See below just a brain dump following the team's quarterly presentation today:
Operations & Projects
Significant increases in mining activity to counteract low strip ratio, and to prep the mine in anticipation of recommencement of Altura plant
PLS stage 1 improvements on track for completion back end of Q3, to ramp up in Q4
PLS stage 2 upgrades, incremental with first improvements targeting an additional 100ktpa, due end of year
Altura recommencement - board approved FID on 25/06, with construction contracts etc. to be awarded in the coming weeks. Nameplate to be achieved by June 2022 - 180-200ktpa
Labour/staffing market remains tight, not a problem thus far however the team are conscious of this as mining ramps up
Significant exploration along tenement boundary - excellent results thus far ("more than we expected") - expecting a massive resource upgrade in September!
Financials
Sales tonnage109kt, shipped tonnage 96kt
Unit operating cost is fully inclusive of all mining related costs - @ $441USD/dmt - up $58USD/t
Main reasons include - freight $24USD/t (tightness of suitable vessels, with many vessels now destined for Atlantic basin)
Current freight costs approx $65USD/t, in the past it was $25USD/t
Higher mining costs due to higher strip ratios and future proofing mining in anticipation of re-commencement of Altura and Plant 1 upgrades
Unit costs $395-430USD/t for FY22 - elevated due to higher ratios and re-start of Altura plant
Expected freight costs to remain high and increase over the next 6 months, hopefully return down in the second half of FY21/21
Positive cash flow of approx $20m from operations, $7.5m provision pricing adjustment from sales in March quarter
Updated pricing mechanisms based on pricing at time of shipment - during September quarter expecting approx $2m of positive provisional pricing adjustments from previous quarter
Kenny Boy / Market Chat
Chemical conversation capacity within China has accelerated and now outpaced merchant spod supply (shortage)
Spot market has emerged that has never been seen before where there is disconnect between spod and chem pricing
PLS is determined to increase participation in spot market via BMX platform
BMX platform is live, 30 potential buyers - didn't give away much more unfortunately
Entire capacity from Altura plant will be available to sell on BMX platform, starting in Dec quarter - estimated 15kt. Also modest additional tonnage coming out of Pilgan plant will be sold on BMX - order of 10-20kt. FY21/22 estimated 100kt to be sold on BMX platform
Posco JV - Ken is frustrated by progress admittedly, citing illness from lithium team in South Korea slowing negotiations
If executing provisionally priced contract today - looking at $650USD/t, back in April was $500USD/t
Mechanisms are in place with current customers to review pricing mechanisms. Current mechanisms based on relationship to hydroxide prices, however if disconnect to hydroxide prices appear (which it is) then there is a system to renegotiate pricing mechanism
Stripping ratio LOM just under 5:1, strip ratio in June quarter 3:1, will peak in next phase of waste movements at approx 6.2:1
Apologies for the brain dump but just wanted to get it all down for those of you who couldn't log on today. Main takeaways for me:
POSCO are being slow and painful
BMX sales will be exciting, I wonder what pricing they will get
Altura recommencement will be a big milestone with all product set to be sold on BMX, nameplate by mid 2022 - need to get this online as soon as humanly possible to take advantage of spot pricing
Resource upgrade will be mammoth, also pending the results they may change mining strategy moving forward
Production costs to remain high $400USD/t+ for the next 12-24 months IMO
Will be interesting if we get any feedback on renegotiated pricing mechanisms with main clients, as it is pretty clear there is a lot of money being left on the table in comparison to spot prices, so renegotiating these terms is key for me
Going to be an exciting 12 months methinks...
Pap
PLS Price at posting:
$1.77 Sentiment: Hold Disclosure: Held
(20min delay)