PLS 5.83% $3.07 pilbara minerals limited

Good News & Bad News, page-514

  1. 8,981 Posts.
    lightbulb Created with Sketch. 4435
    As per Andyroo, previously the company announced that POSCO will fund ~$160 mill via a convertible bond and another debt instrument. In order to prepare for POSCO JV, while keeping other offtake customers happy, I believe PLS will need to spend ~ $300 mill to do that, so there is an additional ~$140 mill required. The said $300 mill includes fixing plant 2 and expanding plant 1 so that PLS have say overall spod production capacity of ~650kt.

    At a $400 spod margin and $7k hydroxide margin, the POSCO JV would generate gross profit of ~$200 mill. Say $110 mill after tax and loan repayments, which equates to 36% return pa on $300 mill capex, so payback period less than 3 years.

    The above numbers are very rough, they assume it happens today, and underlines a strategy assuming all debt. If POSCO fund said $160 mill and PLS raise $140 mill, the $140 mill could be split 50/50 debt and equity, which would lower debt and reduce payback period at the expense of share holder dilution.

    I guess it's important to note that PLS's role in getting ready for the POSCO JV is 18 months away, and if we can make $400 gross margin from spod production of 380kt over the coming 12 months, that would deliver $150 mill profit, which could be recycled to fund 50% of the JV capex. As said in previous post, PLS just need 2 good years under their belt, which will transform the optionality for downstream participation.

    AIMO, DYOR
 
watchlist Created with Sketch. Add PLS (ASX) to my watchlist
(20min delay)
Last
$3.07
Change
-0.190(5.83%)
Mkt cap ! $9.239B
Open High Low Value Volume
$3.19 $3.20 $3.07 $96.53M 30.85M

Buyers (Bids)

No. Vol. Price($)
41 815921 $3.06
 

Sellers (Offers)

Price($) Vol. No.
$3.08 309816 3
View Market Depth
Last trade - 16.10pm 28/06/2024 (20 minute delay) ?
PLS (ASX) Chart
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.