Monsters of Rock: Pilbara Minerals crashes through $5 barrier, now worth more than $15 billion
On May 30, 2014 a 1c penny dreadful called Pilbara Minerals (ASX:PLS) announced the purchase of the Pilgangoora tantalum project near Port Hedland in the Pilbara.
It contained around 87,000t of lithium oxide, a product PLS quaintly said was used in ceramics, glass, batteries and pharmaceuticals.
“Lithium use has expanded significantly in recent years due to increasing use in rechargeable batteries in portable electronic devices and in batteries and electric motors for hybrid and electric cars,” the company told early investors at the time.
That same penny stock is now a $5.10 giant, after climbing by more than 12.1% today to crash through the barrier, with a valuation of over $15 billion.
Few could have predicted the pace of the rise in EVs. As many are sold each week as were purchased in all of 2012.
And more positive news on pricing has spurred the action.
They’re not the only pricing agency out there, but the last report from Fastmarkets MB has laid out a pretty clear picture of continuing tight supplies in the key Chinese market.
Prices lifted almost US$3000 for lithium hydroxide in China to 535,000 RMB or US$75,182/t in their last assessment on Monday night, with lithium carbonate only a touch behind.
The Federal Government has also issued a pretty positive forecast for lithium pricing. While it doesn’t see spodumene staying at current levels forever — PLS pulled in the equivalent of US$7708/t for its last BMX auction sale — it does think they’ll be high enough to support ripper earnings, with total lithium sales from the world’s largest producer to rise from a tick under $5b in FY22 to ~$14b this year.
Prices are not forecast to remain at current spot levels but are expected to remain high, averaging US$3280/t in 2023 and US$2490/t in 2024.
That is well above incentive pricing, with lithium hydroxide expected to average US$51,510/t in 2023 and US$37,650/t in 2024.
Pilbara shares were fetching $5.010 at 3.30pm AEDT.
With the mining sector on a role today and the ASX 200 Resources index up 4.37%, other battery metals stocks were also onto a winner.
The big movers with actual news were Sayona Mining (ASX:SYA) and Piedmont Lithium (ASX:PLL), which launched a PFS into a lithium carbonate production plant at their 75-25 owned North American Lithium operation in Quebec, Canada.
The first hard rock mine to come online in Canada, the project is expected to be shipping spodumene from the first quarter of 2023. The project forms part of Sayona and Piedmont’s previous commitments to the government of Quebec to bring downstream processing to the territory.
“Moving downstream has always been the plan for Sayona in Québec to enable a significant increase in profitability, whether through lithium carbonate or hydroxide production,” Mr Sayona MD Brett Lynch said.
“We look forward to examining the results of the PFS, as we work towards becoming a leading integrated producer and the largest in North America, amid accelerating demand from the battery and electric vehicle sector.”
Outside the lithium sector the broader materials space was rocking, with the index up 4.5%, a lift only accelerated by the surprise drop in the severity of rate rises from the RBA from 0.5% to 0.25%.
A weaker Aussie dollar will also be beneficial for miners, whose commodities are largely sold in US dollar denominations.
Gold miners were particularly buoyant, with the All Ordinaries Gold Index up 6.78%, with falling Treasury yields in the States and the rates news today driving Aussie dollar gold prices up 0.78% to $2623.51/oz.