Pilbara Minerals Ltd (ASX: PLS) shares leapt as much as 10% higher on Tuesday following a market update from the lithium producer.
Pilbara Minerals is a $1.4 billion ASX-listed lithium producer with it primary operation, Pilgangoora, located in Western Australia about 120km from Port Hedland.
This morning, Pilbara Minerals released an ASX update revealing that a pre-feasibility study (PFS) on Stage 2 of the Pilgangoora mine had been completed. Stage 2 would allow the mine to achieve five million tonnes per year of ore production and processing capacity.
“The compelling results of the Stage 2 PFS provided a clear pathway to unlock further value in the outstanding Pilgangoora lithium-tantalum resource and, in the process, cement its position as a globally significant, lowcost supplier of lithium raw materials for decades to come,” CEO Ken Brinsden, said.
The Stage 2 PFS showed “exceptional results,” according to the company.
The net present value or NPV of Stage 2 is $2.1 billion. NPV is a common measure used by finance departments to assess the value of pursuing new projects.
With an NPV of $2.1 billion, Pilbara Minerals said the project provides a “rapid payback” period of three years. The capital cost estimate for the Stage 2 project is $207 million, plus or minus 25% accuracy.
Pilbara Minerals said a Definitive Feasibility Study is underway and expected to be completed by mid-2018. If the company hits its targets, Pilbara Minerals could start construction in the final quarter of 2018 and commission the mine a year later.
“The exponential growth which is occurring across the lithium-ion supply chain as the industry in China and elsewhere gears up for transformational growth to meet demand from the automotive and energy storage sectors is now becoming better understood,” Mr Brinsden added.
“It was against this backdrop that we commenced the Stage 2 expansion studies at Pilgangoora last year in parallel with construction of the Stage 1, 2Mtpa project.”
“The logic of this accelerated expansion strategy was underpinned both by the remarkable growth occurring in the market and the extraordinary success of our exploration team in growing the Pilgangoora Ore Reserve base to a level which underpinned a mine life of more than 40 years at the 2Mtpa production rate.”
Shares of Pilbara Minerals were trading 8.8% higher at $0.865 on Tuesday.
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