Pilbara Minerals (ASX: PLS, Share Price: $0.66, Market Cap: $484m) is generating strong market interest and share price appreciation as a result of successful exploration, appraisal and pre-production activity on its Western Australian tantalum and lithium resource assets. The company’s key attraction is its low-risk exposure to lithium via its WA Pilgangoora project – a major component in high-tech applications.
The company has advised that recent in-fill and exploration drilling along the Western Pegmatite has returned new thick intersections of pegmatite at depth, while extensional drilling north of the Central Pegmatite has returned further thick intersections of high-grade spodumene mineralization.
Market Significance
Pilbara Minerals’ share price hit an all-time high during recent trade of $0.69 – a far cry from its low of just $0.048 a year ago. This extraordinary share price performance has been driven by the achievement of key project evaluation milestones – including a sizeable resource upgrade that confirms Pilgangoora as one of the biggest new lithium ore (spodumene) deposits in the world (with the latest drilling boosting the resource potential even further). More recently the company has released its much-anticipated PFS, which has revealed a financially robust project, along with a recently-completed $100m equity raising.
Announcement Detail – Pilgangoora Mineralised Extensions
Pilbara has reported further outstanding results from ongoing in-fill and extensional drilling at its flagship Pilgangoora lithium-tantalum project, confirming significant extensions of the deposit beyond the current resource boundary. This in turn has enabled the calculation of a substantially upgraded project Exploration Target.
The latest results include thick intersections of spodumene mineralisation along the Central and Western Pegmatites, including highly significant results from two holes (PLS 542 and PLS 546) that confirm the Central Pegmatite extends to the north and remains open along strike and at depth beyond the current Mineral Resource boundary.
Technical Significance
As a result of this work, the company has upgraded its Exploration Target to 130-150Mt grading 1.2-1.5% Li2O and 175-225 Ta2O5, compared with the previously published Exploration Target of 100-110Mt at 1.2-1.5% Li2O and 175-225 Ta2O5.
Due to the success of the current extensional program, an additional 16,000-metre RC drilling program has been approved to start on 10th May, with drilling scheduled to continue through to June with a focus on further extensions and improvement in the resource categories. Six RC rigs will be operating from mid-May onwards.
The aim will be delineating the additional mineralisation now identified outside of the current Mineral Resource and Ore Reserve. A significant component of this expanded program will be achieving further upgrades to the Resource classifications, thereby adding value to the project by enhancing the Pilgangoora Reserve inventory and further reducing the final pit’s strip-ratios.
So far, 12,524 metres of RC drilling has been completed as part of the current Definitive Feasibility Study (DFS) to in-fill, upgrade and expand the current global Indicated and Inferred Resource and grow the Ore Reserve inventory.
Further assay results have been received from RC drilling targeting the north-west extension of the known mineralisation, within the proposed Central-Western Pit. All of this mineralisation from 7670100mN was previously classified as Inferred and therefore lies outside of the current Ore Reserve. The results from hole PLS542 clearly demonstrate the potential of this zone to add significant resources to the Pilgangoora project.
In-fill drilling has also been completed on over the Central and Western Pegmatites within the current pit design. This program is designed to covert a significant portion of the Indicated category in the Resource statement to Measured. Results from a further 16 holes have been received, with assay results continuing to demonstrate excellent continuity, width and grade
Summary
We initially covered and introduced Pilbara Minerals to our Portfolio at a price around $0.175 during September 2015 – representing a gain of 277% so far. The company’s rapidly growing, high-grade Pilgangoora project provides investors with relatively low-risk exposure (both geopolitically and technically) to lithium. By contrast, the majority of lithium-brine projects are higher-risk due to their location in questionable jurisdictions, particularly South America. The company’s aim is to have Pilgangoora in full production by 2018, positioning it to capitalise on the extremely robust market outlook for lithium.
