For those who watch lithium stocks, the latest news out of Pilbara Minerals Ltd [ASX:PLS] has coincided with a healthy jump for the share price.
It is up 12%, trading at 70 cents per share.
The share price of Pilbara Minerals has been largely moving sideways since February, but after coming out of a trading halt, it has recently experienced an uptick:
Source: marketindex.com.au
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Funding package buoys Pilbara Minerals’ share price
Below is a summary of the funding package that the company has secured:
Source: Pilbara Minerals
The CEO and Managing Director of Pilbara Minerals, Ken Brinsden hailed the funding package saying:
‘This should send a clear message about the robust outlook for the lithium market as far as our Tier-1 customer base is concerned and demonstrates the secure position the world-class Pilgangoora project commands as part of a global lithium-ion supply chain that is growing rapidly.’
In effect, this injection of funds will allow the company to expand its output at a time when lithium prices have been softening due to greater supply.
It also demonstrates the sound working relationship the company has with Chinese companies.
China has come to dominate the electric vehicle market with 50% of global production in 2017:
Source: International Council on Clean Transportation
Larger downstream chemical facility to be evaluated
In addition to the funding package, Pilbara Minerals also announced that in conjunction with POSCO, it would consider a larger South Korean JV chemical conversion facility.
Pilbara Minerals would retain a right to participate with a 30% stake in the new facility.
Commenting on the non-binding memorandum of understanding (MoU), Brinsden said:
‘POSCO has invested extensively in battery raw materials research and development for approximately 10 years — especially in the lithium sphere — and as a result they have significant experience and expertise at their disposal. We are pleased to be working with POSCO to develop and expand a new lithium raw material supply chain for the South Korean market that is principally focused on high-quality hydroxide production.’
The price of lithium hydroxide has been more resistant to the recent downturn in lithium prices:
Source: Benchmark Mineral Intelligence
Over the coming weeks, investors will be looking closely for further positive news out of the company.
Further discussion of the state of play for lithium can be found here.
Regards,
Lachlann Tierney,
For Money Morning