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Pilbara Minerals delays capital plans amid lithium market softness

Pilbara Minerals (ASX:PLS) has ruled out any immediate capital management moves, except for dividends, as first-quarter lithium prices and revenues declined, with the outlook remaining uncertain. However, the company plans to release details of new sales of up to 300,000 tonnes annually by the March quarter of next year.

In commentary on the strong quarterly numbers, despite softer prices, Pilbara explained its decision to avoid capital management moves such as special dividends or share buybacks. It cited the need for capital due to softened prices and market conditions, despite the strong lithium outlook.

Pilbara reaffirmed its Capital Management Framework and investment strategy, emphasizing investment in existing operations, sustainable dividends, and organic growth through expansion projects. The company also noted its flexibility to consider other investment opportunities.

Despite having significant capital allocation flexibility, Pilbara acknowledged the softened market conditions during major capital investment programs. Therefore, the Board decided not to proceed with a one-off capital management initiative at this time.

Pilbara reported an end-of-quarter cash balance of $A3.08 billion, a slight decrease from the end of June, attributing it to taxes, costs, and dividend payments. The total payout to shareholders in the first year of dividends was nearly three-quarters of a billion dollars.

The company also highlighted a strong cash margin from operations, amounting to $360 million, despite lower spodumene prices.

In an exciting development, Pilbara revealed plans for new deals covering up to 300,000 tonnes per year of unallocated spodumene production from its P1000 project. This could potentially increase the total production to one million tonnes per year. Pilbara Minerals is actively exploring downstream partnering opportunities to maximize shareholder returns from the P1000 Project.

The partnering process is expected to be concluded, with outcomes announced in Q3 FY24.

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