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Why the Pilbara Minerals (ASX:PLS) share price is in focus

The Pilbara Minerals Ltd (ASX: PLS) share price is under the spotlight today after the lithium business announced its latest BMX auction.

BMX stands for the Battery Material Exchange, which is a digital platform.

Pilbara’s latest auction result

The lithium miner held its 8th BMX auction. A cargo of 5,000 dry metric tonnes (dmt) at a target grade of 5.5% lithia was for sale on the digital platform, with delivery expected from mid-September 2022.

Pilbara Minerals said that “strong interest” continues to be received in both participation and bidding by a “broad range” of qualified buyers with a total of 67 bids received online during the 30-minute auction window.

It said that it intends to accept the highest bid of US$6,350 per dmt, which on a pro rata (calculated) basis for lithia content (including freight costs), equates to a price of around US$7,012 per dry metric tonne.

As per the auction terms, the bidder is now required to enter a sales contract within 24 hours requiring a 10% deposit to be paid by weeks’ end and an irrevocable letter of credit from a recognised bank to be presented be mid-August 2022.

What to make of this

This is interesting because it’s more than the last auction and the same as the June BMX price.

So, prices are still strong for the lithium miner.

The price of the commodity is so important for ASX resource share, as that’s how it generates its revenue and what influences the profit.

With Pilbara Minerals still achieving very high prices for its lithium shipments, I think the outlook is good for the company’s profit in the upcoming result and FY23.

If the leadership are happy with the company’s operations and cashflow, it can start paying dividends to investors to reward them for owning shares.

Final thoughts

With the Pilbara Minerals share price down 20% in 2022, I think it looks like an attractive opportunity considering the long-term expected growth of batteries and electric vehicles. I’d be happy to buy some shares today.

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