Pilbara Minerals moves to preserve cash after price slump

24th January 2024 By: Reuters

Pilbara Minerals moves to preserve cash after price slump

Shares of Pilbara Minerals climbed on Wednesday as the Australian lithium miner trimmed its annual capital expenditure forecast given a slump in prices that pulled down its second-quarter revenue by 46%.

The company's stock rose as much as 8.4% to A$3.545, set to mark its best day since mid-December, if gains hold.

Pilbara, Australia's biggest pure-play lithium miner, said it is focusing on cost-cutting measures to preserve cash, but will go ahead with its expansion plans, which can be funded from its reserves.

"With confidence in the long-term outlook, the group is continuing with its previously announced strategy of prioritising investment in expanding production," it said.

The company also cut its group capital expenditure forecast range for fiscal 2024, the mid-point of which is now 8.4% below the prior range of A$875-million to A$975-million.

"The market has been pricing for lower lithium prices, but I think what it didn't expect was solid operations and company signalling a continued ramp-up," said Tim Hoff, senior mining analyst, Cannacord Genuity (Australia).

"The company has a healthy cash balance and it has got a growth forecast plan, so as a business, you can look through this period of low pricing and really lift as the market balances," he added.

Australian lithium producers may be set to track the nickel industry in project curtailments and delays, analysts said, given slower-than-expected electric vehicle sales that have hit prices, but the jolt is expected to be less severe.

Pilbara said it is unlikely that a dividend will be paid for the first half to preserve its balance sheet.

The miner posted revenue of A$264-million ($173.71-million) for the quarter ended December 31, down from A$493-million in the previous quarter.