27/08/2019 - 12:51

Pilbara fails to find Pilgangoora buyer

27/08/2019 - 12:51

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Pilbara Minerals has halted an attempt to offload up to a 49 per cent stake in its Pilgangoora lithium-tantalum project, but has executed a binding joint venture agreement with South Korean offtake partner POSCO.

Pilbara fails to find Pilgangoora buyer
In March, Pilbara announced it was considering selling between 20 per cent and 49 per cent of its Pilgangoora project.

Pilbara Minerals has halted an attempt to offload up to a 49 per cent stake in its Pilgangoora lithium-tantalum project, but has executed a binding joint venture agreement with South Korean offtake partner POSCO.

In March, Pilbara announced it was considering selling between 20 per cent and 49 per cent of its Pilgangoora project, as it declared commercial production from the processing plant.

Pilbara was set to use the funds from the sale to help fund its $231 million stage two expansion, which would increase the processing capacity of Pilgangoora from 2 million tonnes per annum to 5mtpa.

This would equate to up to 520,000 dry metric tonnes of spodumeme (aka lithium) concentrate.

However, in the 2019 financial year Pilbara processed around 1.46 million dmt of ore, to produce 174,852 dmt of lithium concentrate.

Today, Pilbara said it had received significant interest from potential buyers, but the offers did not represent appropriate valuation for substantial ownership of the project.

The company will now develop its stage two expansion with a lower upfront capital cost in line with current market conditions and customer requirements.

It will divide the stage two development into incremental stages.

The first of which it will outlay between $60 million and $70 million to deliver an expected additional 100,000tpa of lithium concentrate.

The previously planned phase three expansion has now been put on hold indefinately, and Pilbara said it would keep mining activity to a minmium over the remainder of the December half due to reduced processing activity and a stockpile of inventory.

MACA is the contractor at the site. 

The total capital expenditure for the stage two expansion has been revised to between $220 million and $250 million.

The company expects to make a decision on the revised stage two expansion plans early next year following a feasibility study due to be completed in December.

In another announcement to the ASX, the company said it had signed a binding downstream processing joint venture with POSCO.

Pilbara will have a 21 per cent stake in a 40,000tpa chemical conversion plant in South Korea, with an option to lift its stake in the JV to 30 per cent.

The initial 21 per cent investment will be funded through a previously announced $79.6 million convertible bond agreement with POSCO.

In recognition of the expanded offtake position, a $US25 million pre-payment will be made by the joint venture to Pilbara for the purpose of funding its stage two expansion of Pilgangoora.

Pilbara shares were down 2.2 per cent to 35 cents each at 1.35pm AEST.

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