Australia’s biggest pure-play lithium producer, Pilbara Minerals, has opted to withhold its interim dividend as the company moves to preserve its balance sheet strength in an environment of lower spodumene prices.
In addition to pausing the dividend payment, Pilbara has also lowered its 2023 capital expenditure (capex) guidance to between A$820-million and A$875-million, which is a reduction of A$100-million at the top-end of the original guidance and A$55-million at the bottom end.
The combination of capex reductions and withholding the dividend payment would result in a A$200-million cash saving to what would have been spent otherwise, CFO Luke Bortoli said on Thursday.
The group’s strategy remained focused on the P680 and P1000 expansions, Bortoli and CEO Dale Henderson affirmed in a conference call, stating that the expansions supported a lower unit cost.
During the first half of 2024, Pilbara Minerals successfully delivered the P680 primary rejection facility, providing an expanded production base. This production base would be further extended on completion of the next leg of expansion care of the P1000 project, which Henderson reported was tracking well.
The P680 project will expand production by up to 100 000 t/y at the Pilgan plant, increasing the Pilgangoora Operations nameplate production capacity up to 640 000 t/y to 680 000 t/y of spodumene concentrate.
“The capacity increase will provide scale cost benefits and firmly position the company as a major low-cost lithium materials supplier globally,” he said.
Turning to financials, Henderson reported a “very healthy” earnings before interest, taxes, depreciation and amortisation (Ebitda) margin of 55%, despite prices being softer.
Driven by a 67% decrease in the average estimated realised price, Pilbara Minerals reported 65% revenue reduction to A$757-million. Ebitda fell by 77% to A$415-million.