Down 10% in November, why did the Pilbara Minerals share price power down?

The Pilbara Minerals Ltd (ASX: PLS) share price went backwards in November, falling by over 8% in the month.

There was a large underperformance compared to the S&P/ASX 200 Index (ASX: XJO) which rose by 6.1% in November. That means that the index did better by 14%.

Of course, over longer-term time periods, Pilbara Minerals shares have done much better. In 2022 alone, the ASX lithium share has risen 32%. So, the decline may just have been some investors taking profit off the table.

It was a busy month for the business.

A few weeks ago it announced a long-term $250 million Australian government debt facility to support the P680 project expansion. The facility will provide flexibility to pursue further growth and diversification opportunities at Pilgangoora.

But that was just one of a number of other announcements.

Dividends to start

In the middle of the month, the company revealed its capital management framework and dividend policy on the back of a “strong” operating performance and cash flow.

It’s going to balance available capital between investment into the existing business, sustainability commitments, strategic growth opportunities, as well as the start of sustainable returns to shareholders.

Pilbara Minerals is targeting a dividend payout ratio of 20% to 30% of free cash flow. Dividends are expected to start in FY23.

Commsec numbers suggest it could pay an annual dividend per share of 15 cents in the 2023 financial year.

Latest BMX auction

The business also revealed the result of its latest Battery Material Exchange (BMX) platform.

A cargo of 5,000 dry metric tonnes (dmt), at a target grade of around 5.5% lithia, presented for sale on the digital platform. It accepted a bid of US$7,805 per dmt, or US$8,575 on a pro rata basis for lithia content and inclusive of freight costs.

Remember, despite achieving an even higher price for its production, the Pilbara Minerals share price went backwards.

Joint venture

Near the end of the month, Pilbara Minerals announced that it was entering into a joint venture with Calix Ltd (ASX: CXL).

They are going to develop a demonstration plant at the Pilgangoora project. The aim is to produce lithium salts through an “innovative midstream ‘value added’ refining process utilising Calix’s patented calcination technology”. There could also be a commercialisation of the process.

Pilbara Minerals explained that the objective of the mid-stream demonstration plant project is to “deliver a superior value-added lithium product enabling lower product cost, reduced carbon energy intensity, and reduction of waste product logistics”.

The post Down 10% in November, why did the Pilbara Minerals share price power down? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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