It’s still tough out there for mining companies, and for junior miners in particular. Prices for a range of metals are down year-to-date, and there’s no telling when things will start to turn around.
However, the commodities crash has not hit all juniors equally, and at least one Australian junior mining stock has still seen a strong share price increase in 2015. Australia’s Pilbara Minerals (ASX:PLS) is up 468 percent since January, and has gained 681 percent over the past year. The stock is currently trading at about $0.25. Pilbara currently has a market capitalization of approximately $185 million and has traded within a 52-week range of $0.03 and $0.31.
The company is currently advancing its Pilgangoora tantalum-lithium project in Western Australia, along with its Tabba Tabba tantalum project in the same region. Tabba Tabba is currently under construction, with its processing plant currently being assembled on site and tailings dam construction being well advanced. The Pilgangoora project is at an earlier stage – Pilbara recently completed an upgraded resource estimate for the project, and currently has plans to move ahead with a feasibility study.
Why the rise?
Pilbara’s share price started to spike in early June when it announced an increase in its lithium resource at its Pilgangoora project in Western Australia. Further drill results confirmed southern extensions of the deposit, and on September 24, the company released its resource upgrade, in which indicated and inferred resources at Pilgangoora increased by 56 percent and 229 percent respectively. Overall, the updated resource included a 182 percent increase in contained lithium oxide and a 39 percent increase in contained tantalite.
It’s also worth noting that Pilgangoora had started to attract the interest of potential partners even before the formal resource upgrade. Pilbara signed a memorandum of understanding (MOU) for an off-take agreement for 70 percent of future spodumene production from Pilgangoora with two Chinese lithium carbonate producers on July 29. Following that, on September 2, Pilbara announced it had signed additional MOUs for offtake agreements for Pilgangoora with a major North American group and Japan’s Mitsubishi (TYO:8058).
Meanwhile, as mentioned above, things are also moving ahead at Pilbara’s Tabba Tabba project. With construction well underway, Pilbara recently acquired its joint venture partner’s stake in Tabba Tabba to secure 100 percent ownership of the project. All production from Tabba Tabba has been sold to Global Advanced Metals Wodinga, as per a five-year exclusive off-take agreement.
“The start-up of site operations marks another exciting milestone for the Company and we look forward to reporting on our first commercial shipment of tantalite concentrate in the coming weeks, once we have received the final operating permit,” stated Pilbara’s executive director, Neil Biddle, on August 31 when site operations first commenced.
Is there still upside in the Pilbara story? Only time will tell. The company has MOUs for off-take deals, but still needs to lock down official agreements for material from Pilgangoora. At Tabba Tabba, Pilbara still needs its operating permit before it can begin commercial production.
Still, Pilbara’s story so far this year shows that there could still be opportunity in the junior mining space for investors willing to do a little hunting and a lot of research. Investors can look forward to results of a feasibility study for Pilgangoora, which is currently in progress.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.