The Pilbara Minerals Ltd
(ASX: PLS) share price rose by 5.1% today due to a business update.
Pilbara Minerals is an Australian lithium producer with its 100%-owned Pilgangoora Lithium-Tantalum Project. The Pilgangoora project is located in West Australia and is one of the largest lithium ore deposits in the world. With this asset, Pilbara Minerals plans to become one of the world’s largest producers by 2020.
Pilbara Minerals’ Business Update
The company revealed that for the June 2019 quarter it shipped 43,214 of dry metric tonnes (dmt), which was at the higher end of its recently stated guidance.
Pilbara management believe that it expects production and sales to return to full capacity for the December 2019 quarter based on its latest discussions with customers.
The lithium business also revealed that it a new offtake agreement has been signed with China’s Great Wall Motor Company, with the first shipment shipment expected in August 2019.
Management were also pleased to report that good progress has been made on its proposed POSCO joint venture for the downstream chemical conversion facility in South Korea, an in-principle agreement has been reached for the final joint venture terms and the respective Board authorisations are expected during the September quarter.
Pilbara Production And Sales Outlook
Since the update a few weeks ago, Pilbara has continued to discuss things with its customers and has clarified the timing of its deliveries for the rest of the 2019 calendar year.
Pilbara now expects sales to be in the range of 35,000 dmt to 48,000 dmt during the September 2019 quarter from a combination of existing stock and future production. However, the company will proceed with its scheduled 14-day plant shutdown later this month.
Sales for the December 2019 quarter are expected to be in the range of 65,000 dmt to 80,000 dmt. Deliveries to China’s Great Wall Motor Company are at an annual rate of 20,000 dmt.
Is Pilbara A Buy?
Pilbara is clearly on the way to ramping up its sales, so the current price, which is as low as it has been over the past two years, could be an opportune time to buy with growing worldwide demand for lithium.
However, I really don’t know how to evaluate the future of Pilbara, so it could be better to invest in the growth shares in the free report below instead.
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