Pilbara Minerals share price hits record high following Q1 update

The Pilbara Minerals Ltd (ASX: PLS) share price has continued its strong run on Tuesday.

In morning trade, the lithium miner’s shares rose 5% to a new record high of $5.66.

Investors have been bidding the Pilbara Minerals share price higher today in response to the release of the company’s quarterly update.

Pilbara Minerals share price higher on quarterly update

For the three months ended 30 September, Pilbara Minerals reported a 16% quarter on quarter increase in spodumene concentrate production to 147,105 dry metric tonnes (dmt).

Management advised that this strong production performance reflects the company’s operating strategy and represents an annualised production rate of 588,000 dmt of spodumene concentrate.

It also highlights that it decided to lower the grade of its spodumene to optimise the product yield, allowing the company to maximise sales volumes and take advantage of current market pricing conditions. The average grade of product sold during the quarter was ~5.3%, down from 5.4% three months earlier.

This strong production allowed the company to ship 138,249 dmt of spodumene concentrate, which was up 4.4% on the previous quarter.

These shipments were undertaken at an average realised sales price of US$4,266/dmt SC5.3 basis (CIF China). This equates to a reference price of US$4,813/dmt on an SC6.01 basis (CIF China) when adjusted pro-rata for lithia content.

In addition, the company achieved strong pricing from three Battery Material Exchange (BMX) sale auctions during the quarter, with one auction commanding a price of US$7,708/dmt on an SC6.0 equivalent basis (CIF China).

Cost inflation doesn’t stop strong cash generation

Pilbara Minerals’ costs remained higher during the quarter due to “to elevated strip ratios to support a substantial investment in mining activities, the impact of labour shortages in the WA mining sector (including the impact of COVID-19), supply chain disruptions and general inflationary cost pressures.”

Positively, though, its Pilgangoora Project costs eased slightly quarter on quarter to US$434/dmt (US$462/dmt in the June quarter). This is at the lower end of its guidance range.

And while no details were provided in relation to its earnings, the company revealed a huge increase in its cash balance. At the end of the quarter, the company’s cash balance stood at $1.375 billion. This is up by $783.7 million over the three months.

And this doesn’t even include $132.2 million of irrevocable letters of credit for shipments that were completed before the end of the quarter. If you include this, its cash balance was $1.508 billion.

No wonder investors have been scrambling to buy its shares this year!

The post Pilbara Minerals share price hits record high following Q1 update appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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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