Pilbara Minerals cock-a-hoop with Pilgangoora PFS results

THE BOURSE WHISPERER: Pilbara Minerals (ASX: PLS) announced results of a Pre-Feasibility Study completed on the company’s 100 per cent-owned Pilgangoora lithium-tantalite project in Wester Australia.

The PFS has outlined a robust development with low operating costs and includes an initial maiden Ore Reserve for Pilgangoora of 29.5 million tonnes at 1.31 per cent lithium oxide, 134ppm tantalum and 1.18 per cent iron oxide, underpinning a two million tonnes per annum standalone mining and processing operation over an initial 15-year mine life.

Key financial parameters of the project include forecast pre-production capital expenditure of ±$184 million (including mine pre-strip, two million tonnes per annum concentrator and all surface infrastructure) and, projected annual average EBITDA of $103 million per annum based on forecast life-of-mine (LOM) pricing, generating a forecast project Net Present Value (NPV10%, post-tax) of $407 million and IRR of 44 per cent.

“This is an outstanding result for the company, with the PFS clearly showing that Pilgangoora is a robust, long-life project based on a world-class resource,” Pilbara Minerals CEO Ken Brinsden said in the company’s announcement to the Australian Securities Exchange.

“The strong technical fundamentals and excellent financial returns of the project are underpinned by a relatively modest capital cost estimate together with low forecast cash operating costs, which reflects the inclusion of significant tantalite by-product credits.

“This means that the project will be capable of generating very strong operating margins and cash flows, producing a high-quality product that we expect will be in high demand as evidenced by the very high level of interest already displayed by our customer base.

“Based on these results, Pilgangoora is now firmly established as the world’s leading lithium development project – a premier mid-tier mining asset which is already attracting strong interest from prospective project financiers and cornerstone investors based on its potential to transform Pilbara into a leading player in the rapidly growing lithium industry.

“While the PFS – which is an interim document designed to assist us with ongoing financing and offtake discussions while we complete the DFS – is based on an initial mine life of 15 years, we are confident that the mine life will be further extended with additional drilling of the current Inferred Resource base as well as exploration drilling outside of the known Resource envelope.

“Drilling has already commenced and any additions to the resource inventory will be incorporated into the ongoing Definitive Feasibility Study, further enhancing the key financial outcomes of the project.

“We will now focus on the completion of the Definitive Feasibility Study by quarter three of this year, with the overall aim of commencing commissioning at the Pilgangoora project during quarter four 2017.”