The importance of staying in the lithium game was underlined convincingly by the interim result from Pilbara Minerals which has now finally matured into a dividend paying stock.
The company revealed a net profit of $1.4 billion for the six months to December and said it will pay its first ever dividend to shareholders of 11 cents per share.
CEO Dale Henderson, who took over only last year, says the big result is only the start for the company.
Higher production and a 305% increase in prices received saw Pilbara Minerals’ half-year earnings jumped an eye popping 1,091% year on year.
That seems huge, but it has been on the cards for months after the huge September quarter results, news of price and volume increases and rising prices raised anticipation of the super result.
Sales revenue for the year of $2.18 billion, compared very favourably to the $292 million reported in the December, 2021 half year.
Earnings before interest, taxes, depreciation and amortisation EBITDA totalled $1.81 billion, up 1,091% year on year and the statutory net profit after tax of $1.24 billion, up 989%.
The EBITDA figure is a gross margin of more than 83%.
The lithium miner produced 309,255 dry metric tonnes (dmt) of spodumene concentrate in the six months. and shipped 286,876 dmt up 68% on the previous half year period.
Pilbara said it enhanced its output after adopting a production and marketing strategy focused on maximising sales volumes by “deliberately targeting a lower product grade to optimise product yield and maximise concentrate production”.
The 305% lift in the average realised sales price saw Pilbara Minerals receive $US4,993/dmt ~ (on a SC5.4 basis (CIF China) which is a lower grade of lithium than other producers are selling.
Pilbara’s cash balance which has been growing now for more than a year, topped $2 billion by the end of December.
CEO Henderson said in the release that “the strong cash generation from the Pilgangoora Project has further strengthened the company’s balance sheet, putting us in an enviable position with $2.23 billion in the bank as at 31 December 2022 – a $1.63 billion increase on the prior corresponding period.”
“This strong financial performance provides the Company a great platform, supporting our growth and diversification strategy to become a leading, sustainable battery materials supplier.”Now if Chris Ellison was serious about getting bigger in lithium (and the same applies to Andrew Forrest) they could take a run at Pilbara. Its big ‘friend’ is the Chinese battery giant CATL.
MinRes has a valuation of nearly $16 billion; Pilbara, more than $14 billion. Albemarle has a value of well over $A45 billion and it could well be tempted if someone takes a run at Pilbara.
As lucrative as lithium is, investors should ask themselves why WiseTech Global is worth more than $20 billion for continuing to accumulate transport and logistics software companies and MinRes and Pilbara Minerals are worth considerably less.
Both lithium and rationalising global logistics are in their infancies and hold the prospects of huge amounts of money to be made for years.
