The Pilbara Minerals Ltd (ASX: PLS) share price is rising after the ASX lithium share told investors about its latest pricing and expansion update.
It is currently mining a lot of lithium out of the ground, so the price it can get for its production is important.
Stronger price
Pilbara Minerals said that it has completed price reviews with major offtake customers, resulting in improved pricing outcomes. This equated to an average SC6.0 price of approximately US$6,300 per dry metric tonne (dmt) when applying current pricing reference data.
The ASX lithium share said that this was a “significant improvement”. This applies for all shipments to the company’s major offtake customers falling within December 2022 and onwards.
Dale Henderson, Pilbara Minerals’ Managing Director, said:
The revised pricing outcomes with our major offtake customers represent a very positive outcome for our shareholders, reflecting the strong market for lithium raw materials supply and bringing our contracted pricing in alignment with the broader market.
The improved pricing outcomes are expected to further improve cash-flow generation from the Pilgangoora Project, helping the business to continue on its rapid growth trajectory into 2023 and beyond.
Project update
The business said that its P680 expansion project delivery schedule is “on target” with the total capital estimate revised to $404 million. The estimated capital cost is expected to deliver an additional 100kt per annum of spodumene concentrate (lithium). The new integrated crushing and ore sorting facility which will support future expansions is now expected to cost $254 million.
The primary rejection facility remains on track for commissioning in the September 2023 quarter. It wants to deliver the extra 100kt per year as quickly as possible to take advantage of the good lithium prices.
Final thoughts on the Pilbara Minerals share price
The business has done very well up to now to capitalise on the strong prices. Investors will soon be getting dividends from the company. But, the question of whether it’s a buy now will depend on what happens with the lithium price. It’s hard to say how lithium will go, without access to a time machine.
With Pilbara Minerals’ plans for its lithium facilities, I think it’s a compelling investment at this much-lower price. But, there could be plenty of share price movement between now and the end of 2023.
