PLS - Pilbara Minerals

[Ann]

'Vertical integration' gives battery minerals stocks hope

Two of Australia's most watched battery minerals producers remain confident that end consumers will see through bearish sentiment to sign up as anchor partners for their expansion projects.

Lithium exporter Pilbara Minerals and graphite producer Syrah Resources are both facing crucial negotiations with prospective project partners in the months ahead. Both were upbeat on Monday that the long-term prospects of their businesses would survive the recent market gloom.

Pilbara will make an investment decision within the next two months on whether to proceed with an option to partner with Korean giant POSCO on building a processing facility to convert lithium-rich spodumene into battery-grade lithium hydroxide, and is simultaneously trying to arrange funding for two stages of expansion at its Western Australian mine.

The latter process is increasingly expected to see Pilbara sell a stake in its Pilgangoora mine.More..

The Lithium ETF which is a reflection of the Lithium price isn't looking too flash. It is showing three lower highs recently and we are at EOM when folks will be reviewing commodities progress. May be a bit of a dampener short term for the Lith stocks IMO.

 

[Wysiwyg]

The final investment decision is due this month regarding downstream spodumene conversion with POSCO. It's a given so unlikely to affect share price but some detail would be nice considering the conversion plant is proposed to be producing first half next year.
Still holding original parcel untouched and hopeful of a life changing outcome in the future with the move away from hydrocarbon fueling.

 

[greggles]

The Pilbara Minerals share price continues to slide today after the company announced that delays in the construction, commissioning and build-out of the Company's offtake customer chemical conversion capacity in China has resulted in June quarter sales of spodumene concentrate being constrained.

This is in spite of record production of 22,375 dry metric tonnes of spodumene concentrate achieved during the month of May.

The news has sent the PLS share price down 5.67% to 66.5c and it's looking like it's probably heading back to support at 60c.

 

[HelloU]

and with the benefit of some time it is not for me to say that first load may have been special - 1.27% is the running average (as expected by those who invest time in thinking about this stuff).

And 8 months later they are quietly throwing money (lots of money and plant down time) to get that number down.
Funny business lithium, the one with the best numbers is off-limits, and the one with the second best numbers is in administration.

 

[barney]

I'm not at all convinced with this stock.
A nice run up from 67c to 88.5c on high volume but that takes it to an area with a lot of congestion on the chart over the past year or so and now it's back down to 79.5c which is lower than yesterday's close.

That was a very timely call back in March Smurph …..It has gone down ever since!

Funny business lithium,

L Stocks have done it tough … I did some dough on a couple of "Spec"ulations and decided to stop trying to pick the bottom.

In saying that, if you overlay the PLS chart with the Lithium spot price chart, they are basically carbon copies except the spot chart has actually worked off its lows since late August where PLS is basically still at its lowest point.

They are in the throws of raising $100 million at 30 cents which is predominantly going to Deep pockets ($36.5 million) and Chinese Co. CATL $55 million - 8.5% of the Co.) … $20 million offered to current S/H's.

It never ceases to bemuse me that Companies see fit to give away large portions of their net worth to the "big boys" at the absolute share price lows …..

I wonder how Gangfeng Lithium feel since they invested $50 million back in March at 64 cents. I assume they will have to buy more to keep their percentage up.

Technically it should move up from here as a trade, but the net value of the Co. has been severely eroded with 16% offered at 30 cents per share

 

[HelloU]

That was a very timely call back in March Smurph …..It has gone down ever since!



L Stocks have done it tough … I did some dough on a couple of "Spec"ulations and decided to stop trying to pick the bottom.

In saying that, if you overlay the PLS chart with the Lithium spot price chart, they are basically carbon copies except the spot chart has actually worked off its lows since late August where PLS is basically still at its lowest point.

They are in the throws of raising $100 million at 30 cents which is predominantly going to Deep pockets ($36.5 million) and Chinese Co. CATL $55 million - 8.5% of the Co.) … $20 million offered to current S/H's.

It never ceases to bemuse me that Companies see fit to give away large portions of their net worth to the "big boys" at the absolute share price lows …..

I wonder how Gangfeng Lithium feel since they invested $50 million back in March at 64 cents. I assume they will have to buy more to keep their percentage up.

Technically it should move up from here as a trade, but the net value of the Co. has been severely eroded with 16% offered at 30 cents per share

Hey, bit too windy for boating

the big holders are putting in nothing more - no idea if a discussion was had. Posco were sorta chumming up to SK, but SK is having a little legal stoush with LG, so who knows what the feelings are there. Suddenly CATL are sliding money into PLS which is then (from what I can work out) sliding money to posco? (my head says that not even the brown bag may get changed during that)
Sector is rubbish as you say atm ...... but on watch as they all eventually turn.

Smurf jinxed the entire sector I reckon.

 

[barney]

they all eventually turn.
Smurf jinxed the entire sector I reckon.

Lol ….. yeah its obviously @Smurf1976 's fault … what were you thinking Smurph!!!

From a purely trading point of view …. it looks relatively low risk for a punt …

Although, once the Chinese get involved you can sometimes need copious amounts of time on your hands to realise a profit.

 

[Smurf1976]

what were you thinking Smurph!!!

Simple - look at the last words in that post of mine.

"Do not hold".

 

[HelloU]

Simple - look at the last words in that post of mine.

"Do not hold".

I reckon you might have powers that even you do not understand. Be careful where you wave that thing buddy.

 

[HelloU]

Lol ….. yeah its obviously @Smurf1976 's fault … what were you thinking Smurph!!!

From a purely trading point of view …. it looks relatively low risk for a punt …

Although, once the Chinese get involved you can sometimes need copious amounts of time on your hands to realise a profit.

and I will raise you an A40 in that hand ......
the whole lot scare me at the moment ...... but not forever.

 

[barney]

Just under 2 months later we may finally have the start of something readable.

Fundamentally I still see cash burning on their bottom line, but all things of quality that go down eventually stop and reverse.

I think there will be a trade here over the next couple/few months, but at the moment it would be an accumulate slowly on the dips trade if it is a trade at all …

I would not be buying on any 'higher than average up bars' other than for a short term trade.

Bear in mind I get a lot wrong so trade it as you see it

 

[barney]

I would not be buying on any 'higher than average up bars' other than for a short term trade.

I still have that same opinion even though Friday's additional move could easily sway punters who are less sooky than I am

First moves from lows can be tricky and easily turn into bottom draw trades if the timing is wrong.

This has already been a good "short term" trade … I now see it as risky .. even if it jumps the old resistance creek and runs a little …..

I see a trade developing but given the fundamental headwinds in the short term, perhaps a positional trade for the medium/longer term ……….. definitely worth keeping a lazy eye on for sure

 

[barney]

This has already been a good "short term" trade … I now see it as risky ..

Price trading as expected.

Risk is now much less for anyone looking to start accumulating …

The first consolidation period should not be too extended if its going to move again.

Personally I am still on the fence due to Fundamentals in the L space. See what happens over the next couple of months.

 

[barney]

Price trading as expected.

Still as expected but holders obviously won't want to see price get down to the low end of the recent Price/Volume Range as that will look weak given the recent move was the 1st off the lows.

Prefer to see the Daily Range tighten up a bit now.

 

[fiftyeight]

And 8 months later they are quietly throwing money (lots of money and plant down time) to get that number down.
Funny business lithium, the one with the best numbers is off-limits, and the one with the second best numbers is in administration.

Where are you sourcing your info re iron content?

 

[HelloU]

company announcements for PLS numbers.
i have nil interest in any of this anymore (miners, small caps, ipo, bio's etc) due to estate planning so the following is off the top of my head (just trading out of everything on spikes like IMU, BOT and BDC recently)

initial numbers came from 1st shipment (they were especially good it turned out), revised numbers in later updates. Obviously it is better to have lower impurity levels (fe or mica or whatever) but also the month to month supply needs to be consistent. The problem for the converters, apart from initial quality, is when the supply varies as it mucks about the lines.
(not a fan of catl being on the board)
Greenbushes can do outstanding numbers that put pilgangoora stuff into the shadows <0.8% fe from memory, sc6 or sc7. Alliance (Bald Hill) were sending some to the glass makers in europe before going bust (which says product is very good)...... but that is another story.
latest ORE ann shows spod price still decreasing, not sure that general lithium production costs can decrease much more.

 

[fiftyeight]

company announcements for PLS numbers.
i have nil interest in any of this anymore (miners, small caps, ipo, bio's etc) due to estate planning so the following is off the top of my head (just trading out of everything on spikes like IMU, BOT and BDC recently)

initial numbers came from 1st shipment (they were especially good it turned out), revised numbers in later updates. Obviously it is better to have lower impurity levels (fe or mica or whatever) but also the month to month supply needs to be consistent. The problem for the converters, apart from initial quality, is when the supply varies as it mucks about the lines.
(not a fan of catl being on the board)
Greenbushes can do outstanding numbers that put pilgangoora stuff into the shadows <0.8% fe from memory, sc6 or sc7. Alliance (Bald Hill) were sending some to the glass makers in europe before going bust (which says product is very good)...... but that is another story.
latest ORE ann shows spod price still decreasing, not sure that general lithium production costs can decrease much more.

Sorry I missed this reply. Thanks for that, I may have read to much in to your posts as it seemed like you were quite well informed on some of the technical details of the industry

 

[fiftyeight]

Not sure why, but PLS has been something I have watched for years now. Possibly the wannabe hippie coming out in me.

PLS have so far weathered the storm, the collapse in Li prices, plant issues and so far covid. Well it is still alive, but the share price has been smashed.

They have a new off take agreement, with some kind of floor price

http://www.pilbaraminerals.com.au/site/PDF/f778692c-f16e-4775-898d-1e0d4ec39da9/NewOfftakeAgreement

Pricing: Pricing is on US$CIF (Cost Plus Insurance and Freight) basis with annual price reviews and spodumene concentrate pricing is determined pursuant to a pricing formula which references pricing of lithium carbonate and lithium hydroxide. Floor price protections which are CPI adjusted are included.

I asked a similar question in the WPL thread, what is the point of these announcements for an investor. There are no details, this could be a horrible deal or a deal that will set the company up for generation. How are you meant to factor this stuff in?

The headline
Moderated production strategy continues with plant recovery improvements and unit cost reductions contributing to strengthened quarter-end cash position

Sounds very positive.....what contributed more to the strengthened quarter-end cash position was probably a big draw down on inventories

So they are cash flow positive when they don't have to actually do any mining.

Moderation strategy results in net $0.5M cash outflow associated with operating activities conducted during half-year (being receipts of $43.6M and costs paid to suppliers and employees of $44.1M)

Interesting to see what Q3 looks like when they have no sales.

Lots of FIFO workers looking for work at the moment and the low oil price must surely put some downward pressure on mining costs.

https://www.bloomberg.com/news/arti...tting-electric-car-subsidies-it-just-extended

Subsidies extended.....for now. But after the hit car sales took due to covid not sure extended subsidies actually mean much.

the plunge in oil prices, which makes internal-combustion vehicles cheaper to drive.

Will low oil prices slow EV take up? Maybe on a commercial level for fleet purchases, not so much for personal use. High fuel prices are fresh on the mind and I dont think people expect them to stay low for long.

Trump reversing the Obama efficiency rules seems like a very desperate attempt to slow the transition to EVs.

For as long as I have been following FMG, the C1 cost has been front and center same with WPL and their BOE.

If you are or wanting to be a low cost Li producer surely a similar figure should be shown much the same FMG does?

Nothing new or revolutionary above, just what I am pondering at the moment

Think I will sit on the sidelines for a bit longer.

 

[Dona Ferentes]

The government’s $10 billion Clean Energy Finance Corporation and international bank BNP Paribas has cleared some of the clouds hanging over Pilbara Minerals on Thursday by providing a new $US110 million ($153.5 million) debt facility. It is intended to replace an onerous Nordic bond with an interest rate of more than 12 per cent.

BNP Paribas is providing $US73.3 million, with the remainder coming from the CEFC at an average interest rate of 5 per cent as Pilbara Minerals gains more breathing space for its Pilgangoora mine in Western Australia.

This landmark refinancing of our long-term debt facilities is an outstanding achievement for Pilbara Minerals, representing the first time that a lithium raw materials player of our size has attracted conventional, syndicated project financing at such a competitive cost, CEO Ken Brinsden said. The new facilities are offered on very competitive terms, putting us in a very strong position to ride out the current soft market conditions and capitalise on the rebound in the lithium market, when that inevitably occurs.

Pilbara Minerals ended the June quarter with a cash balance of $86.3 million, down from $108.2 million at March 31.

However, the company said market signals indicated lithium prices may be approaching the bottom, with several investment banks and industry analysts forecasting a demand surge and price turnaround in 2021.

 

[HelloU]

What i get from this is that this was done at commercial rates (not the previous vulture rates that all the aussie Li coys are/were subjected to). Lithium in aussie may well be moving from a crawl to a walk? I would like that.