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Why lithium miner Pilbara Minerals charged higher today

The Pilbara Minerals Ltd (ASX: PLS) share price has charged higher on Thursday morning after releasing both its third and fourth market sensitive announcement of the week.

At the time of writing the lithium miner’s shares are up 3.5% to 72.5 cents.

What has been announced?

It certainly has been a busy week for the team at Pilbara Minerals.

On Tuesday the company released the Stage 3 scoping study outcomes which demonstrated the Pilgangoora project’s significant scale, long life, high-quality products and expected low-cost of operations. This supports its continued expansion pathway and Pilbara Minerals’ downstream participation strategy.

Later that day management revealed that it has received A$50 million from Jiangxi Ganfeng Lithium Co. Ltd under a previously announced subscription agreement. The A$50 million equity placement is in lieu of a debt or pre-payment facility for Ganfeng to secure an additional 75,000tpa of spodumene concentrate under its Stage 2 offtake agreement.

This morning Pilbara Minerals announced the declaration of commercial production at Pilgangoora following the achievement of sustained spodumene concentrate production during the first six months of operations.

According to the release, production has reached in excess of 111,199 dry metric tonnes of saleable product to date in FY 2019. Pleasingly, it expects between 47,000 – 52,000 dmt of spodumene concentrate in the March quarter despite the impact of Tropical Cyclone Veronica.

It also advised that its spodumene concentrate is meeting its targeted SC6.0 (6% lithia content) and iron specifications.

In addition to this, the company announced that it has commenced a partnering process to interconnect uncommitted Stage 3 Pilgangoora offtake with future joint venture chemical conversion facilities. The outcome of the partnering process is expected in mid-2019.

Further, management revealed that it is considering the sale of a minority interest of between 20% to 49% in its world class Pilgangoora Lithium-Tantalum Project. It is considering this option after receiving interest from third parties in respect to project ownership and product offtake.

Should you invest?

Things are certainly moving along nicely for the company and its future does look very promising.

However, as with lithium peers Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE), I wouldn’t invest in Pilbara Minerals until there has been a material improvement in the lithium price. Until prices hit an inflection point, I suspect the lithium miners are likely to underperform the market.

Instead of the lithium miners I would suggest investors check out this high risk/high reward buy-rated share.

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