Pilbara Minerals defies lithium bears with $110m raising, brings China’s CATL onto register

Pilbara Minerals chied Ken Brinsden. Picture: Travis Anderson

• NICK EVANS

  RESOURCE WRITER

  
• 11:34AM SEPTEMBER 4, 2019
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Pilbara Minerals has defied the lithium bears, putting away a $91.5m placement at 30 cents and bringing Chinese battery major Contemporary Amperex Technology (CATL) onto its register as a major shareholder.

The company (PLS) was due to emerge from a trading halt on Monday, but delayed the close of its proposed $60m raising after CATL — which Pilbara Minerals says is China’s largest manufacturer of batteries for electric vehicles — made a late approach to take a major share in the Australian lithium producer.

CATL will take $55m worth of Pilbara Minerals stock, to emerge with about 8.5 per cent of its enlarged register, underpinning a total issue worth about $111.5m — including a $36.5m institutional placement and a $20m share purchase plan to allow existing holders to top up their position.

Pilbara Minerals finished June with $63.6m in cash, and the big raising eases any doubt about the company’s ability to ride out this year’s downturn in lithium markets.

The company’s successful trip to the market offers a significant counterpoint to a dour couple of weeks for Australian lithium stocks, after WA producer Alita Resources slipped into administration, lithium major Talison — owner of the rich Greenbushes mine in WA’s south west — pushed back planned expansions, and Galaxy Resources declared a $US172 million half-year loss, slashing the book value of its Mt Cattlin mine.

The market for lithium concentrate has been hit badly by a glut of supply and falling prices, with Chris Ellison’s Mineral Resources pointing to a 36 per cent fall in prices for concentrate from its Mt Marion mine, near Kalgoorlie, from $US1070 a tonne at the start of the financial year to $US682 at its close.

Lithium exporters have blamed slower than expected growth in downstream processing plants, particularly in China, and a build-up of stockpiled concentrate.

Pilbara Minerals itself abandoned a planned selldown of a part-stake in its Pilgangoora lithium project in the Pilbara, pulling back production plans and extending the timeline for further expansion of the project.

But the company said today the CATL cash, along with the rest of the raising, will give it the working capital headroom to continue to ramp up its Pilgangoora operations to nameplate capacity, as well as fund its share of a joint venture with Korean corporate giant POSCO in a downstream processing plant.

Pilbara Minerals chief executive Ken Brinsden said the recent lithium market downturn had overshadowed the fact there was still significant interest from battery makers to secure long-term supplies of high-quality raw materials.

“In particular, the focus is on the quality and security of the lithium raw material supply and matching the raw material demand growth to growth downstream in the lithium-ion battery supply chain,” he said.

Pilbara Minerals will issue 305.1 million new shares in the raising, with CATL to chip in an initial $20m, alongside the institutional placement, and another $35m on receipt of Chinese regulatory agreement and shareholder approval at a Pilbara Minerals meeting.

Shares in the company last traded at 35c.