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 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

Substantial increases in the global resource at the Pilgangoora Project have reinforced its status as Australia's premier lithium development Project. In September 2018, Pilbara Minerals increased the Mineral Resource estimate to 226.0 million tonnes grading 1.27% Li2O (lithia) and 116ppm Ta2O5 (tantalite) and 0.60% Fe2O3. The current Mineral Resource estimate containing 2.86 million tonnes of Li2O (lithia) and 57.7 million pounds of Ta2O5 (tantalite). 

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 here.

Reserves

In September 2018, Pilbara Minerals increased the Ore Reserve estimate published in June 2017. The expanded Proved and Probable Ore Reserve now stands at 108.2 million tonnes grading 1.25% Li2O (lithia) and 120 ppm Ta2O5 (tantalite) and 1.17% Fe2O3.

View the Ore Reserve Estimate here.

Development

A September 2016 Definitive Feasibility Study confirmed a robust, high margin project with a post-tax Net Present Value of A$709 million and a strong Internal Rate of Return of 38.1%.

Based on a proposed 2 million tonne per annum stand-alone mining and processing operation, the DFS forecast current life of mine revenue of A$9.23 billion and life of mine Project EBITDA of A$4.22 billion over an estimated 36-year mine life. Construction of the Pilgangoora Project commenced in January 2017 and was completed at the end of July 2018. Shortly after Pilbara Minerals produced its first 'on spec' concentrate in August 2018.

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 the Company’s offtake partners in north Asia. 

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

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 $A12.2 billion ($ real) and life of mine EBITDA of $A6.3B ($ real (see DFS announcement here).

Strong interest from existing and new customers and positive Scoping Study results supports the case for a further Stage 3 expansion to 7.5 million tonnes per annuum. These results include a LOM project revenue of A$16.6B, a post-tax Net Present Value10% A$3.73 billion and an average annual LOM cash operating cost of US$291/tonne CIF (see Scoping Study announcement here). The decision and timing for delivery of any proposed Stage 3 expansion is subject to a range of factors including final customer demand, financing, environmental approvals and further economic and technical analysis.

To support these expansions, Pilbara Minerals has commenced a partnering process for Stage 3 offtake, chemical plant participation and a potential sale of a minority project level interest of between 20% to 49%). An outcome from this partnering process is expected in mid-2019 (see Partnering Process announcement here).

Offtake

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 has secured a binding offtake agreement with General Lithium, a leading Chinese supplier of lithium products and materials to the fast-growing lithium battery industry in China. 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. This represents over 40% of the Pilgangoora project's anticipated initial annual output of ~330,000tpa of concentrate (inclusive of technical grade spodumene) from Stage 1.

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.

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. The downstream processing opportunity provides Pilbara Minerals a number of advantages including 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 up to 240,000tpa upon Pilbara Minerals’ minimum participation of 30% in a downstream joint venture conversion plant in South Korea. 

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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