The board has approved the move to full construction at the $234 million development.
The decision came after the settlement of the US$100 million senior secured bond issue yesterday.
The company also received A$27 million from offtake partner Jiangxi Ganfeng Lithium, which was part of a broader $80 million equity raising.
Early works have been progressing at Pilgangoora since late last year, with plant construction set to begin next month.
The timeline to first shipments has slipped back to the second quarter of 2018, with commissioning expected to begin in March.
Pilbara managing director Ken Brinsden said the final investment decision marked the beginning of Pilbara’s transformation into a major lithium producer.
“Our rapid progress since completing the definitive feasibility study in September last year is a credit to the hard work of the Pilbara Minerals team and the ongoing support of our shareholders.
“As a result, Pilbara Minerals is now firmly set on the path to near-term production – against the backdrop of accelerating demand for lithium raw materials globally. We look forward to playing an important role in this new, exciting and rapidly growing industry.”
Remaining capital costs to first production are $207 million.
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.
Blue Ocean Equities analyst Steuart McIntyre said if the supply/demand balance remains tight until at least 2020, current elevated prices could persist for several years.
Blue Ocean is assuming average prices of $650/t, which would generate EBITDA of around A$200 million per annum.
While McIntyre reduced his price target for Pilbara to $1.10 from $1.25 due to a more dilutive funding package than forecast, he described current prices as “far too cheap in our view for a company with a clear path to production”.
Macquarie also upgraded Pilbara this week from underperform to outperform, with a price target of 50c.
Pilbara shares rose by 0.5% to 36.7c this morning. Last week’s raising was completed at 35c.
