The Pilbara Minerals Ltd (ASX: PLS) share price is on watch after the ASX lithium share gave its update for the first quarter of FY24.
Pilbara Minerals share price
FY24 first quarter
In the first quarter, it said that it produced 144.2kt of spodumene concentrate (raw lithium). This was down 2% year on year and down 11% quarter on quarter.
It sold 146.4kt of spodumene concentrate, which was up 6% year on year, but down 17% quarter on quarter.
The sale price for its lithium was US$2,240 per tonne, which was 47% lower than last year and 31% lower than last quarter. The lithium price has significantly dropped in recent times.
This led to revenue of $493 million, a reduction of 43% year on year and 42% quarter on quarter.
The unit operating cost (FOB – free on board Port Hedland excluding freight and royalties) was A$747 per tonne, up 18% year on year and up 19% quarter on quarter.
Lower revenue and higher costs are tough for the Pilbara Minerals share price.
The P680 primary rejection facility was successfully commissioned in October, and the first ore was produced. The P1000 expansion project and mid-stream demonstration plant has progressed and “remain on schedule.”
Pilbara Minerals also said that the first shipment of spodumene concentrate was delivered to the POSCO joint venture chemical plant in South Korea in preparation for commissioning of the first train.
Cash decreased to $3 billion after its FY23 final dividend and growth investing, though it had a cash margin of $360 million in the period despite lower lithium prices.
What happened to the sales price and costs?
Pilbara Minerals said that demand for lithium is expected to remain consistent in the second quarter of FY24, which is typically a stronger period for electric vehicle sales.
It also said that market pricing for spodumene concentrate and lithium chemicals is “however likely to continue to remain volatile in the near-term given uncertain macroeconomic conditions and closely managed inventories in the supply chain.”
Management are still very positive about the long-term:
The long-term outlook for lithium materials supply remains positive with an expected structural deficit of lithium materials supply relative to the expected demand for lithium-based products such as electric vehicles and battery energy storage.
The ASX lithium share said that the unit costs reflected ‘pre-investment’ in mine site operating costs including personnel and consumables for its P680 expansion project.
Unit operating costs on an FOB basis are expected to decline over FY24 as production volume increases with the addition of the P680 processing capacity.
Final thoughts on the Pilbara Minerals share price
The ASX lithium share is seeing plenty of volatility this year, and I have no idea what’s going to happen next with the lithium price. But, the long-term looks promising because of growing electric vehicle demand, so I’d say that this decline we’ve seen with Pilbara Minerals shares is a long-term opportunity, particularly with its great balance sheet.
