The Pilbara Minerals Ltd (ASX: PLS) share price is currently down 2% in reaction to its June 2019 quarter report.
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’s June 2019 Update
The lithium business said that in the June 2019 quarter it produced 63,782 dry metric tonnes (dmt) of spodumene concentrate, which was 22% higher than the March 2019 quarter.
In terms of shipments, Pilbara Minerals shipped 43,214 dmt compared to 38,562 dmt in the March 2019 quarter – this means an increase of 12% over the quarter.
The Pilgangoora shipments continued to meet customer requirements, the grade of product shipped during the quarter was 6.0% Li2O and 1.2% Fe2O3 respectively, with minimum variation per vessel.
Tantalite concentrate sales for the quarter were 38,538 pounds, up 27% over the quarter.
However, the company re-iterated that production at Pilgangoora will be moderated during the September quarter to accommodate customers’ revised production requirements. But the company plans to make the best of it – it will continue to rectify prior works of the EPC contractor, further plant improvement works and draw down on final product stocks.
A further offtake agreement has been signed with China’s Great Wall Company with the first shipment expected in August 2019. Deliveries will be 20,000 dmt per year and continue for around six years.
The company finished June 2019 with $63.6 million of cash and also said that due diligence between Pilbara and POSCO to develop a 40kt per annum lithium hydroxide and carbonate chemical conversion facility in South Korea has been completed and formal documents are expected to be finalised in the coming weeks.
Is Pilbara A Buy?
There’s a lot of expectation that lithium will be in big demand over the coming years with a large increase in electric vehicles and home batteries. However, the problem is that it doesn’t guarantee that the price of lithium will go up. Supply could keep going up as well.
For my portfolio, it’s too hard to know, so I would rather invest in the reliable businesses in the free report below instead.
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