Pilbara Minerals eyes expansion

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 28 Sep 2016   Posted by admin


Image: The Pilgangoora lithium project in the WA Pilbara.

By Cameron Drummond

 

LITHIUM hopeful Pilbara Minerals could double production capacity at its Pilgangoora project, according to a pre-feasibility study (PFS) to assess expansion to a 4 million tonne per annum (mtpa) production rate.

The announcement coincided with the release of Pilbara Minerals’ long awaited definitive feasibility study (DFS) on the initial 2mtpa development of the project.

The DFS results confirmed the financial and technical merits of Pilgangoora, highlighting an estimated mine life of 36 years and annual earnings before tax, interest, depreciation and amortisation (EBITDA) of $133 million.

The study assumed a spodumene sale price of $US537 per tonne at an estimated cash operating cost of $US196/t for the first 15 years.

Pilbara Minerals also upgraded the project’s initial development cost from $184m to $214m to reflect expansion costs.

The company said the DFS provided a strong platform for it to complete additional project off-take arrangements, as well as secure project financing and commence production. Commissioning of the project remained on track for the fourth quarter of 2017.

Pilbara Minerals managing director Ken Brinsden said the completion of the DFS on a base case 2mtpa development within six months of the March PFS was a huge achievement, and put the company on track to become Australia’s next major lithium producer.

“We have long believed that Pilgangoora represents an enormously valuable strategic asset that has the potential to become a globally significant south of lithia raw materials,” he said.

“The favourable results from the DFS strongly support that belief and provide us with the framework now to progress this world-class asset towards financing and production.”

Mr Brinsden said that given the significant increase in the Pilgangoora resource and reserve base over the course of the year, the company had undertaken a PFS to assess the potential to double production at Pilgangoora to 4mtpa.

“We have decided to present key findings of the PFS separately, but in parallel to the DFS, so that investors can make a fair assessment of the true long-term potential of this world class project,” Mr Brinsden said.

The study assumed a processing capacity at Pilgangoora being doubled to 4mtpa from year three of the project, for an average annual production of about 564 kilotonnes per annum of 6 per cent spodumene concentrate.

The increase in production would reduce the life of mine to 19 years, increase the annual average EBITDA to $245m, and the forecast net present value to $1.165bn.