Pilbara Minerals share price tumbles on quarterly update

How did the lithium giant perform during the third quarter?

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The Pilbara Minerals Ltd (ASX: PLS) share price is under pressure on Friday.

In early trade, the lithium miner's shares are down 2% to $3.85.

This follows the release of the company's eagerly anticipated third-quarter update.

Pilbara Minerals share price falls on quarterly update

For the three months ended 31 March, Pilbara Minerals performed positively in a very tough environment.

According to the release, the company delivered a 2% quarter on quarter increase in spodumene production to 179kt and a 3% lift in spodumene sales to 165.1kt.

As was expected, heading in the other direction was the price it received for its lithium. Pilbara Minerals achieved a realised average price of US$804 a tonne. This is down a sizeable 28% from the second quarter.

The company's costs were a mixed bag with unit operation costs excluding freight and royalties (FOB) lifting 7% to US$444 a tonne and unit operating costs (CIF) falling 2% to US$519 a tonne.

Pilbara Minerals ended the period with a cash balance of A$1.8 billion, which is down 17% from the end of December.

How does this compare to expectations?

This result appears to have fallen short of expectations on a number of key metrics.

For example, the consensus estimate was for production of 177,000 tonnes of spodumene and shipments of 180,000 tonnes.

Analysts were expecting this to be achieved with an average realised spodumene price of US$891 per tonne and cash costs of $666 per tonne for the quarter.

Production record in March

One positive that might go down well with analysts is its work on growing production. Management advised that in the final month of the quarter, it achieved record output with low costs:

March set a new monthly production record with over 80k dmt produced at a unit operating cost (FOB) of less than $625/dmt. This peak monthly performance was underpinned by the continuous operation of P680 at its expanded production capacity with no shutdowns, higher ore lithium head grade and higher lithium recoveries due to operational improvements including the mobile ore sorters.

Management also spoke briefly about lithium demand and pricing. It said:

The estimated realised sales price for spodumene concentrate in the March Quarter was US$804/dmt3 (CIF China and based on ~SC5.3% product grade) down 28% on the prior Quarter. On an SC6.0 equivalent basis, the average estimated sales price for spodumene concentrate was US$927/dmt (CIF China). During the Quarter, average pricing was lowest in January and increased month on month in February and March. The pre-auction sale of 5k dmt at US$1,106/dmt SC5.5 in March reflects the ongoing demand and positive pricing for unallocated production volume.

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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