Why has the Pilbara Minerals share price soared 57% in FY22?

How did the Pilbara Minerals share price perform in the financial year?

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Key points

  • Pilbara Minerals shares surged 57% in FY22 
  • Pilbara owns the Pilgangoora lithium project in the Pilbara region of Western Australia 
  • A positive outlook for lithium, broker upgrades and strong auction results all appeared to impact the prices 

The Pilbara Minerals Ltd (ASX: PLS) share price has had a positive financial year in FY22.

Pilbara shares have surged from $1.455 at market open on 1 July 2021 to $2.29 at market close on 30 June. This is a 57% gain.

So how did the financial year play out for Pilbara Minerals?

Pilbara Minerals share price hits a high in January

The Pilbara Minerals share price surged 165% to a high of $3.86 on 18 January. Between market close on 7 December and 18 January alone, the company’s share price soared 64%.

Pilbara Minerals owns the Pilgangoora lithium project in the Pilbara region of Western Australia.

Investors bought up Pilbara shares in 2021 and early 2022 amid a positive outlook for lithium. As my Foolish colleague James reported in early January, investors bought up the company’s shares amid the rise in electric vehicle (EV) demand.

Pilbara also benefited from positive broker coverage. Macquarie confirmed its outperform rating on the company’s shares in December with a $3.70 price target. The broker forecasts record-level lithium prices in the next four years. Bank of America also lifted its guidance for the Pilbara share price by 13% in early January.

The company also achieved strong results from spodumene concentrate auctions on the Battery Material Exchange. In October, a buyer bid US$2,350 per dry metric tonne (dmt), while in September Pilbara received a bid of US$2,240 per dmt.

On 21 December, the Pilbara share price suffered a downgrade to spodumene concentrate production and shipping guidance. Pilbara downgraded FY2022 production guidance from 460,000 to 510,000 dry metric tonnes (dmt) to 400,000 to 450,000 dmt. Shipping guidance was lowered from 440,000 to 490,000 dmt to 380,000 to 440,000 dmt. Managing director and CEO Ken Brinsden said:

Notwithstanding this, Pilbara Minerals remains incredibly well-placed to make a significant contribution towards satisfying the world’s burgeoning appetite for lithium raw materials.

A rough few months

The Pilbara Minerals share price tumbled nearly 41% between market close on 18 January and 30 June.

In late February, Brinsden revealed he would step down as CEO of Pilbara at the end of 2022 to spend more time with his family and on his personal interests.

In May, Pilbara and project partner Calix was awarded a $20 million grant from the Federal government to develop a lithium chemicals facility at the Pilgangoora project.

On 1 June, Pilbara appointed Dale Henderson as the company’s new managing director and CEO. This followed a thorough executive search process.

In June alone, the company’s share price plunged 22%. However, it was not alone. Core Lithium Ltd (ASX: CXO) shares dropped 29.6%, while Lake Resources N.L. (ASX: LKE) shares fell 48.7%.

A note from Goldman Sachs predicting lithium carbonate and spodumene concentrate prices to drop in the future appeared to hurt ASX lithium shares. Chinese EV company BYD also revealed plans to buy six lithium mines in Africa, impacting the demand outlook for lithium.

In late June, Pilbara provided a positive June quarter production update. The company advised of an estimated 54% increase in spodumene concentrate production compared to the March quarter.

Pilbara Minerals share price recap

The Pilbara Minerals share price has soared nearly 56% in the past year, but it has shed 29% year to date. In the past month, Pilbara shares have lost nearly 8%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has lost nearly 10% in a year.

In the past five years, Pilbara shares have returned 465% to investors.

Motley Fool contributor Monica O'Shea 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 Scott Phillips.

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