Company overview - Pilbara Minerals Limited is a strategic metals producer. The Company is engaged in the exploration, development and mining of mineral resources. It owns the Pilgangoora Lithium-Tantalite Project, which is located in the Pilbara region of Western Australia. The Pilgangoora Lithium-Tantalite Project is located approximately 120 kilometers southeast of Port Hedland in Western Australia. The Pilgangoora Lithium-Tantalite Project is a spodumene (lithium-mineral) deposit. It has a farm-in and joint venture agreement over approximately six tenements comprising its West Pilbara project. The Pilgangoora Lithium-Tantalite Project has an Indicated and Inferred Resource of approximately 128.6 metric tons grading over 1.22% lithium oxide containing approximately 1.57 metric tons of lithium oxide and over 40 metric pounds of tantalum pentoxide. Its subsidiaries include Tabba Tabba Tantalum Pty Ltd, Sturt Resources Ltd, Sturt Resources PNG Ltd, Star 15 Limited and New Global Limited.

PLS Details
Won main mining lease for the Pilgangoora Lithium–Tantalum Project: Pilbara Minerals Ltd (ASX: PLS) has been granted the main mining leasing license, Pilgangoora Lithium–Tantalum Project Mining Lease M45/1256, by the Western Australian Department of Mines and Petroleum (DMP) during the December 2016 quarter. The award of the Mining Lease was a key condition to the Pilgangoora mining proposal submission and subsequent final project permitting expected during the first quarter of 2017, that has allowed major construction, development and mining activities to proceed. DMP has granted the mining lease following the successful completion of several prerequisite steps that comprised of the signing of a Native Title Agreement with the Njamal people, the traditional owners of the land and signing of an Access and Compensation Deed with the pastoral lease holders within the Project area. 

Core Mining License at Pilbara Minerals’ Pilgangoora Project(Source: Company Reports)
 
Commencement of the site development activities: PLS has announced the starting of the site development activities at the Pilgangoora Lithium-Tantalum Project with the start of bulk earthworks required for the project’s accommodation village. This is after the acquisition of Roy Hill Project’s Rail Camp 3 that comprised a 300-person camp including a gym, recreation facilities and wet mess. This marked a significant milestone for the company and shows that the company is on track to commence run of ore mining in the second quarter of CY 2017. Moreover, the bulk earthworks are now underway for the Stage 1 relocation of the camp to Pilgangoora and comprise initial 60 accommodation rooms as well as common central facilities.
 

Bulk earthworks at the Pilgangoora Project, Western Australia (Source: Company Reports)
 
Placed orders for critical long-lead items: PLS is working on a number of fronts to ensure that appropriate infrastructure, access and logistics support are in place at Pilgangoora to enable the major construction works to start as soon as project finance has been secured and the Board has made its final investment decision. Therefore, as a part of this process, PLS has placed orders for critical long-lead items, including a High Pressure Grinding Rolls (HPGR) crusher, a Ball Mill and a Spodumene Concentrate Filter during the December quarter. These items represent key components of the proposed Pilgangoora processing facility pursuant to the flowsheet outlined in the Pilgangoora Definitive Feasibility Study.
 
Secured Process water supply locations and corridors: PLS has secured Process water supply locations and corridors for the Pilgangoora Project, through a combination of on-site water bores and access to a pre-existing bore field location just south of the Pilgangoora project area. To get sufficient water for Stage 1 (2Mtpa) of the project, the bore licensing for these locations is now underway as part of the broader project approvals. In addition, the detailed negotiations and documentation are getting to near completion to access additional water, under an agreement, from an existing licensed bore field in the project region to further support future expanded water supply requirements, consistent with the PLS’s objective of production growth over time.
 
EPC contract to RCR Tomlinson Ltd: PLS has awarded the lump sum Engineering, Procurement and Construction (EPC) contract for the Pilgangoora Project to RCR Tomlinson Ltd (RCR). The Finalization of the EPC contract for the 2Mtpa lithium-tantalum plant is a key contract that keeps Pilbara on track to commission Pilgangoora in the December Quarter of this year. The contract contains a target cost of A$138 million with a guaranteed maximum price of A$148 million. Moreover, EPC contract has been awarded in two stages with the initial Stage 1 being a two-month FEED program that will determine the final scope of work, timeline and target price. Pilbara’s total commitment for Stage 1 is fixed at approximately A$10.3 million. After securing the project funding, and the Pilbara Board has made its final investment decision, Pilbara has the option but not the obligation to commit to the Stage 2 construction component of the EPC contract, which is for the balance of the contract price and is planned to start in May 2017.
 
Awarded the first stage of the 300-room camp relocation and re-establishment contract: Pilbara Minerals has awarded the first stage of the 300-room camp relocation and re-establishment contract to OTOC Australia, subsequent to the end of the December quarter. The initial 60 rooms and common facilities are due to be completed by late March 2017, and the balance of the camp are due to be completed (subject to approvals and permitting) during Q2 2017. The remaining contract packages for the Pilgangoora Project are either under negotiation or will be the subject of tender processes shortly.
 

Reconciliation of Cash (Source: Company Reports)
 
Acquired Lynas Find Lithium Project: PLS has acquired Lynas Find Lithium Project that directly adjoins the Pilgangoora Lithium-Tantalum Project, which would further expand its world-class resource inventory in the Pilgangoora district of WA. This will also provide PLS with early access to readily accessible higher grade tonnes as well as creating additional flexibility for the location of key infrastructure components for the development of the Pilgangoora Project. The acquisition also includes the maiden JORC Indicated and Inferred Minerals Resource of 7.3Mt @ 1.25% Li₂O, 85 ppm TA₂O₅ and 0.99% Fe₂O₃ as per the binding acquisition agreement with Dakota Minerals Limited.
 
January 2017 Mineral Resource Upgrade: As per January 2017 Mineral Resource Upgrade, the updated resource represents a 22% increase in total resource tonnage as compared with the resource upgrade in July 2016, and now comprises a total of 156.3 million tonnes grading 1.25% Li₂O (spodumene) and 128 ppm Ta₂O₅ containing 1.95 million tonnes of lithium oxide and 44.2 million pounds of Ta₂O₅. Moreover, the total Measured and Indicated Resource has increased by 14% to 95.3 Mt grading 1.32% Li₂O (spodumene), 130ppm Ta₂O₅ and 0.55% Fe₂O₃, containing 1.26 Mt of lithium oxide and 27.3 million pounds of Ta₂O₅.

Pilgangoora Project – Mineral Resource Estimate (using 0.5% Li₂O cut-off) (Source: Company Reports)
 
Agreements in the December Quarter: PLS has signed an agreement with Mineral Resources Limited during the December Quarter to resolve a dispute over a Right of First Refusal (ROFR) relating to the sale of lithium products from the Pilgangoora Project. Moreover, PLS has secured a second innovative off-take agreement with Chinese lithium carbonate (Li₂CO₃) producer, Shandong Ruifu Lithium Co. Limited (Shandong Ruifu), for the early supply of direct shipping ore (DSO) from either the Pilgangoora Project or, at Pilbara’s election, the adjoining higher grade Lynas Find Lithium Project, from as early as July 2017. This in a way, is indicative of strong spodumene demand. On the other side, Pilbara Minerals expects to secure the remaining project funding required to complete the development of the Pilgangoora Project during the March 2017 Quarter.
 
Downstream processing opportunities: Pilbara Minerals has downstream processing opportunities in the form of lithium carbonate and/or lithium hydroxide production. Several initiatives are underway including the Memorandum of Understanding with General Lithium Corporation to jointly evaluate downstream lithium processing opportunities and joint test-work with Lithium Australia NL. Moreover, Lithium Australia NL announced that its Sileach halogen digestion process had successfully produced battery-grade lithium carbonate, for which both groups would jointly evaluate the commercial potential.

Pilgangoora Project Schedule (Source: Company Reports)
 
Stock Performance: Pilbara Minerals’ stock has fallen over 13.27% in the last four weeks (as of February 14, 2017) given some volatility in the commodity prices, while the stock has been up about 32.4% in last one year. On the other hand, having the core Pilgangoora Lithium–Tantalum Project at hand we believe the stock would recover in the coming months. The group is also prudent on working with changes in the board and recently appointed Mr Nick Cernotta as an independent non-executive director. The group also appointed a renowned lithium flotation specialist, Dr Wenbo Wang. We give a “Buy” recommendation on the stock at the current price of – $0.48

 
PLS Daily Chart (Source: Thomson Reuters)

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