Why Pilbara Minerals’ Share Price is Falling

Shares of Pilbara Minerals Limited [ASX:PLS] have dropped 1.19% in value today, to 66 cents per share, after the company handed in its financial results for the quarter ending 31 December 2018.

PLS is an emerging lithium and tantalum producer focused on the development of its 100% owned Pilgangoora Lithium-Tantalum Project.

What caused Pilbara Minerals’ share price to drop?

Despite what some may describe as a positive result for the quarter, investors didn’t seem overly amused, as signified by the slide in share price.

In its quarterly update released this morning, PLS announced good progress was being made to ramp up production at its Pilgangoora Project. The mine moves into operation in just under four years from the first hole being drilled.

Perhaps investors were expecting bigger results from the young miner. PLS recorded $239,000 in sales for the quarter, totalling $16.6 million for six months to 31 December 2018.

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A more probable cause for the drop is PLS’s report loss in net cash from operating activities. In the current quarter, the company reported a loss of $14.9 million, for a total loss of $15.4 million in the past six months.

Sale for its ore seemed strong, reporting sales of 46,682 tonnes of dry lithium spodumene concentrate during the quarter, having produced 47,859 tonnes in total.

Its spodumene concentrate sale produced proceeds of $48 million.

What’s next for Pilbara Minerals?

Regardless of today’s disappointing trade, the company looks to be in a sound financial position to fund the further stages of its Pilgangoora Project.

As of 31 December 2018, the company reported having $70.2 million cash on hand. At the beginning of 2019, PLS announced it had secured funding from lithium manufacturer Ganfeng, and automaker Great Wall.

The second stage of the project is set to expand the production of the mine to five million tonnes per annum. Construction for stage two is set to begin in Q2 2019.

PLS is heavily leveraged on demand for lithium, which it believes is set to rise as demand for lithium batteries increases with the growing popularity of electric vehicles.


Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

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