Pilbara Minerals share price on watch as losses increase 243%

The Pilbara Minerals Ltd (ASX: PLS) share price is on watch as full-year net losses surged amid a weak pricing and demand environment.

| More on:
watch, watch list, observe, keep an eye on

Image source: Getty Images

The Pilbara Minerals Ltd (ASX: PLS) share price is on watch this morning after announcing a 243% increase in net losses after tax.

What does Pilbara Minerals do?

Pilbara is an Aussie lithium miner with significant operations in the Pilgangoora Lithium-Tantulum Project. Founded in 2005, Pilbara is a leading industry player and currently has a market capitalisation of $789.8 million.

Why is the Pilbara Minerals share price on watch?

Despite revenue climbing 96.7% to $84.1 million, the Pilbara Minerals share price is on watch after reporting a $99.3 million net loss after tax. 

Pilbara Minerals did not declare a dividend for FY20 in line with its FY19 policy. Net tangible assets fell 15% lower to $0.17 per share in a tough year for lithium miners.

Softer market conditions in China and weaker customer demand made it a tough year for earnings. Pricing was weak which saw Pilbara Minerals moderate its production and draw down on existing stockpiles to reduce supply. This allowed a more flexible response to the coronavirus pandemic despite disruptions to its Chinese supply chain.

The Pilbara Minerals share price is up 14.5% in 2020. That’s despite the company completing its $111.5 million equity raising to strengthen its balance sheet and increase working capital. 

Total ore mined for the year totalled 812,312 wet metric tonnes (wmt) with 642,215 wmt processed. The company secured a new long-term spodumene concentrate offtake partner in the second half of the year. The agreement sees Yibin Tianyi Lithium Industry Co Ltd take 75,000tpa of spodumene concentrate with an initial 60,000tpa to be supplied in calendar year 2020.

Spodumene concentrate produced in FY20 totalled 90,768 dry metric tonnes (dmt) with 116,256dmt shipped. Tantalie concentrate produced was 86,991 pounds with 143,336 pounds shipped as part of Pilbara Minerals’ drawdown strategy.

Subsequent to the year-end, Pilbara refinanced US$110 million of debt with BNP Paribas and the Clean Energy Finance Corporation (CEFC) to reduce its cost of funding from 12% to 5%.

The Pilbara Minerals share price will be one to watch in early trade as investors weigh up the latest result. The miner increased its cash balance by $22.7 million to $86.3 million thanks to the recent equity raising.

Foolish takeaway

It’s been a tough year for lithium miners amid soft pricing and weaker demand. The Pilbara Minerals share price is worth watching after announcing the significant losses for FY20.

These 3 stocks could be the next big movers in 2021

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 15/2/2021

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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.

More on Resources Shares