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Pilbara Minerals (ASX:PLS) share price in focus as Q3 revenue sinks

The Pilbara Minerals Ltd (ASX: PLS) share price is under the spotlight today after the ASX lithium share reported its March quarterly update.

March 2024 quarter highlights

Pilbara Minerals reported that its production of spodumene concentrate (raw lithium) increased by 2% quarter on quarter to 179kt, while sales rose by 3% to 165.1kt.

However, the realised price that Pilbara Minerals sold its commodity for was US$804 per dry metric tonne (dmt), which was down another 28% quarter on quarter. This huge decrease in the lithium price led to revenue falling 27% quarter on quarter to $192 million.

Pilbara Minerals’ unit operating cost (FOB Port Hedland), including the mining, processing, transport, port charges and site-based general and administration costs and is net of any tantalite by-product credits, increased 6% quarter on quarter to A$675 per dmt. Temporary mobile ore sorting equipment was deployed, increasing costs, but helped “supplemental ore and to bring forward optimisation learnings” as the company ramps up production.

However, the unit operating cost (CIF China) includes FOB Port Hedland, plus freight and royalty costs, declined 2% quarter to quarter to A$789 million.

Pilbara Minerals’ cash balance decreased by 2% to A$789 per tonne.

Promising signs for the Pilbara Minerals share price

The company said that during the quarter, the lithium price stabilised and then increased toward the end of the March quarter. The pre-auction sale of 5k dmt at US$1,106 per dmt in March, reflecting the “ongoing demand and positive pricing for unallocated production volume.”

March set a new monthly production record with over 80k dmt produced at a unit operating cost (FOB) of less than $625 per dmt thanks to expanded production capacity with no shutdowns, higher ore lithium head grade and higher lithium recoveries due to operational improvements.

The business continues to work on its P680 and P1000 expansion projects, which are on schedule and on budget.

It’s also exploring the potential to explore expanding the Pilgangoora operation capacity beyond 1mt per year. The pre-feasibility study is on schedule to be released in the June quarter.

The ASX lithium share is doing all the right things, but it doesn’t have control of the lithium price, which might be the most important factor for success in the medium-term. I wouldn’t call the Pilbara Minerals share price a buy until it’s clearer that the lithium supply-demand relationship is favourable for the company.

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