can AJM match PLS or JV ??

Can AJM match results or JV with PLS ..??

Final approvals for WA tantalum project and start of production the next likely price catalysts for this fast-growing company
A rash of positive recent news including a highly successful $6.5m capital raising, a resource upgrade and a series of outstanding drill results has prompted one of Australia’s top resource analysts to upgrade his valuation for emerging tantalum producer Pilbara Minerals (ASX: PLS).
Melbourne-based equity research group Beer & Co has lifted its valuation of Pilbara by 44 per cent from 17.3c to 25c, and says there could be further upside potential as it successfully starts production at its Tabba Tabba tantalum project and continue to grow its large Pilgangoora lithium-tantalum deposit.
Pilbara has two key projects located just 70km from Port Hedland in WA’s North West which it says have all the ingredients to make it a low-cost producer of tantalum and lithium – both metals which are in high demand due to their growing use in the high-technology and battery sectors.
The first project, the 50 per cent owned Tabba Tabba mine, has been developed for a capital outlay of just $8 million (of which $7 million has already been spent).
It is projected to generate $18 million of EBITDA in its first year of operations – generating valuable cash to underpin the development of the much-bigger Pilgangoora lithium deposit.
A final operating permit for Tabba Tabba is expected in the near future.
While it will enable Pilbara to make the all-important transition from explorer to producer within months, Tabba Tabba forms only a relatively small portion of Beer & Co’s valuation of the company, with analyst Pieter Bruinstroop attributing most of the value to the giant Pilgangoora project.
He says that a recent resource upgrade and successful drilling which has delineated a high-grade zone at the large lithium deposit has underpinned an increase in its valuation.
“PLS now has over 20Mt in resources plus an Exploration Target of a further 50-60Mt. However, we model only a 1Mpta operation. PLS also stated that the Central Zone contains a high-grade core of 12.73Mt at 1.42% Li2O.”
“The resource upgrade was based on all drill results to the end of March,” Bruinstroop continues. “Since then, PLS has reported a plethora of thick, high-grade intercepts. These suggest further significant upside potential to our valuation of Pilgangoora.”
Beer & Co are also encouraged by the success of recent metallurgical testwork on Pilgangoora ore, which shows that the concentrate to be produced by the project will be suitable for use in the glass and ceramics industries, as well as the fast-growing battery sector.
“The recovery of 90% of Li2O at the flotation stage suggests that overall recoveries could be higher than the 80% assumed in Beer & Co’s analysis,” says Bruinstroop.
Bruinstroop’s modelling is based on initial production and cash-flow from the high-grade Tabba Tabba operation being supplemented by the much larger development of a 1Mtpa operation at Pilgangoora by FY 2017.
This shows revenues climbing rapidly from $10 million to $78.1 million in FY 2017 to $120 million a year from FY 2018 onwards, with net profit climbing from $22 million in FY 2017 to around $40 million a year from FY 2018 onwards