Pilbara Minerals Limited, Perth, Australia, (ASX: PLS) has provided an update on operations, production and shipments from the Pilgangoora Lithium-Tantalum Project in Western Australia during the March Quarter.
The Company has continued to deploy its production moderation strategy, focusing on delivering plant recovery improvements and matching site production and available stocks to customer demand, with a view to minimizing investment in working capital. Success in all of these areas has allowed the Company to further strengthen its balance sheet during the quarter. Final tonnes shipped for the March Quarter 2020, were 33,893 dmt of spodumene concentrate product, consistent with the lower end of the previously announced sales guidance of 35kt – 50kt. Provisional final finished spodumene concentrate stocks of 10,150 dmt exist at the mine and port at the end of the March Quarter.
As outlined in the Company’s announcement on 25th March 2020 and its corporate presentation dated 24th February, Pilbara Minerals has been encouraged by the strong progress of recovery improvements arising from the plant modifications undertaken during the past six months. The Company considers that the plant’s recovery performance is now largely in line with its design specifications (being 72% to 78% lithium recovery), depending on the source(s) and/or blend of ore fed to the plant. Improved recovery of spodumene to product is a key driver of achieving unit cost reductions while the plant is operating.
The Company has closed the quarter with A$108.2 million in cash and irrevocable bank letters of credit for shipments completed within the quarter, after paying all operating costs, capital expenditure, corporate costs and interest expense. This represents an increase of A$2.7 million compared to the end of the December Quarter, 2019.
Ken Brinsden, Pilbara Mineral’s Managing Director and CEO, said: “The solid operational and financial performance of the Pilgangoora Project during the March quarter shows that our moderated production strategy continues to defend the business despite the relatively weak backdrop of demand both before and during the COVID-19 impact in China. A combination of improved product recoveries from the plant, lower unit operating costs and the ability to continue to ship product to our customers despite the current disruptions being experienced globally as a result of COVID-19, has enabled us to strengthen our balance sheet during the quarter.
“The Company continues to closely monitor the situation both within China and elsewhere to determine the potential impact of COVID-19 on the lithium market and will continue to engage with existing customers and potential customers on future spodumene concentrate sales and shipments. As the market situation remains uncertain, further commentary in respect of sales conditions and the market outlook will be provided as conditions change and/or within the March Quarterly Report, which will be released later this month.
”Pilbara Minerals completed a successful US$100 million senior secured Bond issue in June 2017 (the “Bond”), to assist with funding the construction of Stage 1 of the Pilgangoora Project. The Company continues to be in full compliance with the terms of the Bond, including financial covenants which are reported to the Nordic Trustee on a quarterly basis. With its strong balance sheet and A$108.2 million in cash and bank letters of credit at 31 March 2020 (inclusive of A$7.0 million of bank letters of credit for shipments completed in late March 2020), Pilbara can continue to readily meet all its debt service requirements (principal repayments and interest) under the Bond.