REAL-TIME GLOBAL RESEARCH
PLS Group: P2000 approved – key metrics largely in line with market expectations; retain Overweight
Key takeaways
- P2000 approved – key metrics largely in line with market expectations; retain Overweight PLS today approved the P2000 expansion, doubling Pilgangoora’s spodumene concentrate production to 2Mtpa through the construction o
- Key takeaways: 1) Growth capex ($2.6bn), opex (A$620/t FOB 2026 Real), first production (SepQ29), production (2Mtpa at SC5.2) were all in line with JPMe.
- Sustaining capex (~$230mpa) was materially below JPMe.
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Research evidence excerpt
P2000 approved – key metrics largely in line with market expectations; retain Overweight PLS today approved the P2000 expansion, doubling Pilgangoora’s spodumene concentrate production to 2Mtpa through the construction of the new Jimmagunya processing facility. Key takeaways: 1) Growth capex ($2.6bn), opex (A$620/t FOB 2026 Real), first production (SepQ29), production (2Mtpa at SC5.2) were all in line with JPMe. Sustaining capex (~$230mpa) was materially below JPMe. 2) Underground optionality at Pilgangoora could add incremental production (~200ktpa) and life (+5yrs); PLS is currently conducting a further feasibility study to assess this development – timeline not provided. 3) The higher-cost Ngungaju plant will be idled and used as swing capacity, should market conditions be supportive. PLS has also updated reserves and resources with the release, articulating a 20yr mine life for the open pit. The release has largely aligned with our previous forecasts with regards long-term operating assumptions. However, it now looks as though a transition to underground will be required earlier than our previous expectations, and we reduce our open pit life ~10yr to align with guidance, partly offset by lower long-run capex. Despite an 11% drop in our NPV to $5.83ps, the stock trades on a P/NPV of 0.5x, and we maintain our Overweight rating. We note improved lithium price sentiment will be required for a re-rating where fears of a demand slowdown, and negative price momentum are outweighing current strong market dynamics.
P2000 capex in line with JPMe. Overall project capex $2.6bn ($1.9bn + $650m road/permanent village/mine services) was in line with JPMe at $2.6bn.
We note on the call, management said there were no contingencies baked into this estimate. Sustaining capex is guided at $220-$240mpa and is lower than our prior estimate of ~$500mpa. First production in SepQ29 was in line (6-mth ramp up vs JPMe 9-mth) whilst steady-state output average of 1.97Mt SC5.2
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