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Pilbara Minerals details proposed funding solution to finance Stage 2 Pilganagoora expansion

Published by , Assistant Editor
Global Mining Review,

Australian lithium producer Pilbara Minerals Ltd (Pilbara Minerals) has released details of a proposed multi-pronged funding package to provide the balance of the funding required to support the development of the Stage 2 expansion of its 100%-owned Pilgangoora lithium-tantalum project in Western Australia to 5 million tpy.

The funding package is underpinned by two of Pilbara Minerals’ key customers, Jiangxi Ganfeng Lithium Co. Ltd and Great Wall Motor Company, demonstrating a high level of customer support for its rapid growth trajectory – which will see Pilbara Minerals become one of the major global lithium raw materials producers by early next decade. The announcement of this proposed funding package follows successful customer site visits to the Stage 1 operations, where the ramp-up of production is on track with strong indications of customer support for a potential future expansion of the Pilgangoora project beyond Stage 2.

Pilbara Minerals’ Managing Director and CEO, Ken Brinsden, said: “We’re out of the blocks early in the New Year with the announcement of a funding package which once completed should ensure that our next major growth step, to 5 million tpy, is fully-funded. Upon completion of the expansion by the March quarter of 2020, Pilgangoora will be elevated to an annualised production rate of up to 850 000 tpy of spodumene concentrate, putting us firmly on track to become one of the world’s major global lithium raw material producers. The quality of the products we are producing, the sheer scale of the resource and the speed at which production is ramping-up means that Pilgangoora is rapidly being recognised as one of the most important new lithium raw material projects globally. Our key customers have recently visited site and they clearly like what they have seen. They are now fulfilling their commitments by providing capital to underpin the Stage 2 expansion in order to secure their full Stage 2 offtake allocations. At the same time, they have made it clear that they would like to see the project grow further, prompting us to undertake studies to evaluate a potential Stage 3 expansion to at least 6.2 million tpy and potentially up to 7.5 million tpy, as part of the engineering work currently contributing to our Stage 2 project. This should send a clear message about the robust outlook for the lithium market as far as our Tier 1 customer base is concerned and demonstrates the secure position the world-class Pilgangoora project commands as part of a global lithium-ion supply chain that is growing rapidly.”

“We are looking forward to playing a key role in that growth and continuing to work closely with our customers to deliver their requirements. An important consideration in the financing of Stage 2 is the interplay between the new customer financing and the existing Bond facility. We believe the combination of a proposed “Tap Issue” under the existing Bond and parallel engagement with existing Bondholders to seek their consent to expand the permitted debt required under the terms of the Bond, will both simplify the approvals process and achieve the lowest overall cost of financing for the proposed funding streams required to finance the Stage 2 expansion,” he added.

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Australian mining news