Strong Demand Scenario A Driver For Increasing Production
Australian lithium producer, Pilbara Minerals Limited (ASX: PLS) has taken further significant steps towards growing spodumene concentrate production at its 100%-owned Pilgangoora Project located in Western Australia.
Following the Board’s approval of the staged restart of the Ngungaju Plant, it is expected these operations will recommence during the December Quarter 2021, with annual production to be ramped up to approximately 180,000 to 200,000 dmt by mid calendar year 2022.
This will see the combined annual production capacity of the Pilgangoora Project increase to 560,000 to 580,000 dmt.
This represents a key milestone for Pilbara Minerals as it works towards maximising the value of its strategic and well-timed acquisition of the former Altura Lithium Operations. The restart will expand production capacity, increase the scale of operations and provide production flexibility as the Company looks to satisfy rapidly growing market demand. The integration of the two processing facilities (Pilgan and Ngungaju) and enlarged resource and pit inventories should provide significant operational synergies, enabling the Company to realise cost efficiencies across the operation over time.
The estimated restart cost of $39M (inclusive of plant modifications and operational readiness activities) is consistent with the Company’s original valuation at the time of acquisition and are proposed to be incurred over approximately the next 12 months. The Company is likely to fund the cost of the re-start from existing cash, although consideration will be given to funding support via the potential restructure of the existing syndicated debt facility, provided favourable terms and conditions can be achieved.
Capital development expenditure is largely focussed on Ngungaju plant modifications that support the adoption of Pilbara Minerals’ Pilgan Plant flotation regime. Pilgan Plant now has a well-established track record of recovery performance through the combination of grind optimisation, process controls, free-iron removal, high intensity conditioning pre-flotation and optimised flotation reagent adoption. The majority of these optimisations and process learnings will now be deployed on the Ngungaju facility to materially rerate its overall lithia recovery performance as compared to its prior operation.
Elsewhere, further investment will be applied to improve the crushing and materials handling aspects of the operation.
Managing Director and CEO Ken Brinsden said that the company was uniquely positioned to capture emerging demand in the spodumene market, being one of very few operations globally with open offtake and expansion capacity to support the significant increase in chemical conversion capacity already developed and emerging.
“The well-timed acquisition of the Altura Lithium Operations provides Pilbara Minerals with available spodumene concentrate at the same time the market is expected to grow rapidly to deal with the mass global adoption of lithium-ion battery technology for use in clean energy applications.
“While production costs will likely be slightly elevated during FY22, we remain confident in both Pilgangoora’s pre-eminent position as an important global lithium raw materials supply base and the trend towards lower cost in the coming years as the Ngungaju Plant restarts, normalises and production settles at a higher rate.
“As a team we worked extremely hard to defend our business during what was a difficult period in the market over the last couple of years and we have now emerged much stronger for it. The combination of unallocated spodumene offtake, burgeoning demand and a sophisticated sales channel in the BMX platform makes for a potent combination at Pilgangoora”.
For further information please visit: http://www.pilbaraminerals.com.au/
