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Pilbara Minerals Ord Shs T.PLS


Primary Symbol: PILBF

Pilbara Minerals Limited is an Australia-based lithium company. The Company is primarily engaged in the exploration, development, and mining of minerals in Australia. Its 100% owned Pilgangoora hard-rock lithium operation is located approximately 120 kilometers (kms) from Port Hedland in Western Australia’s resource-rich Pilbara region. The operation consists of two processing plants: the Pilgan Plant, located on the northern side of the Pilgangoora area and produces spodumene and tantalite concentrates, and the Ngungaju Plant is located to the south produces spodumene concentrate. It owns 70% of the Mt Francisco project, which is located 50 km south-west of the Pilgangoora Project and hosts the large occurrence of outcropping pegmatites located nearby to Port Hedland. It is also pursuing a proposed downstream joint venture (JV) for the development of an approximately 43,000 tons per annum lithium carbonate equivalent (LCE) lithium chemical conversion facility in South Korea.


OTCPK:PILBF - Post by User

Post by seatleslimon Nov 11, 2014 11:11am
148 Views
Post# 23117109

on the question of value

on the question of valueThere was an interesting exchange on the US Concrete call where an analyst is asking about the vertical integration strategy, since USCR is trying to buy aggregate sources. The analyst pointed out that the multiples are just to high. USCR, which seems like a very well run outfit, pointed out that CX, MLM, VMC, et al, were focused on long-lived reserves and particular attributes such reserves brought to their respective long-term cost structures/business models, etc. If you listen to those companies' more general presentation on the aggregate business, they are all effusive about the long-term value of aggregate reserves with respect to local supplies. Even in more pedestrian markets, you simply cannot build quarries with relevant proximity (look at the crazy deal the billionaire tried to pull off in Ontario). That is why they are paying double digit multiples on editda when they can secure a long-life quarry. You've got a resource that at a minimum will be price-indexed to inflation for years, but more so in truly constrained large markets. Incidentally, USCR replied that the analyst was right -- they cannot compete for those deals and that they were limited to "tuck-in" deals with 5 or 6-year mine lives (makes perfect sense). Not that I think Wilson should become a tout, but I think he sometimes misses opportunities to convey what things are going to look like a few years out (probably takes it for granted). But when he discloses that a major San Jose quarry has been shut down permanently, this is a major deal even if it doesn't immediately impact pricing -- there are still quarries out there with 3,4,5-years mine lives selling what is a commodity with out acute shortage at this moment. Let's see what those depletion rates look like with volumes and prices up 15 to 20%. The short-life supply source is worth the NPV discounted back a few years -- and nobody can tell you exactly what pricing looks like over the few short years left. Polaris will never (for all intents and purposes) run out of money or sand and gravel. They will be here for the acute shortage. Give the date, and I'll give you a better target price. But SF, LA, and what ever else they can add are awfully sweet markets to own when you have the best material and longest life. By the way, the San Diego piece pretty much confirms that there is no high-spec gravel source in Mexico.
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