[ferro-alloys.com]Pilbara Minerals has defied weak investor sentiment around lithium to secure all the cash it needs to fund a $231 million expansion of its Pilgangoora project in the Pilbara.

The Ken Brinsden-led miner announced this morning it had tapped its Chinese customers Great Wall and Gangfeng as well as existing lenders for a combined $156.4 million to expand throughput capacity at the project to 5 million tonnes per annum.

The balance of the cash required will come from the company’s existing reserves and future cashflow from its stage one 2Mtpa project.

Pilbara is also eyeing plans for a stage three expansion of Pilgangoora up to a 7.5Mtpa capacity and evaluating the enlargement of a proposed lithium refinery in South Korea with another offtake partner, steelmaking giant POSCO.

The company’s share price soared more than 15 per cent on the announcement and was up 9.5¢ to 72¢ at 11.30am.

The news further highlights a disconnect in sentiment around lithium between investors and the industry itself.

Shares in lithium players took a dive last year on fears of a looming wave of supply that was expected to push prices for the battery mineral lower.

In contrast, lithium industry giants such as SQM, Albemarle, Tianqi and POSCO have invested heavily in expanding their capacity ahead of an expected global surge in electric vehicle production.

News of funding for the expansion of Pilgangoora comes just three months after Pilbara shipped its first lithium concentrate from the stage one development of the project.

The funding includes a $35.5 million offtake pre-payment from Great Wall, a $50 million placement from Gangfeng priced at 64.38¢ a share, representing a small premium to Pilbara’s last traded price of 62.5¢, and $70.9 million tap issue to the company’s existing bondholders.

The stage two expansion will boost Pilbara’s production rate from 330,000 to 850,000 tonnes of spodumene concentrate per annum by the March quarter of 2020.

The funding commitments by the company’s offtake partners reflect a desire to take their full allocations of product from stage two.

Growing demand from the same parties is understood to be behind plans by Pilbara to investigate a stage three expansion to at least 6.2Mtpa and potentially up to 7.5Mtpa.

POSCO wants to expand the capacity of a proposed lithium downstream processing plant in South Korea in which Pilbara will hold a 30 per cent stake.

The plant will produce high-grade lithium carbonate and hydroxide for the electric vehicle battery market.

(The West Australian)

• [Editor:王可]