The Pilbara Minerals (ASX:PLS) share price is up 12% in a week

Record high after record high. Pilbara Minerals shares have been booming this week.
The post The Pilbara Minerals (ASX:PLS) share price is up 12% in a week appeared first on The Motley Fool Australia. –

The Pilbara Minerals Ltd (ASX: PLS) share price has been a standout performer among the S&P/ASX 200 Index (ASX: XJO) this week.

At the time of writing, the Pilbara Minerals share price is down 3.02% to $1.50 per share, however, despite today’s losses, Pilbara shares have gained more than 12% across the past week.

Today’s price movement follows an update regarding a plant restart, production costs and June quarter shipments.

Ngungaju plant restart

Pilbara Minerals is looking to grow its lithium production through the restart of its Ngungaju plant.

The Ngungaju operation was formerly owned by Altura Mining Limited (ASX: AJM), which Pilbara Minerals acquired in October last year for $175 million. This was during a time where lithium spot prices had collapsed to multi-year lows, resulting in Altura falling into administration.

In today’s announcement, the board has approved the staged restart of the Ngungaju plant, with operations expected to recommence in the December quarter of 2021.

The company estimates the restart will cost approximately $39 million, consistent with its original forecast at the time of the acquisition.

Pilbara Minerals said costs will likely be funded by existing cash, however, will consider funding support via a potential restructure of its existing syndicated debt facility, if favourable terms and conditions can be achieved.

Production is expected to be ramped up to approximately 180,000 to 200,000 dry metric tonne (dmt) by mid calendar year 2022. The company advises this will make a significant contribution to the annual production of its overall Pilgangoora project, increasing from 560,000 to 580,000 dmt.

Shipments and costs update

In the same announcement, Pilbara Minerals expects a record June quarter spodumene concentrate shipment of approximately ~96,000 dmt.

In light of strong production figures, the company flagged the likely increase in unit cash operating costs in FY22. The higher costs were driven by factors including higher sea freight rates, costs associated with the Ngungaju plant restart, and a stronger Australian dollar to US dollar exchange rate.

Additionally, Pilbara Minerals said a higher mining strip ratio, the amount of waste material that must be removed to reach the ore, will be required over the 12–24 months to support higher plant output. The higher ratio will drag on operating costs.

According to the announcement, cash operating costs of the combined Pilgangoora operation for FY22 is expected to be in the range of A$525 to A$575/dmt (including cost, insurance and freight to China) or approximately US$395 to US$430/dmt at an AUD:USD exchange rate of 75 cents.

Beyond calendar year 2022, the company expects costs to trend lower, as it realises synergies and improved economies of scale from the ramp-up of Ngungaju operations and the normalisation of freight costs and strip ratios.

What did management say?

Pilbara Minerals’ managing director and CEO, Ken Brinsden welcomed the restart, saying:

The well-timed acquisition of the Altura Lithium Operations provides Pilbara Minerals with available spodumene concentrate at the same time the market is expected to grow rapidly to deal with the mass global adoption of lithium-ion battery technology for use in clean energy applications

Brinsden acknowledged higher costs in FY22 but remains confident in the company’s long-term trajectory:

While production costs will likely be slightly elevated during FY22, we remain confident in both Pilgangoora’s pre-eminent position as an important global lithium raw materials supply base and the trend towards lower cost in the coming years as the Ngungaju Plant restarts, normalises and production settles at a higher rate.

Head above the clouds for the Pilbara Minerals share price

The Pilbara Minerals share price has set a new record all-time high in each of its last four trading sessions.

It looks like its year-to-date returns are fast approaching triple digits, currently up about ~85% this year.

The Pilbara Minerals share price has benefited from factors including firmer lithium prices and a broader bullish performance of lithium-related shares.

The post The Pilbara Minerals (ASX:PLS) share price is up 12% in a week appeared first on The Motley Fool Australia.

Should you invest $1,000 in Pilbara Minerals right now?

Before you consider Pilbara Minerals, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Pilbara Minerals wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

Why New Hope, Nuix, Pilbara Minerals, & Woolworths shares are dropping

Here are 3 of the most heavily traded ASX 200 shares today

The Pilbara Minerals (ASX:PLS) share price smashes another record high
Here are 3 ASX 200 shares that are on the move today

Why the Vanadium (ASX:VR8) share price surged to a 2-year high today

Motley Fool contributor Kerry Sun 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 Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!