Pilbara to raise another $92M

FRESH from a US$100 million bond issue, Pilbara Minerals will raise up to A$92 million in an equity raising to complete the funding for the $234 million Pilgangoora lithium-tantalum project.
Pilbara to raise another $92M Pilbara to raise another $92M Pilbara to raise another $92M Pilbara to raise another $92M Pilbara to raise another $92M

Site works at Pilgangoora.

Kristie Batten

The company plans to issue up to 220 million shares at 35c apiece, a 10.9% discount to the five-day volume-weighted average price, to institutional and sophisticated investors to raise $50 million.

Major shareholder Mineral Resources plans to participate in the offer.

A previously announced US$20 million placement to offtake partner Ganfeng Lithium will also be completed.

The placement will be conducted in two tranches, with the second tranche of A$10.5 million requiring shareholder approval, which will be sought at a meeting in late July.

Pilbara will also conduct a share purchase plan at the same price to raise up to $15 million.

It is proposed that up to 262.9 million shares will be issued to raise a total of up to $92 million.

Earlier this week, Pilbara raised US$100 million via the issue of five-year senior secured bonds carrying a 12% coupon rate.

When combined with existing cash of A$51 million, a previously announced $18 million investment from offtake partner General Lithium, the bond issue and raising will give Pilbara available cash of $293 million.

Early works have been underway at Pilgangoora since November and remaining capital costs are $207 million.

Pilbara plans to use $16 million for corporate and exploration, $16 million for interest costs, $19 million for funding costs and working capital, and retain $35 million for management and liquidity reserves.

Pilgangoora remains on track for commissioning in the first quarter of 2018, subject to a final investment decision, which is expected any day now.

Long-lead items will start to arrive on site from July for the start of plant construction.

Average annual production over Pilgangoora’s 36-year life is set to be 314,000 tonnes of 6% spodumene concentrate and 321,000 pounds of tantalite at cash operating costs of US$196 per tonne CFR in the first 15 years, and $207/t over the life of the mine.

Under the base case 2Mtpa production rate and assuming an average sales price of $537/t, Pilgangoora has a post-tax net present value of A$709 million, at a 10% discount rate, with a 2.7-year payback period and internal rate of return of 38.1%.

More recently, Galaxy Resources has settled 2017 contracts at a price of US$905/t of spodumene.

The company will also considering doubling production early in the project life, with capital costs estimated at $128 million.

Pilbara shares last traded at 37.5c, but will remain in a trading halt until Monday while the placement is being completed.