Pilgangoora Lithium-Tantalum Project

Overview

Pilbara Minerals’ 100%-owned Pilgangoora Lithium-Tantalum Project (Pilgangoora Project) is located 120km from Port Hedland in Western Australia’s resource-rich Pilbara region. The Pilgangoora Project is one of the biggest new lithium ore (spodumene) deposits in the world, with a globally significant hard rock spodumene resource.  The Project is accessible by road, with access to existing infrastructure including port facilities at the port of Port Hedland.

The 2 million tonne per annum stand-alone mining and processing operation produces ~330,000tpa of ~6% spodumene concentrate and 321,000lbspa of +5% tantalite concentrate at name-plate capacity. 

Currently Pilbara Minerals is ramping up the Pilgangoora Project to 'name plate' capacity following declaration of commercial production in April 2019. 

On 2 October 2018 Pilbara Minerals achieved a major milestone with its first spodumene concentrate product shipment from the Pilgangoora Project. A total of 8,800wmt (wet metric tonnes) of spodumene concentrate grading approximately 6.1% lithia and 1.2% Fe2O3 set sail from Port Hedland port bound for offtake partners in north Asia. Since this first shipment a steady stream of shipments have followed, and as of 30 June 2019 the Company had completed 11 spodumene concentrate shipments. 

The outstanding quality of the Pilgangoora Project has enabled Pilbara Minerals to take it from first drill hole to production in under four years.

Pilbara Minerals’ long-term strategy is to unlock the full value of the Pilgangoora Project's deposit through an expansion strategy and position the Company as a fully integrated participant in the lithium raw materials and chemicals value chain.

Resources and Exploration

During the 2019 financial year mining operations at the Pilgangoora Project resulted in the depletion of the Mineral Resource. 

In consideration of this, on 30 June 2019 an updated Mineral Resource statement (including stockpiled material) of 223.2Mt grading 1.27% (spodumene), 116ppm Ta2Oand 0.60% Fe2O3, containing 2.82Mt of Li2O (lithia) and 56.9Mlbs of Ta2O5 was released to the market in the 2019 Annual Report. 

Mineral Resources are inclusive of Ore Reserves.

Future drilling will focus on several under-explored target areas within the Pilgangoora Project, many of which have been identified from the occurrence of outcropping spodumene bearing pegmatites. The new targets demonstrate the potential for incredible endowment within the project area and are considered important for further resource growth over the coming years.

View the Mineral Resource Estimate on page 21 of the 2019 Annual Report here.

Reserves

As per the Mineral Resource, mining operations during the 2019 financial year resulted in the recovery of ore and therefore depletion of the Ore Reserve.  

The resultant Ore Reserve, net of mining depletion as at 30 June 2019, was 106.0Mt at 1.25% Li2O, 120ppm Ta2Oand 1.18% Fe2O3.

The 30 June 2019 Ore Reserve for the Pilgangoora Project contains an estimated 1.31Mt of Li2O and 27.7Mlbs of Ta2O5.

View the Ore Reserve Estimate on page 21 of the 2019 Annual Report here.

Expansion projects 

Pilbara Minerals is embarking on a three-phased growth strategy that includes expansion to 7.5 million tonnes per annum of processing capacity, development of a lithium hydroxide conversion facility and an exploration target to drive mine life extension.

A key objective of this expansion strategy is diversification of Pilbara Minerals’ entrance into the lithium chemical market, through its proposed joint venture with POSCO on a lithium chemical facility in South Korea and the evaluation of a second facility either in Australia or overseas.

An increase in processing capacity to 7.5 million tonnes will ultimately see the Pilgangoora Project deliver 1.2 million tonnes per annum of ~6% spodumene concentrate and 1.1 million pounds of 30% tantalite concentrate to market over a 17-year mine life.

This proposed expansion is underpinned by exceptional Definitive Feasibility Study (DFS) results for an initial Stage 2 expansion to 5Mtpa including a post-tax Net Present Value10% of A$2.160B, life of mine project revenue of $A12.2B ($ real) and life of mine EBITDA of $A6.3B ($ real (see DFS announcement here).

A positive scoping study for the Stage 3 expansion supports the case for a further Stage 3 expansion to 7.5 million tonnes per annum. These results include a LOM project revenue of A$16.6B, a post-tax Net Present Value10% A$3.73B and an average annual LOM cash operating cost of US$291/tonne CIF (see Scoping Study announcement here).

In response to customer requirements, Pilbara Minerals is currently pursing an optimised and incremental expansion strategy for Stage 2. The strategy would subdivide the development, capital investment and production growth into an incremental and phased build-out approach. This substantially reduces the upfront capital expenditure for the initial phase of the development, reduces capital risk by facilitating a more flexible approach to the expansion over time and enables the Company to better align mine expansion capacity with customers’ chemical facilities. 

The proposed Stage 3 expansion is on hold until such time that market demand and/or the participation of a partner is sufficient to justify its development

Offtake

Stage 1

The low cost, long life and outstanding quality of the Pilgangoora Project has attracted a group of high quality, experienced global offtake partners including Ganfeng Lithium, General Lithium, Great Wall Motor Company and POSCO. Collectively, these partners underpin the Stage 1 and 2 projected production from the Pilgangoora project.

For Stage 1, Pilbara Minerals secured a binding offtake agreement with General Lithium, a leading Chinese supplier of lithium products and materials. This offtake agreement is for the supply of 140,000tpa of 6% chemical grade spodumene concentrate for a six-year period, with the option to extend for a further four years. 

Following this, Pilbara Minerals secured a long-term binding offtake agreement with Ganfeng Lithium, one of China's largest integrated lithium producers. The agreement includes the supply of 160,000 tonnes per annum of chemical grade spodumene over an initial term of 10-years, with two five-year options to extend up to a further 10-years.

Collectively these agreements account for ~100% of Stage 1 production. 

Stage 2

To support the Stage 2, 5Mtpa expansion, Pilbara Minerals has entered into an offtake agreement with Great Wall Motor Company one of China’s largest pickup and sport-utility vehicle manufacturers. This offtake agreement encompasses 75,000tpa of chemical grade spodumene concentrate (SC6.0 basis) with the option for a further 75,000tpa (for a total of 150,000tpa) following agreement of binding terms with respect to a debt or offtake prepayment funding facility for Stage 2 of up to US$50 million.

To complement this already extensive, highly experienced list of global offtake partners Pilbara Minerals has entered into a strategic relationship with POSCO. This relationship encompasses long-term offtake, funding and importantly, the opportunity to participate in a joint venture for a downstream conversion plant in South Korea, providing Pilbara Minerals a first-mover position in this fast-growing Korean market. POSCO is one of the largest suppliers of steel to the global automobile industry and has a vision is to become a ‘total solution provider’ for EVs.

The landmark agreements with POSCO encompass a binding life of mine offtake agreement for an initial 80,000tpa of chemical grade spodumene concentrate (SC6.0 basis) from the Stage 2, 5Mtpa operation, increasing to 240,000tpa upon Pilbara Minerals’ minimum participation of 30% in a 30,000tpa LCE downstream joint venture conversion plant in South Korea. 

In late August 2019, Pilbara Minerals reached binding JV terms with POSCO for the development of a 40,000tpa LCE facility, which subsequently increased the offtake agreement to 315,000tpa. Agreement execution and board approvals are expected to occur in the December 2019 quarter. 

The ability to manufacture high-value battery-grade lithium products through downstream processing has the potential to deliver significant additional value for Pilbara Minerals in the years ahead, with global demand for lithium ion batteries expected to experience unprecedented growth over the coming decades.

For the latest updates on development activities at the Pilgangoora Project, please visit our ASX Announcements page.

 

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