Pilbara Minerals share price races higher on 'important milestone'

Things are ramping up in the Pilbara for this lithium giant.

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Key points

  • Pilbara Minerals has made a milestone announcement this morning
  • The lithium giant's board has approved a major investment in the Pilgan Plant
  • This will ultimately sees spodumene concentrate production increase to 1 million tonnes per annum in the coming years

The Pilbara Minerals Ltd (ASX: PLS) share price is pushing higher again on Wednesday.

In morning trade, the lithium giant's shares are up 3.5% to $3.99.

Why is the Pilbara Minerals share price pushing higher?

Investors have been bidding the Pilbara Minerals share price higher after the company made a major announcement.

According to the release, the company's board has approved the capital investment for the P1000 Project.

This investment in the Pilgan Plant and its supporting infrastructure will deliver a ~320,000 tonnes per annum increase in nameplate spodumene concentrate production capacity.

Once fully commissioned and ramped up in the September quarter of 2025, this will increase the annual production run rate from the Pilgangoora Project to approximately 1 million dry metric tonnes (dmt).

Management notes that this supports its long-term growth strategy to increase production capacity at the Pilgangoora Project in line with market demand.

What will this cost?

The P1000 Project's estimated capital cost is $560 million across the Pilgan concentrator and supporting infrastructure. This includes the previously announced $38 million of pre-final investment decision capital.

Pleasingly, this investment is expected to deliver attractive returns to the company. In fact, management estimates that it has a forecast payback from incremental cashflows relative to P680 within 12 months.

Furthermore, the capital investment for the P1000 Project is expected to be funded from a combination of existing cash and ongoing cashflow from operations.

Pilbara Minerals' managing director and CEO, Dale Henderson, commented:

The P1000 Project expansion is an important milestone for Pilbara Minerals. This expansion step facilitates a major lift in production capacity, capitalising on the substantial scale of this Tier-1 hard rock asset which underpins a ~25 year mine life at this new expanded production level.

This reinforces the exceptional scale and quality of our Pilgangoora Project, which is one of the few hard rock lithium production operations globally that has both the resource size and an existing operating platform to enable a rapid scale-up of production to capitalise on the growing demand for lithium products.

Henderson also revealed that its future spodumene production is already in demand with end users. He adds:

The Company has received significant inbound interest for further offtake and downstream partnerships, and we have begun exploring options to maximise the value of the additional product from P1000 including new offtakes and downstream partnerships to extract greater value along the battery minerals supply chain.

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 Scott Phillips.

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