The growth of Pilbara Minerals continues despite the company being hit by several operational hindrances in the December quarter.
The company experienced record operating cashflow for the quarter, increasing the quarter-on-quarter figure from $48.5 million to $115.5 million. The major miner had a cash balance of $245 million to start 2022.
Pilbara Minerals enjoyed spodumene concentrate prices of between $US1750 ($2477) per dry metric tonne (dmt) and $US1800/dmt in the quarter, achieving the top end of prior guidance ($US1650–$US1800/dmt).
Pilbara Minerals produced 83,476 dmt of spodumene from its Pilgangoora operation in Western Australia, a slight dip from the quarter before (85,759 dmt).
Shipments of spodumene concentrate were also slightly down for the three-month period, with 78,679 dmt of spodumene setting sail compared to 91,549 dmt the quarter before.
In its quarterly report, Pilbara Minerals said industry-wide labour shortages were a contributing factor to the reduced production.
The miner also attributed the decreased output to “reduced mine movements, delays with commissioning of plant improvement works, plant ramp-up initiatives and extended plant shutdowns (both planned and un-planned)”.
Pilgangoora’s Pilgan plant operated at an average runtime of 76 per cent for the quarter, below the targeted 84 per cent, as it experienced unplanned equipment breakdowns and further shutdowns as part of planned plant refurbishments.
Pilbara Minerals had a revised production guidance of 85,000–95,000 tonnes for the quarter.
Despite this revision, the lithium market continues to strengthen and under its existing offtake contracts the Perth-based miner expects to experience spodumene prices in the range of $US2600–$US3000/dmt for the March quarter.
The price jump comes as supply struggles to keep up with demand, something Pilbara Minerals believes will remain an issue throughout 2022.
“S&P Global Market Intelligence forecasts a supply deficit of 5000 mt (metric tonne) LCE (lithium carbonate equivalent) in 2022 which compares with a surplus of 66,000 mt in 2020 and an estimated deficit of 8000 mt in 2021, with the ongoing deficit expected to underpin continued strong pricing in 2022,” the miner said in its quarterly report.
“A key driver of current market conditions has been surging electric vehicle sales in Europe and the explosive growth of China’s New Energy Vehicle (NEV) market. Data released by the China Association of Automobile Manufacturers (CAAM) shows that NEV sales are likely to reach 3.4 million units in 2021 and 5 million units in 2022.”
Pilbara Minerals’ share price was $3.20 at the time of writing, a 6 per cent decrease over the past five days.