Ongoing Lithium volatility amid restarts, though too early on Australian equities despite pullback; Preview Jun-Q/FY27; Sell PLS

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Ongoing Lithium volatility amid restarts, though too early on Australian equities despite pullback; Preview Jun-Q/FY27; Sell PLS

Goldman Sachs Australia Metals & Mining

June Q production preview

We update our estimates/PTs on a MtM of commodity prices/FX (see Exhibit 24), and

preview the June-Q, where we expect focus to be on FY27 guidance, capex and

expansion projects, alongside realised pricing given ongoing lithium price volatility. We

summarise our estimates vs. consensus in Exhibit 3.

n PLS (Sell): We continue to see PLS FY26 production just above the top end of

guidance, with some catch up on capex in the 4Q. Into FY27, we see production

lifting to ~1.1Mt (~0.95Mt SC6) with the ramp up of Ngangaju, though with the

smaller higher cost plant lifting unit costs up ~5% to ~A$580/t despite the higher

volume. We see capex as the main gap vs. Visible Alpha Consensus Data in FY27

(<A$500mn), where we factor in Pilgangoora capex of >A$800mn (including

~A$175mn of P2000 post-FID spending in the 2H; or ~A$625mn pre-FID which is

what will likely be guided). We also see total P2000 capex of >A$2bn limiting FCF

over FY27-29E, where we expect this sees a more modest return to dividends in

August at the bottom end of the payout range.

o We note the Jun-24 P2000 PFS capex estimate of A$1.2bn did not include

any mining or supporting infrastructure spend (-20/+30% accuracy

including contingency, with some modest tailings spend). We highlight that

on our recent analysis of mill project capex in the gold sector, capital

intensity has roughly doubled over the past ~3 years, where an FID in early

CY27 would see P2000 be one of ~20 mill projects in execution in the WA

resources sector (from <10 concurrent projects in CY25), adding further risk

to capex/timelines.