The Pilbara Minerals Ltd (ASX: PLS) share price is under the spotlight after making a big profit in its FY22 result.
Pilbara Minerals is one of the largest lithium miners in Australia. It also has plans to be involved with more of the lithium value chain.
FY22 result
Here are some of the highlights from the report:
- It shipped 361,035 of dry metric tonnes (dmt) of spodumene concentrate, which was an increase of 28% year on year
- Revenue jumped 577% to $1.2 billion thanks to strong demand conditions with a realised selling price of US$2,382 per dmt
- EBITDA (EBITDA explained) soared to $814.5 million, up from $21.4 million
- Statutory net profit of $561.8 million, up from a loss of $51.4 million, after recognising a tax expense of $163.2 million
That’s a big jump in profit, and improvements in profit can help the Pilbara Minerals share price.
Pilbara Minerals said that its operational performance has seen a strong increase in the cash balance, which grew by $758.5 million to $874.2 million, including $282.4 million of irrevocable bank letters of credit for shipments completed before 30 June 2022. At the end of FY22, the net cash balance was $714 million.
It wasn’t just lithium price rises
While the soaring lithium price certainly helped, Pilbara Minerals’ operations also helped.
It said the restart of the Ngungaju Plant during the year, together with capacity improvements at the Pilgan Plant, enabled increased production volumes to sell into the strong pricing environment.
Management revealed that the Ngungaju Plant is on track to achieve its nameplate production capacity of between 180,000 tonnes to 200,000 tonnes per year during the September 2022 quarter. This will increase its combined annual production capacity across the Pilgangoora operations from both plants up to around 540,000 tonnes to 580,000 tonnes per annum of spodumene concentrate.
Pilbara Minerals was proud of this result considering the COVID-19 headwinds, the WA mining industry labour and supply shortage and rapid cost inflation.
Outlook for the Pilbara Minerals share price
The Managing Director and CEO, Dale Henderson, said:
Having recently approved the expansion to grow production by a further 100,000 tonnes per annum to a combined 640,000 tonnes to 680,000 tonnes per annum, and with the company now progressing towards a final investment decision to expand production to 1 million tonnes per annum, Pilbara Minerals commences FY23 in an exceptionally strong position.
The business is in an enviable position, supplying product into a burgeoning growth market with a clear pathway for further production off a performing operating base. Further, chemical participation with our downstream joint venture with POSCO and our midstream project provides another extension of value creation for our shareholders. A very exciting future lies ahead for our business and our shareholders.
Final thoughts on the Pilbara Minerals share price
I think lithium has a very strong future, and the world may need even more than some investors are expecting. I like the outlook for the business, particularly with its plans for the midstream project.
While the ASX lithium share has soared over the last couple of months, I think it can still go quite a bit higher. It just depends what the lithium price does, it may not forever be as good as it is right now, but demand is expected to keep rising in the coming years. I’d be happy to buy Pilbara Minerals shares at the pre-open price for the long-term.
