Pilbara Minerals (ASX:PLS) has published a Pre-Feasibility Study (PFS) on the potential expansion of its Pilgangoora lithium operation in Western Australia, where annual production could be boosted to more than 2 million tonnes per year.
Known as the P2000 Project, the expansion effort is expected to result in annual production of 1.9 million tonnes for the first 10 years, with production of more than 2 million tonnes per year over the first six years after the ramp-up.
Pilbara Minerals, which has a market capitalisation of $9.63 billion, says the construction of P2000 — which boasts a net present value of $2.6 billion — will require capital expenditure of $1.2 billion, with an internal rate of return of 55%.
CEO Dale Henderson says the scale benefits of the expansion will build on the company’s position as one of the world’s major lithium suppliers.
“This study follows the 35% reserve upgrade to 214 million tonnes announced in August last year,” he says.
“The growth of the reserve, and the optionality to incrementally expand production, further reinforces Pilgangoora’s position as a tier one asset of global significance.
“The next level of Feasibility Study will now commence with expected completion in the December quarter CY25. As we have done in the past, the timing of the financial investment decision (FID) will be considered in conjunction with prevailing market conditions and only proceed when it makes sense to do so.”
Henderson adds that in parallel with the Feasibility Study, Pilbara Minerals will consider other opportunities associated with the expansion, including funding, offtake strategies, and downstream partnerships.
Ultimate funding requirements will be determined during the Feasibility and FID phases. Nevertheless, Pilbara Minerals says it has considered all available funding options, including its end-of-March cash balance of $1.8 billion, cash flows from existing production, new loan facilities, and other sources.
Pilbara Minerals has begun initial discussions to investigate different funding options, including engagement with Australian Government financing agencies. Following this initial engagement, agencies have provided non-binding letters of support for up to $400 million for the project.
The Pilgangoora operation lies in the Pilbara region of Western Australia and is on track to deliver a nameplate production rate of 1 million tonnes per year.
Pilbara Minerals is a pure-play lithium producer that wholly owns hard-rock lithium operations in Western Australia.
Write to Aaliyah Rogan at Mining.com.au
Images: Pilbara Minerals
