The Pilbara Minerals Ltd (ASX: PLS) share price has risen after the ASX lithium share revealed its $560 million P1000 plan to boost production.
Pilbara Minerals is one of the largest ASX lithium shares in Australia. But, it has goals of becoming even bigger.
P1000 approved by Pilbara Minerals
The lithium miner announced that the board have approved the final investment decision to increase the nameplate production capacity of its key Pilgangoora project by around 47%, from 680,000 tonnes per annum, to around 1 million tonnes per annum of spodumene concentrate (material that includes raw lithium).
The P1000 project includes an expanded concentrator with increased throughput at the Pilgan plant, along with a range of supporting site infrastructure. Put simply, it will enable Pilbara Minerals to process more material.
It was noted that P1000 will be executed at the same time as the ongoing P680 project (which aims to add an additional 100,000 tonnes per annum to the current production capacity of around 580,000 tonnes per annum).
The P1000 project is targeting ‘first ore’ in the March quarter of 2025 and full production after the commissioning and ramping up at the end of the September quarter in 2025.
How much is this going to cost?
Pilbara Minerals revealed that the estimated P1000 capital expenditure for this is $560 million, including the previously announced pre-final investment decision of $38 million.
By spending this money, the ASX lithium share can unlock “compelling project economics”, with a forecast payback from additional cashflow relative to P680, within 12 months.
The idea of this investment is that it supports the company’s long-term growth strategy to increase production capacity at the Pilgangoora project in line with market demand.
Management commentary
The Pilbara Minerals Managing Director and CEO Dale Henderson said:
This reinforces the exceptional scale and quality of our Pilgangoora Project, which is one of the few hard rock lithium production operations globally that has both the resource size and an existing operating platform to enable a rapid scale-up of production to capitalise on the growing demand for lithium products.
The company has received significant inbound interest for further offtake and downstream partnerships, and we have begun exploring options to maximise the value of the additional product from P1000 including new offtakes and downstream partnerships to extract greater value along the battery minerals supply chain.
Final thoughts on the Pilbara Minerals share price
I think this is a great move by the ASX lithium share. Delivering more production during the period of more demand seems smart and can unlock more cashflow for the business, without pushing down the lithium price.
If the lithium price were to permanently fall to a lower level, then it wouldn’t be as compelling as it is now. It’s possible that batteries of the future could use other materials. But, as of today, I think Pilbara Minerals looks very promising, particularly with its long-term growth plans.
