Pilbara Minerals (ASX:PLS) share price on watch after doubling sales in FY21

This lithium miner's shares will be on watch on Friday…

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The Pilbara Minerals Ltd (ASX: PLS) share price will be on watch on Friday.

This follows the release of the lithium miner's full year results after the market close.

Pilbara Minerals share price on watch after sales surge

  • Shipments up 142% to 281,440 dry metric tonnes (dmt)
  • Revenue up 108.9% year on year to $175.8 million
  • Cash gross margin of $46.2 million compared to cash gross margin loss of $12.2 million in FY 2020
  • EBITDA of $21.4 million compared to loss of $33.9 million a year earlier.
  • Statutory net loss after tax of $51.4 million
  • Cash balance of $115.7 million

What happened in FY 2021 for Pilbara Minerals?

For the 12 months ended 30 June, Pilbara Minerals reported a significant improvement in its cash gross margin to $46.2 million. This was driven by a combination of improved market conditions and strong operational performance at the company's Pilgangoora Lithium-Tantalum Operations in Western Australia.

Management notes that a significant increase in demand from customers during the second half of the year supported total FY 2021 spodumene concentrate shipments of 281,440 dmt. This enabled better utilisation of the processing plant.

Another positive was the completion of several key process plant improvement projects. These resulted in increased feed, higher utilisation, and improved lithia recoveries. This ultimately led to a reduction in the average unit cash operating cost to A$519/dmt (CIF China), supporting an improved cash gross margin from operations.

Finally, on the bottom line, Pilbara Minerals recorded a $47.9 million improvement in its consolidated net loss after tax to $51.4 million. This is after accounting for $26.6 million of depreciation and amortisation, $17.1 million of non-cash acquisition costs written off, and net financing costs of $29.1 million.

What did management say?

Pilbara Minerals' Managing Director, Ken Brinsden, was pleased with the company's performance in FY 2021.

He said: "What an incredible turnaround we have seen during the second half of FY2021. Global demand growth for lithium raw materials has now really kicked-in and it is resulting in substantial increases in the price received for our products."

"Our world-class asset base has been further enhanced by the Altura acquisition, as we now own two processing plants and have the ability to rapidly ramp-up production from the second plant into a market that is low in spodumene concentrate supply. Importantly, production from this second plant is completely uncommitted."

"This additional capacity, along with the restart of the Ngungaju Plant, will see us supply the market with around 550,000-580,000tpa of spodumene concentrate by June 2022 through our existing offtake agreements and newly-established BMX platform," he added.

What's next for Pilbara Minerals?

The good news for the Pilbara Minerals share price is that the company is forecasting a major lift in shipments in FY 2022. It is forecasting shipments of 440,000 to 490,000 dmt for the year. This will be a 56.3% to 74.1% increase on FY 2021's shipments of 281,440 dmt.

However, one thing that could weigh on the Pilbara Minerals share price is its cost guidance for FY 2022. It is guiding to unit cash operating costs of A$525 to A$575/dmt (CIF China), up from A$519/dmt.

Management advised that its costs are expected to be higher during FY 2022 and FY 2023 due to elevated strip ratios, Pilgan production ramp up, and the restart of the Ngungaju operation.

After FY 2023, the company is aiming to bring its unit cash operating cost down to A$450 to A$500/dmt.

Pilbara Minerals share price outperformance

The Pilbara Minerals share price has been an exceptionally strong performer this year.

Since the start of the year, its shares have risen 155%. This compares to a 12% gain by the ASX 200 over the same period.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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