Lithium Watch – MJ Doubts PLS DFS

John Robertson

PortfolioDirect

UK-based industry publication Mining Journal has questioned the price assumptions underpinning the recently released Pilgangoora lithium project definitive feasibility study from Pilbara Minerals. The Journal has observed that “there is very little sound analysis present” to justify the prices assumed for the 36 years of the project. While the Mining Journal recognises “there will undoubtedly be an uptick in demand over the next few years as growth in the battery space soars”, it questions the justification for extrapolating the favourable near term conditions over several decades. Mining Journal concludes quite reasonably that “even if many of the technological advances needed to leverage new supply are delayed by a few years, the supply will catch up”. In reviewing the study conclusions, Mining Journal also points out that the price used for valuation purposes is based on the spot market which does not account for the bulk of lithium traded. This is where sensitivity analysis is important. According to the feasibility study, a 25% decline in assumed sales prices implies a project value less than 75% of the company’s current market price.


John Robertson
John Robertson
PortfolioDirect

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.