Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

Pilbara Minerals shares: where next after mixed quarterly results?

Pilbara Minerals is sitting on an AU$2.7 billion cash pile, and lithium could soon start sharply rising again.

pilbara Source: Bloomberg

Despite some serious volatility, Pilbara Minerals (ASX: PLS) shares are up 23% over the past month, 74% over the past year, and 435% over the past five years to AU$4.55 today. And while the ASX 200 lithium trailblazer remains some way off its record AU$5.66 it achieved in Q4 2022, there is room for further growth.

Partially, this is because buyout fever is in the air.

BHP’s takeover of Oz Minerals, Glencore’s pursuit of Teck, and the likely Newmont-Newcrest tie-up are just the start. There’s also Albemarle’s AU$5.5 billion rejected bid for Liontown to consider, and the recently agreed merger between Allkem and Livent Corp to create a US$10.6 billion titan of the lithium industry.

This consolidation is simple to understand — inflation has sent mining costs soaring, there is a growing global critical minerals supply gap, ever fewer quality metal deposits, and the cyclical nature of mining means that larger companies need to adapt to ensure growth through the next phase.

Pilbara Minerals shares: quarterly update

After exceptional half-year results earlier this year left the company with $2.2 billion in cash, April’s quarterly update seems to have tempered expectations — after Pilbara reported a 9% quarter-over-quarter fall in spodumene production to 148,131 dry metric tonnes (dmt).

While this decline was very close to market expectations, the bigger problem was shipments — with deliveries down 3% quarter-over-quarter to 144,312dmt — short of analyst expectations of 161,000dmt and a far cry from Goldman Sachs’ optimistic prediction of 170,000dmt.

Pilbara, like all miners in the space, is battling two fronts. On one hand, it saw a 9.15% quarter-over-quarter increase in unit operating costs to AU$632 per dmt, reflecting general labour shortages, ongoing supply chain disruption, reduced production, and just regular inflation. Overall, the ASX lithium company expects FY23 unit operating cost to be between $600/dmt and $640/dmt.

On the other, the company saw its ‘average estimated realised spodumene concentrate sales price’ fall by 15% quarter-over-quarter to circa US$4,840/dmt on a ~SC5.3 basis. While analysts had been expecting prices achieved to fall in line with the softer market, the company also warned that further price falls would be likely ‘until pricing for lithium chemicals stabilises, including domestic pricing in China.’

Positively, PLS does see lithium ‘potentially strengthening in the second half of this year as restocking of inventory levels in China occurs across the supply chain,’ likely driven at least partially by falling battery stocks at CATL.

It’s worth noting that despite the mixed results, Pilbara still increased its cash balance from the previous pile of AU$2.2 billion to close to AU$2.7 billion.

Where next for Pilbara Minerals?

It was only a few months ago that PLS delivered it maiden, fully franked dividend of AU$0.11 per share. However, Morgans analysts are predicting a fully franked AU$0.15 per share dividend for the full year, meaning only 4 cents are left to be paid out. Worse, they expect weaker lithium prices to see next year’s dividend cut to just AU$0.09 per share — though admit that this is prediction is made with weak conviction given the unpredictable nature of Chinese demand through FY24.

CEO Dale Henderson consider that major investment in the sector combined with a drive for the EV revolution leaves Pilbara ‘very positive on the structural deficit for lithium.’ Despite weaker present prices, there is a clear and growing supply gap that could see prices resurge in the medium to longer term, with the CEO pointing out that rising EV sales in China is the ‘key consumption driver right now.’

While falling Chinese EV subsidies have weighed on lithium demand, Morgan Stanley commodities analyst Marius van Straaten thinks that a ‘turning point’ might have been reached as ‘sentiment is clearly improving, and their (Chinese) lithium inventories appear to have eroded.’

Pilbara’s share price, dividend, and trajectory may soon follow suit.

Take your position on over 13,000 local and international shares via CFDs or share trading – all at your fingertips on our award-winning platform.*

Learn more about share CFDs or shares trading with us, or open an account to get started today. *

Winner of ‘Best Multi-Platform Provider’ at ADVFN International Finance Awards 2022

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.