Pilbara Minerals share price races higher on 'important milestone'

Things are ramping up in the Pilbara for this lithium giant.

| More on:
A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.

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

  • Pilbara Minerals has made a milestone announcement this morning
  • The lithium giant's board has approved a major investment in the Pilgan Plant
  • This will ultimately sees spodumene concentrate production increase to 1 million tonnes per annum in the coming years

The Pilbara Minerals Ltd (ASX: PLS) share price is pushing higher again on Wednesday.

In morning trade, the lithium giant's shares are up 3.5% to $3.99.

Why is the Pilbara Minerals share price pushing higher?

Investors have been bidding the Pilbara Minerals share price higher after the company made a major announcement.

According to the release, the company's board has approved the capital investment for the P1000 Project.

This investment in the Pilgan Plant and its supporting infrastructure will deliver a ~320,000 tonnes per annum increase in nameplate spodumene concentrate production capacity.

Once fully commissioned and ramped up in the September quarter of 2025, this will increase the annual production run rate from the Pilgangoora Project to approximately 1 million dry metric tonnes (dmt).

Management notes that this supports its long-term growth strategy to increase production capacity at the Pilgangoora Project in line with market demand.

What will this cost?

The P1000 Project's estimated capital cost is $560 million across the Pilgan concentrator and supporting infrastructure. This includes the previously announced $38 million of pre-final investment decision capital.

Pleasingly, this investment is expected to deliver attractive returns to the company. In fact, management estimates that it has a forecast payback from incremental cashflows relative to P680 within 12 months.

Furthermore, the capital investment for the P1000 Project is expected to be funded from a combination of existing cash and ongoing cashflow from operations.

Pilbara Minerals' managing director and CEO, Dale Henderson, commented:

The P1000 Project expansion is an important milestone for Pilbara Minerals. This expansion step facilitates a major lift in production capacity, capitalising on the substantial scale of this Tier-1 hard rock asset which underpins a ~25 year mine life at this new expanded production level.

This reinforces the exceptional scale and quality of our Pilgangoora Project, which is one of the few hard rock lithium production operations globally that has both the resource size and an existing operating platform to enable a rapid scale-up of production to capitalise on the growing demand for lithium products.

Henderson also revealed that its future spodumene production is already in demand with end users. He adds:

The Company has received significant inbound interest for further offtake and downstream partnerships, and we have begun exploring options to maximise the value of the additional product from P1000 including new offtakes and downstream partnerships to extract greater value along the battery minerals supply chain.

Motley Fool contributor James Mickleboro 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 Materials Shares

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Materials Shares

Why did Macquarie downgrade Mineral Resources shares?

The broker is no longer bullish on this mining and mining services company.

Read more »

A bricklayer peers over the top of a brick wall he is laying with a level measuring tool on top and looks critically at the work he is carrying out.
Materials Shares

Brickworks shares rise 1% on trading update

Investors seem delighted by a new update from Brickworks.

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Does Macquarie prefer Rio or BHP shares today?

Let's find out which mining giant is the better pick right now according to the broker.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Bell Potter says this ASX 300 mining stock could rise 125%

Let's see what the broker is saying about this stock.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Materials Shares

Guess which ASX mining stock is up 8% today and could rocket a further 200%

Bell Potter has good things to say about this mining stock which released an announcement today.

Read more »

Broker working with share prices on computers.
Materials Shares

Timing the dip: How far can these ASX materials shares fall?

When could be the right time to buy low on this battered sector?

Read more »

A man wearing a shirt, tie and hard hat sits in an office and marks dates in his diary.
Materials Shares

Are BHP shares a bargain buy?

Are analysts bullish on this beaten down mining stock? Let's find out.

Read more »

A group of people in suits and hard hats celebrate the rising share price with champagne.
Materials Shares

This ASX mining stock is jumping 11% on big news

This miner is having a good session on Thursday. Let's find out why.

Read more »