Worth Watching II: Pilbara Minerals Limited (ASX: PLS)
On Wednesday I attended an investor briefing hosted by Read Corporate. The room was full, the lunch was excellent, and all three presenting companies (ASX: EMX, KDR, PLS) are at an interesting stage of development. All companies have merit, but I was particularly interested in Pilbara Minerals. Read a brief commentary below.
I’ve known Neil Biddle, MD of Pilbara Minerals, for many years. He is one of the most successful entrepreneurs in the junior resource space. This ticks the all-important management box. However, there is much more that I like about this company.
Pilbara Minerals has two principal projects: Tabba-Tabba, which hosts a small resource of 650,000lbs (294 tonnes) of tantalum pentoxide (Ta2O5); and Pilgangoora, which hosts a large resource of 10.7Mlbs (4,850 tonnes) of tantalum pentoxide, along with 192,000 tonnes of lithium oxide (Li2O). The tantalum occurs as the mineral tantalite [(Fe,Mn)Ta2O6], which must be processed to produce tantalum pentoxide.
Tantalite is used as a feedstock to produce tantalum metal. It sells for around USD180, 000 per tonne. The lithium occurs within the mineral spodumene (LiAl(SiO3)2). Pilbara Mineral’s spodumene is of sufficient grade and purity to be used as a precursor in the manufacture of various lithium products such as glass and rechargeable batteries.
The Tabba-Tabba project is “shovel ready” as our political masters like to say. It is good grade, but what is really interesting are Pilbara Mineral’s partners in the project.
Global Advanced Metals is one of the two giants of the titanium business (the other is H.C.Starck). Global Advanced is an off-take partner for all tantalite concentrate produced by Pilbara Minerals. The project is 50/50 joint ventures with NAGROM – specialists in tantalite processing. NAGROM are responsible for construction and operation of the mine and process plant.
Development of a first project is the most risky stage in the growth of junior resource companies. But with these two partners, the project is substantially de-risked. A big positive.
Good management; good partners; near term production; long term future. The next milestone to watch will be successful production and sale of concentrate later this year.
My “Worth Watching” series is a brief review of corporate presentations that appeal to me. They are not based on in-depth research and are in no way a recommendation to buy or sell shares. The reader is advised to do their own research and/or consult with their broker.