- After experiencing a steady climb in its share price towards the end of last year, Pilbara Minerals (PLS) finally reached the $1 mark on January 6, 2021
- The Australian lithium-tantalum producer is the sole owner of the Pilgangoora Project in WA which has been recognised as a crucial new source of lithium
- Aside from a 12.5-cent low in March, PLS’ share price floated between 20 and 25 cents
- It wasn’t until it announced it would acquire Altura Mining’s subsidiary, Altura Lithium Operations, that its share price significantly improved
- Through the deal, Pilbara would snap up Altura’s lithium project for US$175 million (roughly A$225.7 million)
- As the project neighbours its Pilgangoora Project, the buy would make Pilbara the largest pure-play, ASX-listed lithium company by enterprise value
- The acquisition is being funded through a $240 million equity raising which was completed yesterday
- With the deal almost completed and an improved demand in the lithium market, will Pilbara’s share price stay above $1?
- Pilbara Minerals ended the day trading down a slight 0.42 per cent at $1.18
After experiencing a steady climb in its share price from September 2020, Pilbara Minerals (PLS) finally reached the $1 mark on January 6, 2021.
It seems the ASX-lister has a way of reaching this milestone at the dawn of a new year as the last time its share price was above $1 was in January 2018.
Before the share price started to pick up, PLS was floating between 20 and 35 cents for most of 2020. It even reached a low of 12.5 cents that hasn’t been seen since 2015.
About Pilbara Minerals
Pilbara Minerals is an Australia-based lithium-tantalum producer which holds fully owns the Pilgangoora Project.
With this project under its belt, Pilbara is looking to become a major player in the rapidly growing lithium supply chain to support the global electric vehicle and energy storage markets.
Pilgangoora is located in the Pilbara region of Western Australia and has been recognised as one of the most important new sources of lithium raw materials.
In fact, the lithium project recently celebrated a record for spodumene concentrate shipments.
In the December 2020 quarter, Pilbara shipped 70,609 dry metric tonnes (dmt) of spodumene concentrate to offtake partners.
2020 recap
In March 2020, Pilbara Minerals’ share price basically halved from just over 24 cents to 12.5 cents in three weeks.
The billion-dollar-company attributed the decline to softer market conditions as COVID-19 had spread worldwide causing panic amongst investors.
The demand for lithium raw materials began to soften in late 2019, but as China began to lift its COVID-19 restrictions, the company hoped the market would start to improve.
Following the all-year slump, PLS’ share price was on the move and went back up to the 24-cent mark in late May.
On July 30, Pilbara Minerals secured a US$110 million (roughly A$153.34 million at the time) debt facility from international bank BNP Paribas and Australia’s Clean Energy Finance Corporation (CEFC).
This news saw PLS’ share price go up to 37.5 cents and meant it could continue developing the Pilgangoora Project and repay a debt owed to Nordic Bond.
It also gave the miner flexibility with its cash as the lithium demand was still fairly weak at that time.
Altura Lithium Project
By late October, the company saw an opportunity to bag another lithium project when Altura Mining (AJM) entered receivership after failing to pay off its debts.
As a result, its assets were up for offer and Pilbara Minerals seized its chance to buy Altura’s lithium project for US$175 million (roughly A$248 million at the time).
As the Altura Lithium Project neighbours PLS’ Pilgangoora Project, the buy would make Pilbara the largest pure-play, ASX-listed lithium company by enterprise value.
Following this, and a corporate presentation that seemed to impress the market, Pilbara Minerals’ share price was on the rise. Significantly, the lithium stock’s share price went from 37 cents at the start of November to enter December sitting at a comfortable 69 cents.
However, this quickly rose to 75 cents when PLS formally executed a share sale agreement for Altura’s subsidiary, Altura Lithium Operations.
The good news continued on the December 11 when Altura’s creditors approved and signed the deed of company arrangement. All that was left was for Pilbara to complete a $240 million equity raising which was first announced one month prior.
By this point, the billion-dollar stock’s share price reached 87 cents — no small feat considering Pilbara hadn’t hit 80 cents since November 2018.
By the time it had completed its $119 million placement, PLS launched its $121 million entitlement offer to buy Altura Lithium. The offer consisted of a $60 million retail component and a $61 million institutional component.
“Pilbara Minerals is uniquely placed to realise the full value of benefits that should arise from acquiring the neighbouring Altura Project,” Pilbara Minerals Managing Director Ken Brinsden said.
On December 31, Pilbara’s share price was 87 cents, which represents a significant improvement from the start of 2020 when its share price was around 29 cents.
2021 forecast
To kick off the new year, the lithium producer got its share price up to $1 for the first time in three years on the third day of trading in 2021.
“What a great way to start the New Year, with record tonnes shipped from Pilgangoora to support increasing customer demand and an upward trend evident in the price for lithium chemicals in China,” Ken said.
Yesterday, PLS wrapped up the final component of its capital raise and ended the day trading at $1.17.
With the Altura acquisition nearing completion and improved demand in the lithium market, will Pilbara’s share price stay above $1? Only time will tell.
According to financial services company Morningstar, PLS shares are overvalued at 90 cents. However, the price target comes with very high levels of uncertainty.
Pilbara Minerals ended the day trading down a slight 0.42 per cent at $1.18.