Pilbara Minerals saw prices paid for its lithium fall 50% in the December quarter, with the company flagging a suspension of its half-year dividend
\nBut it will keep the foot on the gas in growth projects to expand its Pilgangoora mine to 1Mtpa
\nCore Lithium reveals impact of falling lithium price ahead of decision to cease mining at Grants mine<\/p>\n
Spodumene prices paid to Pilbara Minerals (ASX:PLS)<\/a> in the December quarter tanked, tumbling 50% to US$1113\/t as the lithium giant revealed it was unlikely to pay a dividend for the 2024 half year.<\/p>\n It comes amid a firestorm for the industry, which is being brought to its knees on the back of a more than 80% decline in lithium prices over 2023.<\/p>\n PLS had built a massive warchest which topped out at $3.3 billion in June last year after spot prices climbed over US$8000\/t in late 2022.<\/p>\n Realised prices have fallen 67% from US$4993\/t in the first half of 2023 to US$1645\/t in the first half of 2024.<\/p>\n PLS now has $2.14b in the bank, dropping $897m in cash through the December quarter as tax payments ate away at the $176m cash margin it pulled from its Pilgangoora operations in the Pilbara.<\/p>\n The company produced 176,000t in the three months to December 31, up 22% QoQ, with sales up 9% to 159,900t, with revenue down 46% to $264m.<\/p>\n But it did see costs fall 14% to $639\/t, with costs on a CIF basis (after freight and royalties) down 20% to $805\/t (US$523\/t).<\/p>\n MD Dale Henderson said on a conference call this morning the company was \u201clooking through short term volatility\u201d, but has revealed tentative plans to pull back investment, reducing its FY24 capex guidance from $875-975m to $820-875m and flagging a suspension of dividend payments. That would save around $200m.<\/p>\n But the company said its plans to expand output to 680,000tpa and then 1Mtpa at Pilgangoora remained on track, saying it could fund the growth projects and maintain \u201cmultiple years of cash runway at sustained lower spodumene prices\u201d.<\/p>\n Not exactly supply-side discipline.<\/p>\n Those hoping for supply discipline @PilbaraMinerals<\/a> may be disappointed\u2026 $PLS<\/a> pedal to the #spodumene<\/a> metal with fully funded P680 and P1000 expansions, seemingly happy to “rationalize the market” #Lithium<\/a> <\/p>\n Conference call @henderson_dale<\/a> in 20 minutes\u2026 pic.twitter.com\/hSZSEc454v<\/a><\/p>\n \u2014 Howard Klein (@LithiumIonBull) January 23, 2024<\/a><\/p>\n\n Prices have slipped even lower in the New Year, with 6% Li2O spodumene collecting US$875\/t according to price agency Fastmarkets. PLS is currently supplying concentrate grading 5.2% Li2O.<\/p>\n Tumbling lithium prices have seen major cutbacks already this year across the industry, with Liontown Resources (ASX:LTR)<\/a> pausing expansion plans at its new Kathleen Valley mine after lower price forecasts prompted its financiers to pull out of a $760 million debt deal, while marginal Core Lithium (ASX:CXO)<\/a> halted work on an underground development and stopped mining at its Finniss mine in the Northern Territory.<\/p>\n \u00a0<\/p>\n Pilbara is the most shorted stock on the ASX, effectively meaning a large number of punters are betting on lithium prices to keep falling.<\/p>\n Short positions in PLS have risen from under 3% in March last year to over 21% today.<\/p>\n Henderson said he hoped the \u201chedge funds are shaking in their boots\u201d with prices around cyclical lows.<\/p>\n It came as a rebound in Chinese futures prices overnight, responding to reports of new stimulus measures rumoured to revive the country\u2019s ailing stock markets, stirred a massive rebound in lithium stocks.<\/p>\n Pilbara shares charged 7.3% higher this morning, with other battery metals stocks in Australia and abroad following suit.<\/p>\n Take that shorters \u2026 for now.<\/p>\n \u201cPilbara is one of the large liquid stocks in pure play lithium on the ASX. What we hear is that they\u2019re betting on price movement downwards as it relates to lithium,\u201d Henderson said.<\/p>\n \u201cWe\u2019re not alone in terms of being shorted and in the US market the other big lithium groups are shorted similar to us. <\/p>\n \u201cBut of course we stand out a bit on the ASX. As to what the hedge funds are worried about, I hope they\u2019re shaking in their boots. I hope they\u2019re worried that there\u2019ll be other government stimulus and other things which tends to pop up, because what we know from this industry is pricing can turn very quickly.\u201d<\/p>\n Wood Mackenzie, which levelled the bearish forecasts that sank Liontown\u2019s debt deal in what LTR said was a 60% slash of those it reported in the third quarter last year, has said it sees oversupply in lithium and other battery metals continuing for years to come.<\/p>\n Despite continued strong EV growth rates, lithium supply grew at a quicker pace than electric vehicle sales as Chinese subsidies rolled off and Western automakers pulled back in a weakening macro environment last year.<\/p>\n Cell prices have been dropping due to lower raw material costs, but WoodMac said automakers in China are likely sitting on cell supply, with only 387GWh of the 747GWh produced in China last year making it into products, according to the consultancy \u2014 which has replaced Goldman Sachs this week as the villain of the play.<\/p>\n IMO @WoodMackenzie<\/a> is the LEAST COMPETENT \u201cinformation\u201d company forecasting & commenting on the #lithium<\/a> market. Their spod price FC is nonsense based on the cost curve their lepidolite FC creates. I welcome another meaningless legal notice from them. https:\/\/t.co\/JCo1CPgBRn<\/a><\/p>\n \u2014 Joe Lowry (@globallithium) January 23, 2024<\/a><\/p>\n\n (Don\u2019t send us a cease and desist on Joe\u2019s account, thanks guys.)<\/p>\n WoodMac says Chinese EV makers could gain increasing market shares, with the prospect of a Republican (or even Trumpian) win at this year\u2019s US election presenting the potential scrapping of EV subsidies in the States.<\/p>\n \u201cWood Mackenzie forecasts surpluses of lithium, cobalt, nickel, and graphite to continue for several years, providing relief to cell producers and alleviating concerns over rising materials costs,\u201d WoodMac said in a note yesterday. <\/p>\n \u201cWhile the decrease in raw material costs provides some breathing room for midstream producers, such as cathode, anode, and cell manufacturers, to expand margins and invest in research and development, it also presents an opportunity to gain market share in the Western EV market. <\/p>\n \u201cAs the industry aims to transition from early adopters to the mass market, the availability of low-cost EVs will be crucial.\u201d<\/p>\n PLS, which announced an increase of its offtake to Chinese conversion giant Ganfeng over the next three years earlier this month, says demand for EVs continues to grow.<\/p>\n \u201cThe December quarter set all time records for EV sales,\u201d Henderson said.<\/p>\n \u201cChina\u2019s EV penetration rate was 38%, up 5% year on year from the prior year and as it related to December, sales totalled 1.1 million units, giving a penetration rate of 41% \u2014 so very strong signs of the uptick of this important demand market.\u201d<\/p>\n He noted South Korea, the EU and US Government continue to invest in cell manufacturing.<\/p>\n \u201cI would note that our chemical partners are the major established participants within the industry \u2026 the consensus feedback was one of cautious in the near term as it relates to processing,\u201d Henderson said. <\/p>\n \u201cHowever all have a strong conviction on the long term prospects of the industry and all of our major customers are building in some way, shape or fashion and seeking further long term supply from Pilbara.\u201d<\/p>\n \u00a0<\/p>\n <\/span><\/p>\n \u00a0<\/p>\n Core Lithium meanwhile has revealed the impact of slipping prices that led it to pause mining at the Grants pit at its Finniss mine in the NT, with its operations losing $28.8m in the December quarter.<\/p>\n That left the company with ~$125m in cash at December 31, down from ~$202m on September 30.<\/p>\n That came despite a 39% lift in production to 28,837t, which also saw recoveries rise from 50% to 60%. But concentrate grades slipped commensurately, with 30,718t shipped at an average grade of 4.8% Li2O in the December quarter. In the previous quarter the 23,424t shipped were sold at an average grade of 5.2%.<\/p>\n Unit operating costs clocked in at $1953\/t in December, up from $1889\/t three months prior, against an average provisional price of US$1418\/t.<\/p>\n But Core was also stung by adjustments made after deliveries, with a repayment due in the March quarter of $13.6m on shipments made in November and December.<\/p>\n It projects that the decision to suspend mining will reduce unit costs to between $800-900\/t in the second half, with overall guidance for FY24 changing from 80-90,000t at 5.5% Li2O to 90,000-95,000t at a grade of just 4.77% Li2O.<\/p>\n Concentrate sales will fall from 90,000-100,000t for the year to 80,000-90,000, with low grade fines sales dropping from 85,000-95,000t to just 46,298t, with those discounted product sales paused due to market conditions.<\/p>\n Core expects its operating unit costs to come in at $1350-1400\/t, down from $1470-1570\/t, with the reduction of stripping to save $42-47m.<\/p>\n The suspension of early works at the BP33 underground will reduce growth capex there from $45-50m to $36-37m, while exploration and study spending has also been chopped from $35-40m to $27-29m.<\/p>\n \u201cWith the rapid shifts in lithium market pricing, Core moved quickly to undertake a strategic review, resulting in the temporary suspension of mining and BP33 early works to conserve cash, and preserve the value of the underlying business,\u201d Core MD Gareth Manderson said.<\/p>\n \u201cThe work undertaken ahead of the wet season has successfully established ore stockpiles that will see us produce concentrate for the next 5-6 months at a lower overall cash cost, due to the suspension of mining.<\/p>\n \u201cThis approach will preserve Finniss\u2019 long-term value and ensure we are prepared to move quickly to restart mining in a more favourable pricing environment.\u201d<\/p>\n Talking to analysts today, Manderson said on a call that a bump in price would need to be viewed as sustainable and durable in order to justify restarting mining at Finniss.<\/p>\n Mineral Resources (ASX:MIN) <\/a>is the next major battery metals stock to report its Q2 results tomorrow, with focus likely to be placed on costs at the Mt Marion and Bald Hill mines.<\/p>\n \u00a0<\/p>\n <\/span>\u00a0 The post Ground Breakers: Shorter\u2019s fave Pilbara Minerals could dump dividend but shares optimism for long term lithium outlook<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Dale Henderson on the market<\/h2>\n
Pilbara Minerals (ASX:PLS) share price today<\/h2>\n\n
Core reveals impact of lithium price drop<\/h2>\n
Core Lithium (ASX:CXO) share price today<\/h2>\n\n
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