Pilbara Minerals weathers the lithium winter

Pilbara Minerals has secured commitments for a new $1 billion debt facility from a group of domestic and international banks.

The move is designed to refinance existing project debt and bolster the company’s balance sheet, offering increased financial flexibility and liquidity as it navigates a fluctuating lithium market.

The revolving credit facility (RCF) represents a significant step in Pilbara Minerals’ capital structure evolution, with the RCF subject to execution of transaction documentation by mid-October 2024 and the repayment of existing debt facilities.

Despite a softer lithium pricing environment, Pilbara Minerals maintained its financial health in the 2023–24 financial year (FY24).

While revenue dropped by 69 per cent to $1.3 billion due to a 74 per cent decline in the average realised price, the company still achieved a solid earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin of 43 per cent.

FY24 saw Pilbara Minerals achieve notable operational progress, including a 17 per cent increase in spodumene production to 725,300 dry metric tonnes (dmt) and a 16 per cent rise in spodumene sales to 707,100dmt.

The acquisition of Latin Resources, announced earlier this month, marks a key diversification move that will expand Pilbara Minerals’ lithium asset base.

“Earlier this month, we announced a binding scheme implementation agreement for the acquisition of Latin Resources,” Henderson said.

“This strategic, counter-cyclical acquisition will further diversify our business, adding a second 100-per-cent-owned, hard-rock lithium asset that is expected to be highly accretive for our shareholders over time.

“We are excited about the value this transaction will create and look forward to updating the market as we progress.”

The centrepiece of the acquisition is Latin Resources’ flagship Salinas lithium project, located in Minas Gerais, Brazil, a favourable mining jurisdiction home to Brazil’s ‘Lithium Valley’.