Pilbara Minerals (ASX:PLS): Lithium Auction Shows ‘Strong Interest’ Despite Dip

By ,

Lithium producer Pilbara Minerals [ASX:PLS] released the latest results from its BMX lithium auction, securing an implied price of US$6,841/dmt for its spodumene concentrate.

The digital auction was held via Pilbara’s Battery Material Exchange (BMX).

While the producer has been able to capitalise on a strong lithium market, the stock hasn’t been able to avoid the wider correction in the sector.

Year-to-date, PLS shares are down more than 20%.

ASX:PLS pilbara stock chart

Source: Tradingview.com

Pilbara’s latest BMX auction

PLS conducted another spodumene concentrate auction held via its digital BMX platform.

PLS was offering cargo of 5,000dmt at a target grade of ~5.5% lithia, with delivery expected from August 2022.

Pilbara said it received ‘strong interest in both participation and bidding by a broad range of qualified buyers’.

Pilbara received 41 bids during a 30-minute auction window.

The lithium producer said it will accept the highest bid of US$6,188/dmt (SC5.5, FOB Port Hedland basis).

On a pro rata basis for lithia content, this roughly equates to a price of US$6,841/dmt (SC6.0, CIF China basis).

5,000dmt at the targeted 5.5% lithia grading cargo has been scheduled for delivery by the end of August.

Pilbara indicated that it has every intention to accept this offer, in which case the bidder will then have 48 hours to complete their sales contract.

PLS will receive a 10% deposit and expects a letter of credit actionable by late July to seal the deal.

Pilbara’s latest auction sees modest price drop

In Pilbara’s previous BMX auction, the winning bid for Pilbara’s spodumene concentrate was more than US$7,000dmt.

Meaning this week’s auction’s bid came in about 2.5% lower.

Is this just short-term volatility or an indication of a faltering lithium price?

If lithium prices are levelling off, Pilbara can still offset this with rising production volume.

In June, PLS announced that FY22 annualised production is expected to be in the range of 373,000 to 377,000dmt, a 33% increase on FY21.

Now, 2021 was definitely the lithium sector’s year.

Eight of the top 10 best-performing stocks on the All Ords were lithium stocks.

But — as is often the case — mean reversion kicked in…not to mention souring market sentiment triggering selling of risk-on assets.

Lake Resources [ASX:LKE] is emblematic of the sell-off. LKE shares are down more than 70% from their all-time high reached in April.

So is the run over?

Or are there lithium stocks worthy of consideration?

While the easy money has been made in the lithium sector, you can still find quality stocks — but you have to be careful, diligent, and picky.

In our recent Money Morning report, we profiled three overlooked lithium stocks that are best-placed to enjoy the strong secular demand for the critical battery tech metal.

To read the free research, access it here.

Regards,

Kiryll Prakapenka,
For Money Morning

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

Core Lithium Shares Lift On ‘Outstanding’ Yields

Australia’s self-proclaimed ‘newest lithium miner’ Core Lithium [ASX:CXO] was up more than 2% Monday afternoon after the company broadcast that one of its deposits yielded outstanding results in the quarter.

Ioneer Signs Third Offtake Deal

US-based lithium and boron miner Ioneer [ASX:INR] lifted 2% this morning on the news of another — third — binding lithium offtake deal. Ioneer has identified its latest offtake comrade in battery maker, Prime Planet Energy & Solutions. The lithium miner has risen 10% in the past week and 39% in the last few weeks. … Read More

Lake Resources (ASX:LKE) Up on June Quarter Update

ASX developer Lake Resources [ASX:LKE] released its June quarter results on Friday.

Novonix [ASX:NVX] Shares Dip As Cash Burn Mounts

Lithium battery tech stock Novonix [ASX:NVX] recorded $43.8 million in operating cash outflows for the year ending June 2022 on cash receipts of $9 million.

Vulcan Energy Shares Rise on License Grant

Lithium developer Vulcan Energy Resources [ASX:VUL] has provided a regulatory update for its lithium project in Germany.

Ioneer [ASX:INR] Shares Rise on Binding Ford Lithium Offtake

US-based ASX lithium developer Ioneer [ASX:INR] has signed a binding lithium offtake agreement with giant automaker Ford. Like other lithium stocks, INR has been hit hard in 2022 as the hot story of 2021 cooled this year. INR is down 35% year-to-date, although it has gained in recent weeks, up 30% in the past month. … Read More