Pilbara's full year performance for fiscal year 2024: The average price of spodumene is $1176 per ton, a decrease of 74% compared to last year, but cash flow remains strong

Pilbara's full year performance for fiscal year 2024: The average price of spodumene is $1176 per ton, a decrease of 74% compared to last year, but cash flow remains strong

Key points

The safety indicators have improved, and the Total Recordable Injury Frequency Rate (TRIFR) has decreased by 27% to 3.4 (compared to the previous fiscal year ending June 30, 2023, FY23:4.7).

The production of spodumene concentrate increased by 17% to 725300 dry metric tons, and sales increased by 16% compared to FY23, reaching 707100 metric tons (FY23:607500 metric tons).

Based on SC5.3, the average estimated realized price of spodumene concentrate is $1176 per ton. Based on SC6.0 equivalence, the average estimated selling price is $1347 per ton (CIF China).

Revenue decreased by 69% to $1.3 billion, reflecting a 74% decrease in average realized price, partially offset by a 16% increase in sales volume.

EBITDA was $538 million, a decrease of 84% compared to the same period last year, mainly reflecting lower realized prices, partially offset by lower total costs and higher sales volume.

The EBITDA profit margin remained strong during this period, at 43%.

After tax statutory profit decreased by 89% compared to the previous corresponding period, mainly reflecting a lower average realized sales price.

The strong cash flow generated from operations in fiscal year 2024 is $513 million.

A strong balance sheet with a cash balance of $1.6 billion as of June 30, 2024. Cash decreased by $1.7 billion, with two key expenditure points being $763 million in FY23 income tax payments and $493 million in capital expenditure growth for the P680 and P1000 projects.

The crushing and beneficiation facilities of the P680 project began trial operation in the second quarter, while the P1000 project proceeded according to plan and budget.

Production improvement work is underway on Train 1 at the POSCO Pilbara Minerals joint venture chemical plant in South Korea, and construction of a midstream demonstration plant project has begun.

The Pilgangoora ore reserves will increase by 35% in August 2023, reaching 214 million tons, and the feasibility study for P2000 has begun.

Significant progress has been made in sustainable development through the development of Pirgangora's operational power strategy, the release of the first reconciliation action plan, and the launch of a community grant program.

On August 15, 2024, a binding plan implementation agreement was announced to acquire 100% equity of Latin Resources.

Today, Pilbara Minerals announced that it has secured a credit approval commitment for a new AUD 1 billion debt loan (in the form of a revolving credit facility or RCF) from a banking group to refinance existing project debt and further strengthen the company's balance sheet.

Dale Henderson, Managing Director and CEO of Pilbara Minerals Limited (hereinafter referred to as the "Company"), commented on the performance for the 12 months ended June 30, 2024 as follows:

Pilbara Minerals achieved outstanding results in the 2024 fiscal year, further consolidating our leadership position in global lithium production, thanks to the rigorous execution of our strategic plan.

The successful completion of the main beneficiation facilities of the P680 project is an important milestone, making record breaking production and sales possible. The operational performance of the facility also demonstrates cost-effectiveness per unit of scale, and is expected to further improve after the completion of the upcoming P1000 project. In addition to the current expansion, the feasibility study of the P2000 project has been completed, providing potential growth steps for future production

Our strategic goal of entering lithium chemical manufacturing is progressing as planned, and the joint venture chemical plant of POSCO Pilbara Minerals in South Korea has started production. We have also conducted joint research with Ganfeng Lithium on potential downstream joint ventures, which is still proceeding as planned and in line with our long-term growth strategy

Despite the challenges posed by the softening lithium price environment, Pilbara Minerals maintained a strong EBITDA profit margin of 43%, which demonstrates the team's strong operational performance and strict cost management

After the end of this fiscal year, Pilbara Minerals has secured a new AUD 1 billion credit commitment from a banking group, which will enable Pilbara Minerals to mature its capital structure and provide further financial flexibility and liquidity. With a robust balance sheet, Pilbara Minerals maintains a strong competitive position in the industry compared to many peers

At the beginning of this month, we announced a binding agreement for the acquisition of Latin Resources. This strategic countercyclical acquisition will further diversify our business and add a second 100% owned hard rock lithium asset, expected to bring high returns to shareholders over time. We are pleased to create value from this transaction and look forward to updating the market as we move forward

The fiscal year 2025 will bring another exciting year for Pilbara Minerals. We will continue to leverage our strengths to maintain our position as a low-cost operator, while prudently deploying capital to adapt to the growth pace of the lithium market, expand our business scale, and maintain our strong balance sheet

Financial Summary

During the reporting period, Pilbara Minerals achieved multiple positive financial results, including strong EBITDA profit margins, positive cash flow generated from operations, and strong ending cash balances despite market volatility.

Revenue was $1.3 billion, a decrease of 69% compared to the previous corresponding period ($4.1 billion), mainly due to a 74% decrease in average realized price, partially offset by a 16% increase in sales volume to 707.1 thousand tons, thanks to the expansion of production.

EBITDA was $538 million, a decrease of 84% from the same period last year ($3.3 billion). After deducting depreciation expenses of $150 million, net financing income of $16 million, and tax expenses of $146 million, the statutory net profit was $257 million.

The EBITDA profit margin remains strong at 43%. The statutory after tax profit decreased by 89% to $257 million, mainly reflecting a decrease in the average realized price.

Compared with the same period in the previous fiscal year, the ending cash balance decreased by 51% to $1.6 billion, reflecting FY23's income tax payment of $763 million, growth capital expenditure of $493 million, and final dividend payment of $421 million.

Despite achieving an average price of $1176 per ton, which is lower than the previous year's price of $4447 per ton, the operating cash flow (defined as the amount received from customers minus operating cost payments) remains strong at $513 million. This enables the company to increase its capital investment in real estate, plant, and equipment by $810 million on a cash basis, and to increase its investment by $865 million on a cumulative basis to expand projects and improve operational efficiency. The investment projects include: $493 million for the P680 and P1000 expansion projects, $141 million for capitalized tailings development, $141 million for new projects and improvement measures, and $89 million for sustaining capital expenditures..

Consistent with the Pilbara Minerals capital management framework, and while continuing to invest in the P680 and P1000 projects, the board of directors did not announce the final dividend for that period.

Proposed new AUD 1 billion debt loan

Pilbara Minerals has obtained credit approval commitments for a new AUD 1 billion debt loan from domestic and international banks, which exists in the form of a revolving credit line. The establishment of new debt loans depends on the execution of transaction documents, repayment of existing debts, and other usual prerequisites before mid-2024.

The new AUD 1 billion debt loan is a further step towards the maturity of the group's capital structure, which will enable the group to repay existing debts and further enhance financial flexibility and liquidity.

Sustainability Summary

Pilbara Minerals continues to focus on operational safety, achieving a Total Recordable Injury Frequency Rate (TRIFR) of 3.41, which is an improvement from FY23. In addition, a QSIFR (Quality Safety Interaction Frequency Rate) score of 1.72 was achieved, which is higher than the target value of 1.0. These results indicate that Pilbara Minerals has achieved significant results in continuously improving workplace safety and implementing effective safety measures, while also supplementing core processes aimed at driving continuous improvement in operational safety.

During FY24, Pilbara Minerals advanced a series of sustainable development initiatives, including developing the Pilgangola operational power strategy, launching a community grant program, and releasing its first reconciliation action plan.

This is the first time that the group's sustainability report has become part of the annual report, which supplements the sustainability data manual and enhances its sustainability reporting practices. To meet the growing demand for detailed environmental, social, and governance information.

About Pilbara Minerals

Pilbara Minerals is an ASX listed lithium company with the world's largest independent hard rock lithium operation. The operation is located in the resource rich Pilbara region of Western Australia, producing spodumene and tantalum concentrates. The significant scale and quality of this operation have attracted an alliance of high-quality global partners including POSCO, Ganfeng, Shengxin, Yahua, Yibin Tianyi, and General Lithium.

Tips: The Australian company's fiscal year begins on July 1 of the previous year and ends on June 30 of the current year. The Pilbara 2024 annual report is from July 1, 2023 to June 30, 2024