The Pilbara Minerals Ltd (ASX: PLS) share price has continued its poor run and dropped lower again on Monday.
In early trade the lithium miner's shares are down over 1% to 64.7 cents following the release of its third quarter update.
What happened in the third quarter?
In the third quarter the company produced 52,196 dry metric tonnes (dmt) of spodumene, up 9% on the second quarter. This increase was achieved despite the impact of Tropical Cyclone Veronica on its operations.
Pleasingly, the improvement in production is expected to continue in April with management expecting 20,000 to 22,000 dmt of spodumene thanks to its improving lithia recovery trend.
Although production escaped the cyclone, the same could not be said for quarterly sales. Pilbara Minerals sold 38,562 dmt of spodumene during the quarter, which was down over 17% from the previous quarter. This was caused by the delay of one shipment. Tantalite concentrate sales increased 9.1% to 30,356 pounds.
At the end of the quarter Pilbara Minerals had a cash balance of A$103.9 million, which was an increase from A$70.2 million at the end of December.
This was driven by concentrate sales (both spodumene and tantalite) of $36.1 million and a $50 million equity placement to Ganfeng in exchange for additional offtake from its Stage 2 production.
Should you invest?
I thought this was a reasonably positive quarter for the company considering the challenges it faced with Tropical Cyclone Veronica. However, it wasn't enough to make me positive on the company just yet.
Although management noted that lithium prices have started to stabilise in China, there's no signs of improvement just yet.
In light of this, I would suggest investors continue to stay clear of Pilbara Minerals and peers such as Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE) until there has been a sustained improvement in both demand and prices of the battery making ingredient.
