Pilbara Minerals (PLS) has been a standout performer in the Australian junior mining sector this year, raising more than $13 million from strategic investors, developing its first mine, commencing a Feasibility Study on its second, much larger, lithium project, and signing up an impressive portfolio of global off-take partners.
The Fremantle-based company is on track to begin commercial sales from its Tabba Tabba Tantalum Project, located 70km south-east of Port Hedland in WA, in November, producing a highly valuable metal which is in high demand because of its use in electronics, especially capacitors for tablets and smartphones.
Developed for a capital outlay of just $8 million, Tabba Tabba is forecast to generate strong cash-flows, estimated at around $18 million in its first year of operations, with product delivered to industry giant Global Advanced Metals under a secure 5-year off-take deal. There is excellent potential to increase project reserves to at least a 5-year mine life, both at Tabba Tabba and the nearby Strelley tantalum deposit.
But the bigger picture for Pilbara is its 100%-owned Pilgangoora Lithium-Tantalum Project, located 55km from Tabba Tabba. With a JORC resource already totalling more than 23Mt, Pilbara is targeting a major resource upgrade in late September which should confirm its status as the world’s second-largest hard rock lithium deposit (outside of the world-class Greenbushes deposit in WA).
Lithium has a compelling demand profile with the market growing at an annualised rate of more than 12 per cent. And this could be set to accelerate further as the metal’s widespread use in conventional industries such as ceramics, glass, batteries and pharmaceuticals gets overrun by growing consumption in rechargeable batteries in portable electronic devices and in batteries and electric motors for hybrid and electric cars.
A Feasibility Study is underway aimed at bringing Pilgangoora into production by 2017, positioning it to take advantage of a widely anticipated shortage in lithium in global markets. To this end, the Company has already signed up long-term off-take deals spanning China, North America and Japan.
Just yesterday, Pilbara further expanded its portfolio of strategic off-take partners, signing non-binding agreements with major North American and Japanese corporations for the future sale of low-iron spodumene concentrate – pushing its shares 20 per cent higher to 14.5c.
The investment community is beginning to wake up to Pilbara’s enormous potential. One analyst who follows the stock closely, Pieter Bruinstroop from Melbourne-based equities research house Beer & Co, has a 28.5c price target based on the outstanding potential of its two strategic metals projects.
