Core Lithium Vs Pilbara: Which is a better buy?

Key Highlights:

• Core Lithium and Pilbara are two strong lithium players on ASX.
• Rising demand for battery-making material, lithium prices, production, and shipment of lithium are a few factors influencing prices of lithium stocks.
• Both players made significant progress in December 2022 quarter.

When we discuss popular ASX-listed lithium stocks, two names that directly come to mind are Core Lithium (ASX: CXO) and Pilbara (ASX: PLS). There are many lithium players listed on ASX 200. However, these two are the popular ones amongst investors.

Image Source: Refinitiv

In the last 1 year, PLS and CXO shares have delivered a return of 51.53% and 36.94%, respectively.

Factors that influence PLS and CXO share price:

Several factors influence stock price movement on a daily basis. Let’s look at some of them:

• The stock performance of any stock depends on the earnings of the Company. In most cases, the stock price is directly linked to its earnings. In the case of material stocks, the earnings are influenced by commodity prices.
• Another key factor influencing lithium stocks is the rising demand for battery-making materials. Lithium is a key component in lithium-ion batteries. This battery offers lower cost, more power, longer range, faster charging times, greater flexibility, and improved safety over their in-house contemporaries. Lithium-ion batteries are a key source of energy for electric vehicles. They have a smaller environmental impact than driving while producing exhaust gas from burning fossil fuels.
• Another factor influencing the price of lithium stocks is the production and shipment of lithium.

On that note, let’s analyse these stocks one by one:

Core Lithium Limited (ASX: CXO)

Core Lithium shares delivered a return of ~37% in the last one year. In the recent December 2022 quarter results announcement, the Company highlighted that it commissioned the crushing and screening plant. It successfully crushed the first ore from Finniss (CXO’s flagship project located just south of Darwin Port in the Northern Territory). This Project has significant infrastructure advantages as it is close to grid power, gas, and rail and only 88km trucking distance by sealed road to Darwin Port, which is Australia’s nearest port to Asia.

During the December 2022 quarter, the Company shipped 15,000 dmt (dry metric tonnes) of direct shipping ore (DSO), with an average grade of 1.4% Li2O sold for US$951/dmt through a tender using a digital exchange platform.

Further, during the quarter, the Company shipped the first cargo of high-grade Direct Shipping Ore to the Darwin Port subsequent to the quarter end. CXO shipped 15,000 dmt of DSO was shipped to Fangcheng, China.

Pilbara Minerals Limited (ASX: PLS)

Pilbara Minerals shares zoomed by ~51.5% in the last 1 year. Pilbara Minerals is an Australia-based pure-play lithium company that owns Pilgangoora hard-rock lithium operation located ~120 km from Port Hedland in Western Australia’s resource-rich Pilbara region.

In December 2022, the Company produced 162,151 dry metric tonnes of spodumene concentrate, up 10% QoQ. It shipped 148,627 dmt of spodumene concentrate, up 8% QoQ. The average realised spodumene concentrate sales price was US$5,668/dmt, up 33% QoQ.

Other than this, the Company also highlighted that it was approved for a AU$250 million debt facility from the Australian Government to support the P680 Expansion Project. The Company is focused on maintaining the delivery schedule for the P680 Project to capitalise on the existing robust lithium market dynamics.

Additionally, the Company progressed the P1000 Expansion Project to increase the total spodumene concentrate production capacity across the Pilgangoora Project to 1Mtpa.

Furthermore, Pilbara Minerals and Calix signed a joint venture deal to develop a Demonstration Plant at the Pilgangoora Project. Through this, the parties aim to produce a superior “value-added” lithium salt product for the market that is lower in cost, carbon energy intensity, and waste product, utilising Calix’s flash calcination technology.

Based on the recent progress made by the Company, the Company was able to enter ASX 50 index for the first time.

Bottomline:

Based on the quarterly results announced by both these companies, one can easily figure out that Pilbara made significant progress compared to Core Lithium. However, Core lithium is also making substantial developments at its flagship project and shipping Li2O.

If we compare PLS and CXO, Pilbara is a large-cap company, while Core Lithium is a small-cap company. Thus, Pilbara has a low risk compared to Core Lithium.

Both CXO and PLS are strong players in the lithium space. However, the decision to buy the shares of any of these companies varies from person to person. One of the factors which most investors see while choosing a stock is their risk appetite. Now, based on your risk appetite, projects, progress and seeing the Company’s growth, you can easily decide which stock to buy.

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