Pilbara Minerals declares dividend on a $1.24bn net profit
Pilbara Minerals has $2.2bn to spend on expansion after delivering a $1.24bn net profit for the first half of the year.
Pilbara Minerals is sitting on a $2.2bn expansion war chest after the company delivered a $1.24bn net profit for the first half of the year and presented an 11c-a-share interim dividend.
The company will return about $329.8m to shareholders on the back of last year’s soaring lithium pricing, after Pilbara Minerals booked earnings before interest, tax, depreciation and amortisation of $1.81bn for the first half.
Pilbara Minerals chief executive Dale Henderson said the inaugural dividend was a “reward” for shareholders who had stuck with the WA miner through the 2019 lithium price crash which forced the company to slow its mining operations due to a glut of concentrate on global markets.
Mr Henderson told shareholders the company was poised to take advantage of its stellar half year by giving the go-ahead to growth projects which would sustain the company’s earnings for decades.
But Mr Henderson warned that the company was not immune to the cost inflation that has dragged back earnings across the Australian mining industry, telling analysts to expect an escalation in costs when the company delivers a final feasibility study for its plans to expand its Pilgangoora lithium operations to one million tonnes of concentrate a year.
The company is already expanding production at the mine by 100,000 tonnes to 680,000 tonnes, and in December lifted the cost estimates for the project by 34 per cent to $404m.
Its downstream joint venture with Korean industrial giant POSCO expects to commission the first train of its 43,000 tonne-a-year lithium hydroxide plant in South Korea by the end of December. The second train is due to begin commissioning by the end of March 2024.
Despite concerns in the market that demand for lithium was showing signs of softening, Pilbara Minerals should benefit from improved pricing in the second half of the year after a recent price upgrade in long-term offtake contracts with its major customers.
Mr Henderson told analysts he was not concerned about market chatter of slowing demand, saying Pilbara Minerals was still receiving plenty of interest in its product.
“The sky is not falling in. It looks pretty good to me,” he said.
There has been some pullback in pricing, particularly within the China domestic market – I would point out the January spring festival is always a soft month.
“If you look back, this is the time you see a pullback and domestic pricing is a function of the slowdown in the Chinese market, so we are seeing a bit of that.”
Pilbara Minerals shares closed up 5c to $4.53 on Friday.