slide rules over Mineral Resources shares. Here’s what they found.

Read more »

Miner looking at a tablet.
Resources Shares

Mineral Resources share price shoots 15% higher on third-quarter report

The ASX 200 iron ore and lithium giant has released its 3Q FY25 activities report.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Why Macquarie says this ASX 200 mining stock could rocket 67% in a year

Macquarie forecasts a big potential rebound for this diversified ASX 200 miner.

Read more »

Female miner smiling at a mine site.
Resources Shares

3 reasons why the Fortescue share price could still be a buy

Here’s why I view Fortescue as an opportunity.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Resources Shares

Here's the latest earnings forecast out to 2029 for Rio Tinto shares

Let’s unearth what this mining giant is predicted to achieve.

Read more »