Pilbara Minerals Ltd (ASX:PLS) shares rise on project update: Should you invest?

The Pilbara Minerals Ltd (ASX: PLS) share price pushed higher on Tuesday after the lithium miner provided the market with an update on its 100%-owned Pilgangoora Lithium-Tantalum Project in Western Australia.

Pilbara Minerals’ shares rose 3.5% at one stage before closing the day over 1% higher at 86 cents.

Why did Pilbara Minerals’ shares push higher today?

The market appears to have responded positively to company advising that commissioning of the Stage 1 Concentrator at the project is progressing. The project has now moved into the ramp up stage of fines concentrates production for customer delivery.

According to the release, product specifications for both fines spodumene concentrate and primary tantalite concentrates are consistent with saleable specifications, marking the achievement of another key milestone following the start of plant commissioning just over two months ago.

In light of this, management’s focus has now turned to growing concentrate production for sale via the steady ramp up of the plant’s capacity towards both the total Stage 1 design throughput and recovery targets.

Pleasingly, the performance of the its Stage 1 Concentrator has been strong. It has demonstrated ~220tph process run rates, which represents approximately 80% of the plant’s design capacity of 270tph.

Management expects the first shipment loading to commence between September 14 and 21, putting the company on the verge of generating meaningful revenues from the project.

Should you invest?

If lithium prices remain favourable over the medium term then I expect Pilbara Minerals could prove to be a great investment. However, the future direction of the price of the battery making ingredient is a matter of fierce debate. Some believe prices will remain high as demand grows, other fear an oversupply will lead to prices collapsing.

Because of this, I feel that an investment in Pilbara or either Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) is high up on the risk scale and largely unsuitable for the average investor.

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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 Scott Phillips.

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