Pilbara shares rebound as Jarden backs 'comprehensive response' to market conditions
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More news: Shares in Pilbara Minerals recovered from a dip in early trading to climb higher after the lithium producer trimmed its full-year guidance, suspended construction of its Ngungaju plant and paused non-contracted construction works with its joint venture partner Calix.
By midday AEDT, Pilbara shares were up 5.3%, reversing a more than 1% drop at market open.
Jarden analysts said Pilbara remains their preferred lithium producer on the ASX, due to valuation support, the strategic value of 100% control of a Tier-1 operation and a balance sheet capable of funding further growth.
What they said: "[Pilbara] has reported a robust [September quarter] production result, however, the operating and sales statistics are overshadowed by the supply-side response that [Pilbara] has taken in response to low lithium prices," said Jarden's analysts.
They said that "holistically" they view "the difficult decisions announced today as a courageous and comprehensive response from a lithium industry leader to weak market conditions".
Pilbara slips on guidance cut, presses pause on plant construction
More news: Shares in Pilbara Minerals are down 1.1%, to $2.82, after the lithium producer trimmed its full-year guidance by 100,000 tonnes following a decision to mothball its high-cost Ngungaju plant amid difficult market conditions.
Pilbara separately announced that its joint venture with Calix had decided to defer any non-contracted construction works for their demonstration plant project, in light of the market conditions. The two companies said the plant was 60% complete at the end of September and construction works in progress will be completed until market conditions are supportive or further government support for the project can be secured.
Pilbara has been assessing long-term downstream opportunities with its production at the flagship Pilgangoora mine in Western Australia set to increase in coming years. It is the world’s largest independent hard-rock lithium operation.
The two companies said they remain fully supportive of the JV, and Pilbara's mid-stream strategy, and the pause would enable the JV to align the timing of expenditure with improved market conditions.
Pilbara Minerals mothballs plant, trims FY guidance
The news: Lithium producer Pilbara Minerals has reported lower production and sales revenue in the September quarter and trimmed its full year guidance after temporarily placing a high cost plant in care and maintenance.
The numbers: September quarter spodumene concentrate production was down 3% from the prior quarter to 220,100 tonnes, while sales were down 9% to 214,500 tonnes.
However, the average realised price dropped 19% to USD682 ($1,040) a tonne, dragging revenue down 31% to $210 million.
The context: The miner attributed the reduction in production volumes to reduced plant availability due to integration and ramp up of the P680 crushing and ore sorting facility. The commissioning was completed and the P1000 project, which will deliver nameplate production rate of 1 million tonnes per annum, remains on budget and on schedule.
Pilbara said it is continuing to focus on prudent costs management initiatives in response to lithium market conditions, and will optimise the higher performing, lower cost Pilgan plant while temporarily putting the Ngungaju plant in care and maintenance.
This will result in spodumene production reducing by 100,000 tonnes over FY25 but will increase cash flow by $200 million, it said.
The source: ASX announcement
