Pilbara to Declare Commercial Production at Lithium-Tantalum Project

Shares of Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) jumped 15 percent on Thursday (March 28) after the lithium miner said it will be ready to declare commercial production at its Pilgangoora project on April 1.

The Western-Australia-based company was able to achieve this milestone following sustained output and quality of spodumene concentrate from Stage 1 at Pilgangoora during the past six months.

“The declaration of commercial production is based on the achievement of consistent, steady-state plant throughput and production of quality spodumene concentrate, with regular shipments to our customer base,” Pilbara Minerals Managing Director and CEO Ken Brinsden said.

The company reported that spodumene concentrate output has reached 111,199 dry metric tonnes (dmt) of saleable product so far in the financial year of 2019. Pilbara forecasts production for the March quarter to be between 47,000 and 52,000 dmt.

Looking ahead, the company expects further production improvements to be made, with a focus on reaching nameplate capacity during the rest of the year.

“We are continuing to work on fine-tuning and balancing a number of aspects of this large and complex plant to achieve design recovery levels of 75 percent, and we remain confident of achieving 100 percent of production design capacity during 2019,” Brinsden added.

Pilbara also said it has started to consider partners for Stage 3 offtake deals, a chemical participation and/or a potential minority selldown of the Pilgangoora project to between 20 and 49 percent.

“Several recent transactions in the global lithium industry have highlighted the substantial value that can be unlocked through introducing strategic partners to product offtake and project level interests,” Brinsden said.

The company noted that this process will not include Pilbara’s interest in a proposed joint venture with POSCO (NYSE:PKX) for a potential 40,000-tonne-per-year lithium hydroxide facility in South Korea.

The partnering process, which follows a successful Stage 3 scoping study, is expected to support the expansion of Pilgangoora and Pilbara’s downstream participation strategy. The company said it estimates that it will reach an outcome by mid-2019.

Pilgangoora’s Stage 3 will see processing capacity expand to 7.5 million tonnes per year, delivering an average of 1.2 million tonnes of 6 percent spodumene concentrate over an estimated 15-year mine life.

Aside from lithium, Pilgangoora is expected to produce 1.1 million pounds per year of 30 percent tantalite concentrate. The project is one of the largest pegmatite-hosted tantalite resources in the world.

On Thursday, shares of Pilbara surged 15 percent, closing at AU$0.80 in Sydney.  

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.