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Highlights
- Pilbara Minerals received AU$250 million in funding from the Australian government.
- The 10-year debt facility will push the expansion of Pilbara’s Pilgangoora project.
- Following the news, shares of Pilbara were trading in the green, up 2.631% at 2:16 PM AEDT.
Shares of the Australian lithium producer Pilbara Minerals Limited (ASX:PLS) were surging 2.631% higher in the afternoon trade on the ASX. Pilbara’s shares were trading at AU$5.460 apiece at 2:16 PM AEDT, 11 November 2022.
This increase in Pilbara’s share price appears to reflect the company’s recent announcement on receiving AU$250 million in funding from the Australian government, as per the recent ASX filing.
Meanwhile, both ASX 200 Materials and S&P/ASX 200 Metal and Mining sectors were booming today with gains of 559.7 points at 16,914.5 points and 194 points at 5,721.1 points, respectively (as of 2:37 PM AEDT).
What is Pilbara expecting from the funding?
On 11 November 2022, the Australian mining behemoth declared that it had secured a 10-year debt facility from the Australian government to finance the growth of its Pilgangoora project in Western Australia's Pilbara region.
The government has committed to fund Pilbara through the Export Finance Australia (EMF) and Northern Australia Infrastructure Facility (NAIF) agencies. While EFA has given the go-ahead to pay AU$125 million, NAIF will provide the remaining AU$125 million subject to the NAIF board's investment decision.
According to the ASX release, the government intends to encourage Australian businesses through this 10-year debt facility so they can contribute significantly to the supply of critical minerals to the rest of the world. The goal of this funding is to hasten the global shift to renewable energy sources.
Talking about this EFA and NAIF facility, Dale Henderson, managing director and CEO of Pilbara Minerals, said:
Image Source: © 2022 Kalkine Media ®
Data Source: Company announcement dated 11 November 2022
How is Pilbara planning to use the debt facility?
Through this support from the government, Pilbara has planned to accelerate the expansion of the P680 project to the Pilgan plant. This will push the production of spodumene concentrate by an additional 100,000tpa; the anticipated capital cost for this expansion is about AU$103 million.
Apart from this, Pilbara will establish a 5Mtpa crushing and ore sorting facility to take the capacity of its Pilgangoora project up to 1Mtpa. As per the ASX report, this expansion will cost around AU$194 million.
This 10-year debt facility's confirmation is contingent on the completion of financing documents and fulfilment of prerequisite requirements for financial closing and drawdown, as stated in the ASX filing.
