The Pilbara Minerals Ltd (ASX: PLS) share price has had a strong start to the week.
In morning trade the lithium miner's shares are up almost 4% to 81 cents.
Why are its shares higher?
This morning Pilbara Minerals announced that it has successfully completed its $28 million equity subscription and signed its off-take agreement with Great Wall Motors.
The funds from the 50 cents per share equity subscription will be put towards the completion of Stage 1 of the Pilgangoora Project development and the financing of the Stage 2 Definitive Feasibility Study.
Great Wall's off-take comprises 75,000tpa of chemical grade spodumene concentrate over an initial five-year term. The automaker has the right to extend the agreement for up to a further ten years via two five-year options.
Furthermore, Great Wall has the opportunity to secure a further 75,000tpa of Stage 2 off-take by providing Pilbara with US$50 million of debt financing for its Stage 2 expansion, either via a debt or an off-take pre-payment facility.
Should you invest?
While I think lithium miners such as Pilbara, Galaxy Resources Limited (ASX: GXY), and Kidman Resources Ltd (ASX: KDR) all have bright futures ahead of them due to growing demand for lithium from the automotive market, I believe a lot of this has been priced into their shares following strong rallies.
In light of this, I believe investors ought to wait for a pull-back before considering an investment.
