Pilbara Minerals (ASX:PLS) share price climbed 12% today, but why?

The Pilbara Minerals Ltd (ASX: PLS) share price climbed 12% today, yet there’s no announcements from the company. Lets take a closer look!

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asx share price increase represented by golden dollar sign rocketing out from white domes of lithium

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The Pilbara Minerals Ltd (ASX: PLS) share price rallied 12% in trade today even though the lithium producer posted no news itself. Looking more broadly across the lithium stocks, it appeared to be a relatively good day of trade for many lithium producers.

Let’s look at some of the recent news and events for Pilbara and lithium to grasp what could have had investors excited today.

Lithium prices remain elevated

After a prolonged period of depressed lithium prices due to oversupply, the demand has caught up in recent months. This has led to the lithium price increasing by 45% year-to-date, and inevitably reinvigorating investor interest in the lithium sector.

In January, we witnessed many lithium stocks skyrocket with this reignited interest, and Pilbara Minerals was one of the beneficiaries. From its 2021 starting price of 86.5 cents per share, Pilbara rallied 58% to a top of $1.365. Since roughly 21 January, most ASX listed lithium stocks have taken a spell and retreated. However, during this time lithium derivatives have continued to increase in price.

In addition, yesterday a handful of articles were floating around on plans proposed by researchers at the US Department of Energy’s Princeton Plasma Physics Laboratory in early February. The researchers have reportedly created a plan to use liquid lithium to manage the extreme temperatures inside tokamak fusion reactors. Investors may be speculating the potential for this research to develop into a new-found demand for lithium.

What is Pilbara Minerals doing in the meantime?

In the company’s last report, the December quarterly, Pilbara Minerals noted its continued efforts to scale up operations. The lithium producer acquired a neighbouring lithium operation, Altura Mining Limited for $201 million in a bid to obtain synergies in its operations and added flexibility in its production capability.

In that same report, Pilbara stated it would be providing an update to the market on the Altura asset evaluation by the end of the March quarter, which is now fast approaching. Shareholders potentially are anticipating a good result buoyed by the sustained high lithium prices.

Pilbara Minerals share price snapshot

Over the last year, the Pilbara Minerals share price has returned a hefty 280%. Most of these gains were after November of last year, where the shares broke above 40 cents and continued to climb steadily. After today’s substantial performance, shares in the lithium producer are sitting at $1.08, which is still a 21% discount to its 52-week high.

The current market capitalisation is $2.08 billion, at the time of writing.

 

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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