Pilbara Minerals says 2024 dividend unlikely despite turn in lithium market
\nWhitehaven Coal bats away questions on costs after mega BHP mine buy
\nIluka down as mineral sands volumes slide, funding negotiations with Canberra on rare earths blowout continue<\/p>\n
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Those hoping for a fast return to dividend payments from cashed up lithium miner Pilbara Minerals (ASX:PLS)<\/a> will probably be disappointed, with boss Dale Henderson flagging it as \u2018unlikely\u2019 after a nosedive in lithium prices that came through in the March quarter.<\/p>\n PLS delivered 179,000t and sold 165,100t in the March quarter at a realised price of US$804\/t, down 28% on the average US$1113\/t selling price in the December quarter.<\/p>\n That saw revenue fall 27% to $192m (for $950m YTD), though strong cost performance ensured the Pilgangoora operations were still pumping out plenty of cash, with unit operating costs on a CIF (delivered) basis of US$519\/dmt and FOB (on ship) basis of US$444\/t.<\/p>\n But the miner\u2019s cash balance declined from $2.1b to $1.8b as Henderson flagged the need to conserve cash for growth projects with the company continuing to invest in its staged expansions to 680,000tpa and 1Mtpa at Pilgangoora, a mid-stream demonstration plant and now a study with Ganfeng on a proposed ex-China lithium refinery.<\/p>\n The company helped pump up lithium indices late in the March quarter with a 5000t sale of 5.5% Li2O spodumene at US$1106\/t (US$1200\/t SC6) via its Battery Material Exchange auction platform.<\/p>\n .@PilbaraMinerals<\/a> (#ASX<\/a>:$PLS) restarts its BMX #lithium<\/a> auctions, pulling prices well above spot on a 5000t #spodumene<\/a> cargo. https:\/\/t.co\/BgVCuIRvKS<\/a><\/p>\n \u2014 Stockhead (@StockheadAU) March 14, 2024<\/a><\/p>\n\n However, it has already flagged that future sales are unlikely this year given most of its material is allocated for customers. Also unlikely are dividends, paused in February\u2019s half-year results after bumper returns sparked by temporary extraordinary lithium prices prompted payouts in FY23. Henderson said capital distributions would be a tough ask given the volume of capex on the cards.<\/p>\n PLS flagged stronger production numbers could be flowing through from the next quarter, with Pilgangoora operating at a record 80,000t rate in March (960,000tpa), with operating costs falling below $625\/t (AUD) thanks to the continuous operation of its P680 configuration plant, higher grades and strong recoveries brought about with the use of mobile ore sorters.<\/p>\n Jarden analyst Ben Lyons said Pilbara\u2019s production was 3% below its estimates and sales 11% off forecast, or 7% down on consensus estimates.<\/p>\n But prices came in 6% ahead of Jarden\u2019s US$758\/t estimate. With the lower than expected sales volumes (and impacted by the same weather problems that hurt Pilbara iron ore producers early in the March quarter), unit costs came in 15% above Jarden estimates, though they ran well below that level in March.<\/p>\n Despite the weak sales, Lyons called it a \u2018robust\u2019 result. Jarden has a $4.14 price target and buy rating on PLS.<\/p>\n \u00a0<\/p>\n \ufeff<\/span><\/span>\u00a0<\/p>\n \u00a0<\/p>\n While the price movement wasn\u2019t great in March \u2014 PLS ate a 1.3% loss in early trade as investors digested their impact \u2014 Henderson believes we have seen a genuine uptick over the past 60 days.<\/p>\n He noted Rhomotion data showed at 3.2 million sales, EV shipments have increase 23% YoY in the March quarter, a far cry from suggestions from some quarters of a scale back in demand.<\/p>\n Henderson said there had been supply curtailments in response to weak pricing as well as environmental inspections, most notably in China.<\/p>\n \u201cOn a quarter to quarter basis moving from December to March quarter, (there was) an average decline across all metrics. However, when you look at the past 60 days up to mid-April, the increases are fairly material,\u201d Henderson told analysts.<\/p>\n \u201cOver the last sort of 60 days to the 16th of April, we\u2019ve seen a 27% increase for spodumene concentrate in an average of the five PRAs (price reporting agencies).<\/p>\n \u201cAs it relates to Chinese domestic carbonate, the last 60 days has been a 14% increase, utilising the SMM (Shanghai Metals Market) sources and seaborne hydroxide past 60 days, a 6% increase care of Fastmarkets.<\/p>\n \u201cSo those numbers obviously underlie the upwards movement that we\u2019ve been discussing.\u201d<\/p>\n When it comes to long term demand, Henderson said Pilbara continues to be pushed for more supply, indicating the supply chain remains positive on lithium demand even after signing offtake deals with three major Chinese customers in the March quarter.<\/p>\n \u00a0<\/p>\n A reasonable question was posed on Whitehaven Coal\u2019s (ASX:WHC)<\/a> quarterly call today: what is the long term outlook for costs on the newly acquired Queensland met coal operations, given the seller BHP (ASX:BHP)<\/a> reported a big lift in costs for FY24 at its BMA met coal business to US$119-125\/t?<\/p>\n While it\u2019s still well below coking coal indices (around US$270\/t), the creep in BHP and other Queensland coal miners\u2019 costs have been concerning \u2014 less so for BHP which extracts most of its values from iron ore and copper than other regional players.<\/p>\n Whitehaven took the keys at Daunia and Blackwater on April in a deal worth up to US$4.1b ($6.4b) but is yet to provide guidance, which will come for next year with August\u2019s full year results.<\/p>\n It says the mines will transform the fossil fuel producer\u2019s business, shifting its sales balance from ~92% thermal to 70-30 in favour of steelmaking coal, a business with higher premiums and more apparent longevity.<\/p>\n But WHC produces its Hunter Valley thermal coal at much lower costs, producing 4.4Mt in the March quarter and on track to meet FY24 guidance of 18.2-20.7Mt at the upper end of its range of $103-113\/t (US$65-72\/t).<\/p>\n Realised prices in the March quarter came in at US$136\/t for thermal coal, an 8% premium to the Newcastle high CV benchmark of US$126\/t, with overall pricing of $219\/t (AUD). A small amount of coal was sold to NSW utilities under a reservation scheme at $112\/t, which will wrap up at the end of June.<\/p>\n The premium coking coal index averaged US$308\/t in the March quarter, down from US$333\/t in December. Whitehaven MD Paul Flynn said issues with ballooning costs in Queensland\u2019s coal sector could be put down to awful weather, but also kinda said it was a question for BHP \u2026 which is weird since they now own those two mines.<\/p>\n \u201cI don\u2019t think there\u2019s anything systematically wrong with the met coal business up there. So I wouldn\u2019t be inferring that met coal has suddenly become harder. I wouldn\u2019t do that,\u201d he said.<\/p>\n \u201cClearly, the weather up there has been influential so that\u2019s made things a little bit more inconsistent certainly, than I\u2019m sure the producers out there would like.<\/p>\n \u201cWe can only speak to what we\u2019ve observed in a short period of time. We\u2019ve been focused on the two assets that we\u2019ve procured here. I think Daunia has done pretty well and appears to have been less weather affected quite frankly, in terms of in terms of output performance, whereas Blackwater has been a little bit more disrupted in that sense.<\/p>\n \u201cBut I don\u2019t think there\u2019s anything systematically wrong and if the data point that you\u2019re using to pose that question all emanate from BHP it\u2019s perhaps best to focus the questions on them in that regard, because our exposure to this is really just limited to the ones that we\u2019ve been obviously dedicating our focus to acquire.\u201d<\/p>\n We\u2019ll have to wait and see what they cost to run, but at least prices are providing a strong buffer.<\/p>\n Flynn noted BHP\u2019s results showed weaker performance from Blackwater, where BHP has invested heavily in waste-stripping. Flynn said the strip ratio was performing in line with pre-acquisition expectations and that Whitehaven will continue to invest in the waste-strip over the next 12 months but said it was \u201cnot huge\u201d.<\/p>\n Meanwhile, the coal miner has dumped an autonomous trial with Hitachi at its Maules Creek mine in NSW.<\/p>\n \u00a0<\/p>\n <\/span>\u00a0<\/p>\n \u00a0<\/p>\n Iluka Resources (ASX:ILU)<\/a> says it remains in conversation with the Commonwealth Government to extend a $1.25b credit line after cost escalations at its Eneabba rare earths refinery surged to $1.7-1.8b.<\/p>\n The ASX 100 mineral sands producer and rare earths hopeful is banking on Australia\u2019s determination to break China\u2019s vice grip on rare earths processing to up its support.<\/p>\n The Critical Minerals Facility loan was already controversial when it was delivered by the previous government in 2022 given Iluka\u2019s own corporate weight. It wants to develop the refinery to process monazite waste containing magnet metals left over from mineral sands mining at Eneabba near Geraldton on WA\u2019s Mid West coast.<\/p>\n The plant has also been pitched as a third party processor for other ASX-listed companies and monazite from Iluka\u2019s deposits in Victoria and New South Wales.<\/p>\n So far bulk earth works and ground improvement activities have been completed, with a 302-bed camp currently being commissioned and a further 60 room expansion due to commence soon.<\/p>\n An upgrade of the mine access road is done while a number of long lead procurement packages have been awarded including a roasting kiln.<\/p>\n Iluka\u2019s result showed a big drop in zircon production at the Jacinth-Ambrosia and Mid-West WA projects, with the Narngulu mineral separation plant offline for six weeks until mid-February. Zircon output from Cataby in WA\u2019s South West was also sharply lower, with total zircon, rutile and synthetic rutile production down 17.2% to 86,600t in the March quarter (42.6% down YoY).<\/p>\n Synthetic rutile output in WA was up 359.3% to 37,200t after the restart of the SR2 plant, while ilmenite output rose 96% to 69,000t (though 54.7% down YoY).<\/p>\n Iluka said titanium pigment markets appear to have turned the corner with customers reporting stronger seasonal demand and commentary from pigment producers point to a \u2018double digit increase\u2019 in volumes in the second quarter.<\/p>\n \ufeff<\/span><\/span>\u00a0 The post Monsters of Rock: Lithium giant Pilbara Minerals says dividend unlikely, but low costs keep Pilgangoora flying high<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Pilbara Minerals (ASX:PLS) share price today:<\/h2>\n\n
Hendo on the market: EV sales are up, so are lithium prices<\/h2>\n
Don\u2019t you worry about [blank], let (BHP) worry about [blank]<\/h2>\n
Whitehaven Coal (ASX:WHC) share price today:<\/h2>\n\n
Still Iluk-in for govt funds<\/h2>\n
Iluka (ASX:ILU) share price today:<\/h2>\n\n
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