What Pilbara Minerals (PLS.AX) is signalling to lithium markets

Pilbara Minerals (PLS) are the market leader in Australian lithium production, from a single world class orebody in Pilgangoora, located in northern Western Australia.

Pilgangoora is one of the world’s great hard rock lithium mines with an enormous resource with a production profile that can be scaled up significantly. PLS trades at a significant relative premium to other local lithium players, reflective it’s asset quality, market power and optionality. Whilst the spodumene products it sells are generally below the premium 6% spodumene benchmark, the low operational costs and lithium bull cycles have demonstrated reliable earning potential albeit with enormous volatility.

PLS recently entered into an all-scrip deal for Latin Resources (LRS) a company that holds a substantial hard rock lithium resource located in Brazil. Whilst this is a development project, PLS were prepared to offer 6.4% of the combined entity to LRS shareholders to secure this project. This fact piqued our interest.