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Why Pilbara Minerals Ltd shares rocketed higher today

One of the best performers on the market on Tuesday morning has been the Pilbara Minerals Ltd (ASX: PLS) share price.

At the time of writing the lithium miner’s shares are up 10% to 87.5 cents.

What happened?

This morning Pilbara announced the completion of its pre-feasibility study assessing an expansion to achieve 5Mt per annum run-of-mine ore production and processing capacity at its flagship 100%-owned Pilgangoora Lithium-Tantalum Project.

According to the release, the study outlines a compelling business case for commencing the expansion of the project to 5Mtpa of production and processing capacity.

Based on the proposed 5Mtpa stand-alone mining and processing operation, the study indicates that the project will be a robust, high margin project with current forecast life-of-mine revenue of $11.5 billion and life of mine Project EBITDA of $6.5 billion over an estimated 17-year mine life.

As a result of the strong financial and technical merits of the expansion project, management has pushed ahead with a definitive assessment which is targeting completion mid-2018.

Pilbara Minerals’’ Managing Director and CEO, Ken Brinsden, believes that the results of the study will “cement its position as a globally significant, low-cost supplier of lithium raw materials for decades to come.”

Judging by the market’s reaction today, investors appear to agree with Mr Brinsden.

Should you invest?

I can’t say I’m surprised by Pilbara Minerals’ strong gain today. The Pilgangoora Lithium-Tantalum Project certainly has the potential to be one of the more lucrative operations in the industry.

However, my preference in the industry continues to be Galaxy Resources Limited (ASX: GXY), closely followed by Orocobre Limited (ASX: ORE).

Though it is worth remembering that they are amongst the more volatile and high risk shares on the local share market. I think that this would make these lithium miners suitable only to investors with a high tolerance for risk.

So if the lithium miners are too high risk for you then check out these exciting shares with bucketloads of growth potential instead.

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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