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Date : 27/08/2022

Pilbara Minerals (ASX: PLS) shares on Watch after Reporting FY22 Earnings

Australian lithium-tantalum producer Pilbara Minerals Ltd (ASX: PLS) is at the forefront of the expanding global lithium industry thanks to the advancement of its wholly-owned Pilgangoora Lithium-Tantalum Project.

As one of the world’s largest hard-rock lithium-tantalum deposits, the Pilgangoora project may be found in Western Australia’s Pilbara area. Less than four years have passed since the first drill hole was sunk for this project, a testament to the size and quality of the undertaking. Pilbara Minerals is expanding the Pilgangoora project while building strategic links to international markets. The project is already producing and shipping products.

Pilbara Minerals has the potential to become a major role in the global supply chain for lithium raw materials, resulting in a sustained increase in the company’s share price through at least 2028. After reporting FY22 earnings, PLS shares continue to be on watch.

PLS: FY22 Results Highlights

Pilbara Minerals asx

PLS shares (ASX: PLS) are valued at $3.27 and have gained more than 3% today after the company announced its FY22 results. The current market cap of the company is approximately $9.73 Billion. Here’s our comprehensive PLS share analysis report:

  1. Demand conditions were so favourable that the realized selling price of US$2,382 per DMT drove revenue up 577 % to $1.2 billion.
  2. Despite paying taxes totalling $163.2 million, the statutory net profit was $561.8 million, up from a loss of $51.4 million.
  3. The company’s EBITDA increased dramatically to $814.5 million from $21.4 million.
  4. There was a year-over-year rise of 28% in the spodumene concentrate shipped by Pilbara Minerals, which amounted to 361,035.
  5. At the close of FY22, Pilbara Minerals reported a cash balance of $115.7 million.

Good economic conditions

Due to the commodity nature of the company, the performance of the lithium price is one of the most important factors that could affect the PLS share price.

According to Pilbara Minerals, lithium’s “high” price puts it in an “ideal position to capitalize on current market conditions, notably through selling spodumene concentrate” from the Ngungaju plant.

A significant increase in lithium production is anticipated over the next two decades, but a growing gap between supply and demand is anticipated to “have pricing ramifications” by 2040. It is estimated that 18 Pilgangooras will be needed to cover the shortfall.

The rise of PLS shares is not just due to lithium prices going up

The success of PLS shares and Pilbara Minerals’ activities was aided by both the rising price of lithium and the company’s strategic decision to focus on those operations.

The company reported that it could take advantage of the robust pricing environment thanks to higher production volumes made possible by the reactivation of the Ngungaju Plant and capacity upgrades at the Pilgan Plant during the year.

According to the company’s management, the Ngungaju Plant is scheduled to reach its nameplate production capacity of 180,000 to 200,000 tons annually by the end of the September 2022 quarter. With this expansion, Pilgangoora’s annual spodumene concentrate production capacity will rise from about 540,000 to 580,000 tons.

Pilbara Minerals is pleased with this outcome despite the COVID-19 challenges, the WA mining industry’s labour and supply shortfall, and rapid cost escalation.

Conclusion

So, what’s the guidance and forecast for ASX-PLS shares?

Some investors may be underestimating the demand for lithium, but the commodity has a massive role to play in the future of energy. PLS’s ambitions for the midstream project, in particular, are encouraging.

Even though PLS shares have risen dramatically over the past few months, it still has room to grow. The future of lithium prices is uncertain. However, increased demand is anticipated over the next few years, which should carry the momentum.

 

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