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Lithium miner says $1.24b half-yearprofit just the start

Lithium producer Pilbara Mineralshas declared its maiden dividend with more on the horizon after a recent priceupgrade in long-term offtake contracts with its big Chinese customers.

Pilbara Minerals will return an interim dividend of 11¢ a shareto investors less than three years after its shares were worth not much morethan that amount

The company’s biggest customers are China’s Ganfeng – which alsomines lithium in WA in partnership with Chris Ellison’s Mineral Resources –General Lithium and carmaker Great Wall, followed by South Korea’s POSCO.

Led by chief executive Dale Henderson, Pilbara Minerals has beendropping grade to maximise production of spodumene, with its 5.3 per centproduct fetching an average price of $US4266 a tonne in the September quarter,and its 5.4 per cent grade fetching $US5668 a tonne in the December quarter.

The revised off-take contracts didn’t take effect until justbefore the end of a half year where Pilbara Minerals posted a whopping netprofit after tax of $1.24 billion, up almost 1000 per cent from $114 million atthe same time last year.

Sales revenue hit $2.18 billion, upfrom $174.7 million, on the back of big increases in production and pricing,and earnings before interest, taxes, depreciation and amortisation climbed to$1.81 billion.

The results and fully franked maiden dividend, representing areturn of about $330 million to shareholders, come five years after PilbaraMinerals started shipping spodumene concentrate from its Pilgangoora mine about120 kilometres south of Port Hedland

At aglance (statutory) | Pilbara Minerals

Table with 4 columns and 5 rows. Currently displaying rows 1 to 5.
Half year	2023	2022	% change
Revenue ($m)	2180.13	291.73	647.3
Pre-tax profit ($m)	1774.87	84.7	1995.5
Net profit ($m)	1241.91	114	989.4
Interim dividend (¢)	11	nil
Date dividend payable	March 24

Table: FinancialReview Source: Company data *Includes special dividend

They came in the face of higher operating costs the company saidreflected labour shortages in the WA mining industry, an elevated strip ratioto support further investment in mining activities, supply chain disruptionsand inflationary pressures.

Mr Henderson said the half-year result was “just the beginning”,with massive growth on the way after the company ended December 31 with $2.23billion in the bank.

The maiden dividend reflects a policy for paying out between 20per cent and 30 per cent of free cashflow.

“This [dividend] is a huge milestone for Pilbara Minerals, andwe are very pleased to be able to reward our shareholders who have had faithand stuck with us over the journey,” Mr Henderson said.

“This strong financial performance provides the company a greatplatform, supporting our growth and diversification strategy to become aleading, sustainable battery materials supplier.

“The combination of a world-class asset, operating expertise andteam spirit is coming together and delivering into a growing market. The stageis set for Pilbara Minerals to take massive growth steps in the months andyears ahead. This is just the beginning.”

Pilbara Minerals is moving to boost production from 580,000tonnes a year to 680,000 tonnes a year, with associated plant upgrades andadditional crushing and ore sorting capacity expected to cost more than $404million.

Mr Henderson shares the view of US-based battery minerals giantAlbemarle, which has a growing footprint in the WA lithium industry, that China will remain an important partner.

“I think they will be a key customer for Pilbara for a long timeyet just because of the structural landscape that has evolved,” he said earlierthis month.

“The lithium-ion industry is essentially completely domiciled inChina, bar some emerging shoots elsewhere, so we have had to make the choice towork with China and our customers have been fantastic partners in the main.”