Shares leap as Pilbara locks in new offtake, Infinity pencils in project finance

A fresh offtake deal for miner Pilbara Minerals and a project funding agreement for EU-based Infinity could point to a brighter future for the lithium sector
27th March 2020
Resources Rising Stars

A fresh offtake deal for miner Pilbara Minerals and a project funding agreement for EU-based Infinity could point to a brighter future for the lithium sector (reports Stockhead).

Battling falling prices even before the ‘coronacrisis’ hit, lithium stocks had been stuffed in the bottom drawer by many investors.

In February, spodumene concentrate prices nudged lower to an average $US463 ($697) per tonne — a 46 per cent drop from the same period last year — due to that ‘overhang’ in Chinese stockpiles.

WA hard rock producers like Pilbara Minerals (ASX:PLS), Altura Mining (ASX:AJM) and Galaxy Resources (ASX:GXY) have been curbing exports in response but this excess feedstock — estimated at 25,000t LCE (lithium carbonate equivalent) — is still expected to persist through the first half of the year at least, Benchmark says.

But in the background things are still happening. In February, Altura locked in a crucial $305m refinancing deal which allows it to keep the lights on during this difficult period.

Today, neighbouring WA producer Pilbara Minerals signed a new five-year, 75,000-tonne-per-annum (tpa) offtake agreement with Chinese lithium chemical firm Yibin Tianyi.

Yibin Tianyi is set to become a key cog in the supply chain of Contemporary Amperex Technology (CATL), the world’s bigger lithium-ion battery maker (and major Pilbara Minerals shareholder).

Yibin Tianyi’s first 25,000tpa LCE plant is currently under construction and targeting production from June 2020, Pilbara says.

60,000tpa will be supplied in 2020, increasing to a minimum 75,000tpa for the remainder of its term. An initial shipment of 20,000t was delivered this month.

So far, Pilbara Minerals says has it has not experienced any material impact to its Pilgangoora operations as a direct result of the coronavirus situation – but things are changing fast.

“While there has understandably been some disruption within the China supply chain as a result of COVID-19 (where the company’s largest customers are based), the ability to secure sales, credit, and shipping has continued to function within China,” Pilbara Minerals says.

“At this stage, the company anticipates that shipped tonnes for the March 2020 quarter will be consistent with the lower end of previously announced guidance of 35kt-50kt.”

The miner also has a pretty strong balance sheet following a $111.5m cap raise late last year.

Read more at https://stockhead.com.au/resources/lithium-shares-leap-as-pilbara-locks-in-new-offtake-infinity-pencils-in-project-finance/

 

Image: Business News WA

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