Pilbara progressing to grow & diversify its business; Approves capital investment for the P1000 Project

Key Takeaways:

• Pilbara Minerals has approved capital investment for the P1000 Project.
•  As a delivery of the P1000 Project result, there will be a rise in the annual production run rate from the Pilgangoora Project to ~ 1,000,000 dmt.

Australian lithium producer Pilbara Minerals Limited (ASX: PLS) announced that the PLS Board approved the capital investment for the P1000 Project. Following this news, the Company’s shares surged on ASX. At AEDT 1:10 PM, PLS shares are trading at AU$3.99, up 3.636% from the previous close.

This investment in the Pilgan Plant and supporting infrastructure will deliver a ~320K tpa surge in nameplate spodumene concentrate production capacity. As a delivery of the P1000 Project result, there will be a surge in the annual production run rate from the Pilgangoora Project to ~ 1,000,000 dmt once completely commissioned & ramped up in the September Quarter 2025.

This investment supports PLS’s long-term growth strategy to improve the production capacity at the Pilgangoora Project in line with market demand.

About P1000 Project:

The P1000 Project scope includes the design & construction of a series of additional unit processes at the Pilgan Plant, which will be knotted into the current flowsheet via a series of staged shutdowns and interface works.

The P1000 Project involves a series of upgrades to the Pilgan Plant’s concentrator and various supporting infrastructures, plus an expansion of the Tambrah Camp. PLS will manage the delivery of the P1000 Project on its own. In this direction, key long-lead procurement has started as part of the AU$38 million in pre-FID expenditure announced in December 2022 and will continue to be undertaken before the award of key construction agreements.

Significance of P1000 Project:

The expansion of the P1000 Project is a significant milestone for the Company as it will lift the production capacity, capitalising on the extensive scale of this Tier-1 hard rock asset which supports an approx. 25-year mine life at this new expanded production level.

Further, it will strengthen the exceptional scale as well as quality of the Pilgangoora project, which is amongst the few hard rock lithium production operations globally that has resource size as well as a prevailing operating platform to allow quick scale-up of production to capitalise on the rising demand for lithium products.

Cost of P1000 Project:

The estimated cost of the P1000 Project is projected to be AU$560 million across the Pilgan concentrator and supporting infrastructure. It also includes the previously announced AU$38 million of pre-FID capital. The cost across the Pilgan concentrator and supporting infrastructure, along with AU$38 million of pre-FID capital, is expected to deliver attractive returns to PLS, including a forecast payback from incremental cashflows relative to P680 within 12 months.

The Company will fund the project from the Company’s strong balance sheet as well as ongoing cashflow from current operations.

Outlook:

Pilbara has received significant inbound interest for more offtake and downstream partnerships as the Company started looking for possibilities to maximise the value of the other product from P1000, including new offtakes plus downstream partnerships to obtain greater value along the battery minerals supply chain.

Accordingly, following FID for the P1000 expansion, PLS aims to pursue additional offtake and partnering opportunities regarding unallocated products and will actively engage with selected participants across the battery materials supply chain.

The initiative taken by the Company aligns with its long-term strategy to grow & diversify its business to become a fully integrated participant in the lithium raw materials and chemicals supply chain. The result from these initiatives is expected by 2023 end. It will not impact its existing offtake obligations to customers, comprising the Calix JV or the POSCO Downstream JV.

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