The Pilbara Minerals Ltd (ASX: PLS) share price is under the spotlight after the ASX lithium share revealed its latest BMX auction.
Pilbara Minerals is one of Australia’s largest lithium miners. It wants to get as much revenue as it can for its lithium production.
Auction result
Pilbara Minerals uses the Battery Material Exchange platform to sell specific amounts of production.
It auctioned a cargo of 5,000 dry metric tonnes (dmt) at a target grade of 5.5% lithia. It was presented for sale on the digital platform, with delivery expected from mid-October 2022.
“Strong interest” was received in both participation and bidding by a broad range of qualified buyers, with a total of 22 bids received online during the 30-minute auction window.
The ASX lithium share said that it intends to accept the highest bid of US$6,988 per dmt, which on a pro rata basis for lithia content (and adjusted to be inclusive of freight costs) equates to a price of around US$7,708 per dmt.
The bidder is now required to enter a sales contract within 24 hours requiring a 10% deposit to be paid by the end of the weekend and an irrevocable letter of credit from a recognised bank to be presented by late September 2022.
Thoughts on the Pilbara Minerals share price
The ASX lithium share has shot higher in the last few months. Over the last three months, it has risen by around 130%.
With lithium prices extremely strong at these BMX auctions, it would make sense for Pilbara Minerals to try to sell as much as it can through this process.
It’s great for the profit and cashflow for the business, so it can self-fund its growth initiatives and eventually it can start paying shareholder returns.
I’ve said that the lithium miner was an opportunity at a (much) lower price – it’s up around 75% since then. At this level, there is a lot of excitement priced in, so even though the lithium price is booming, I like its long-term plans, lithium demand is forecast to be stronger than supply for years, and it’d be my pick of the sector… I’d be cautious about buying at today’s level. There could be a time when the Pilbara Minerals share price drops to a more attractive level.
Until then, there are other ASX growth shares that could be better value.
