The Pilbara Minerals Ltd (ASX: PLS) share price jumped more than 3% after releasing its FY25 second quarter update.
Pilbara Minerals is one of the largest lithium miners in the world, with its Pilgangoora operations in Australia.
Pilbara Minerals FY25 second quarter update
The ASX lithium share reported that its production of 188.2kt for the three months to December 2024 (FY25 Q2) was 14% lower than three months to September 2024 (FY25 Q1).
The lithium mining company said the reduction in production volume was due to the “successful transition to the P850 operating model with the Ngungaju plant being placed into care and maintenance, and planned downtime for the ramp-up of P680 crushing and sorting.
It also said its sales of 204.1kt were 5% lower than the FY25 second quarter than the first quarter.
Pilbara Minerals noted that in Q2, its realised price for the commodity that it sold was up 3% quarter on quarter to US$700 per dry metric tonne (CIF China).
However, its unit operating costs were A$731 per tonne (up 2% quarter on quarter) or US$478 per tonne in US dollar terms (flat quarter on quarter).
Pilbara Minerals said costs increased in line with the new P850 operating model and were driven by lower sales volumes and operating costs.
The business finished with a cash balance of A$1.2 billion, which was a reduction of 13%, or A$0.2 billion, quarter on quarter. But, the cash balance is a useful asset supporting Pilbara Minerals shares.
Project and acquisition update
The key driver of the cash reduction over the three months to 31 December 2024 was growth capital expenditure for the P1000 project, which is now largely spent, and infrastructure and projects.
Pilbara Minerals said the P1000 project is on schedule, with wet commissioning currently being undertaken after the planned January tie-in shutdown.
After the end of the December quarter, both Latin Resources Ltd (ASX: LRS) and the Court approved the acquisition of Latin Resources. The implementation date is expected to occur on 4 February 2025.
Final thoughts on Pilbara Minerals shares
The ASX lithium share has dropped over 50% since August 2023. It’s probably at a fair price now considering the weakness of the lithium price.
It could be a recovery opportunity if the lithium price rebounds in the coming months or the next few years. It might take a while for lithium demand to outstrip supply like it was a couple of years ago.
There is no guarantee the lithium price will get back to any particular price, so it’s a bit of a flip of a coin of whether this ASX lithium share can deliver strong returns. That’s not the sort of investment I usually go for.
