Lithium 'survivor' Pilbara Minerals best-placed for Altura deal

A bullish Ken Brinsden says Pilbara Minerals is one of the better-placed companies to benefit from a lithium market recovery (reports MiningNews).
13th November 2020
Resources Rising Stars

A bullish Ken Brinsden says Pilbara Minerals is one of the better-placed companies to benefit from a lithium market recovery (reports MiningNews).

"It's fair to say we've surprised a lot of people with just how far we've come," Brinsden told the Resources Rising Stars 2020 Investor Forum yesterday.

Pilbara's Pilgangoora mine has been running at about 40% of nameplate due to weak lithium demand and prices.

Brinsden said moderating production was a tough decision to make, but it protected the balance sheet.

"As a result, we're one of the survivors," he said.

September quarter cash costs were US$355 per dry metric tonne, including royalties and freight.

"There's no other supplier in Australia that has the ability to do that," Brinsden said.

The company had A$85.7 million in cash at the end of September.

Pilbara successfully refinanced, securing a low-cost US$110 million senior secured debt facility with BNP Paribas and the Clean Energy Finance Corporation, allowing repayment of a higher cost $100 million Nordic bond.

"We moved from credit card rates, nominally, to more conventional terms," Brinsden said.

Last month, Pilbara's Pilgangoora neighbour Altura Mining went into receivership after it was unable to refinance its debt.

"We are sad and we're sorry Altura has ultimately fallen into receivership," Brinsden said.

"It's a real shame."

Pilbara swooped quickly, entering into an agreement with the receivers within days to acquire the Altura lithium operations for $175 million.

The acquisition will be funded by a A$240 million equity raising, which will be supported by AustralianSuper and Resource Capital Fund.

At the same time, PCF Capital Group has launched a process seeking expressions of interest for a recapitalisation or sale of the Altura mine.

Pilbara will find out within weeks if its bid is successful, though it has rights to match any competing proposal.

Brinsden said it was suspected Altura had been in trouble for some time.

"And for some time, I mean a long time," he said.

"And we at Pilbara Minerals were ready to act.

"Pilbara is uniquely placed for this transaction."

He described Pilbara's team as lithium flotation experts.

"It's a rare set of skills in Australia," he said.

"Our flotation circuit works like a dream."

Brinsden said Altura's flotation circuit had "never really worked" and if any other buyer came into the asset, they would suffer the same issues.

"We think we're well-placed to make the most of the Altura lithium operations," he said.\

Read more at https://www.miningnews.net/events-coverage/news/1399008/lithium-survivor-pilbara-minerals-best-placed-for-altura-deal

Image: Pilbara Minerals

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