Amid the surge in lithium stocks sparked by the rebuffed $5.2 billion bid for Liontown from US giant Albemarle, local major Pilbara Minerals has confirmed that it has no fears that the slide in lithium prices holds any dangers for its future expansion.
Pilbara revealed on Wednesday that it will spend more than half a billion dollars on a large expansion of its key WA lithium mining business.
Pilbara has ignored that volatility and the downturn in Chinese lithium prices especially in the past month or so to press ahead with this major expansion of its core business.
Pilbara Minerals said that its board had approved the capital investment for the P1000 Project which will boost spodumene concentrate from its Pilgangoora mine to around a million tonnes in two and a half years’ time.
Pilbara said the $560 million investment in the Pilgan Plant and supporting infrastructure will see 320,000 tonnes a year boost in spodumene concentrate production capacity.
The cost will be funded from Pilbara’s more than $2 billion in cash on hand reserves.
The news didn’t worry investors who pushed the shares up 2.3% to $3.94 in the continuing push in the wake of the Liontown offer from Albemarle.
Liontown shares rose to a high of $2.64, before settling back to end the session at $2.59, up 0.8% on the day. Analysts led by Citi said the US company would have to sweeten the offer to win approval from the Australian group.
Pilbara said the expansion will involve a series of upgrades to the Pilgan Plant’s concentrator and a range of supporting infrastructure, along with an expansion of the Tambrah Camp for fly in-fly out staff in the Pilbara.
Pilbara says it will self-manage delivery of the project with first ore to be produced in the first quarter of 2025 and full output two quarters later.
“This will ultimately increase the annual production run rate from the Pilgangoora Project to approximately 1,000,000 dry metric tonnes (dmt) once fully commissioned and ramped up in the September Quarter 2025.
“This investment supports Pilbara Minerals’ long-term growth strategy to increase production capacity at the Pilgangoora Project in line with market demand,” Pilbara said in Wednesday’s statement.
The company has already started the purchase of key long-lead equipment and will continue doing so up to the award of key construction contracts.
“The P1000 Project’s estimated capital cost of $560M across the Pilgan concentrator and supporting infrastructure includes the previously announced $38M of pre-FID capital and is expected to deliver attractive returns to the Company, including a forecast payback from incremental cashflows relative to P680 within 12 months,” Pilbara forecast.
CEO Dale Henderson said in Wednesday’s statement:
“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.
“The P1000 Project increases our nameplate production capacity by approximately 47%, driven by continued strong demand for our product, and leverages the planning and ongoing work being undertaken as part of the current P680 Expansion Project.
“This further increase in production capacity will cement Pilbara Minerals’ position as a globally significant supplier of lithium materials products delivering into this rapidly growing market.”
He said the company continues to receive “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.”
