Pilbara Minerals (ASX:PLS) management said the December quarter marked an “inflection” as lithium market conditions improved, with higher realized pricing translating directly into stronger cash generation and a larger cash balance, while the company maintained its operating footprint and reaffirmed FY26 guidance.
Managing Director and CEO Dale Henderson said the lithium market has been in what many have described as a “lithium winter” for the past 18 months, characterized by oversupply and pricing pressure. He noted that since the trough, spodumene pricing has “more than tripled,” and that the company’s December quarter results demonstrated operating leverage as pricing improved.
Pricing recovery drives cash generation
On operating results, Henderson said sales volumes were 232,000 tonnes, up 8% quarter-on-quarter. Revenue increased 49% to AUD 373 million, which management attributed to higher pricing and higher sales volumes. Interim CFO Flavio Garofalo said improved pricing and ongoing cost discipline drove the cash margin increase, reinforcing the company’s strategy of protecting the business during the downturn so it could benefit from operational leverage as markets recovered.
Garofalo said unit FOB operating costs increased to AUD 585 per tonne in the December quarter, primarily due to lower production volumes and an inventory drawdown, as sales exceeded production during the period. He said the company’s cost program continued to deliver “sustained cost discipline across the business.”
Operations: mining transition, contact ore, and crushing wear
Chief Operating Officer Brett McFadgin said the quarter was “solid,” including progress in transitioning to an owner-operator mining model supported by additional haul truck deliveries. Total material mined increased to 8.1 million tonnes, while ore mined decreased to 1.5 million tonnes as planned, reflecting a deliberate focus on waste stripping to position the operation for future production and improved sequencing.
Processing produced 208,000 tonnes, in line with plan, and lithium recovery of approximately 76% “remained robust,” which McFadgin attributed to increasing contact ore and maximizing ore sorter performance. However, he said increased throughput contributed to elevated wear rates at the front end of the crushing circuit, affecting average runtime. To mitigate this, the company mobilized additional crushing capacity as contingency to maintain crushed ore buffers and support plant utilization.
Sales exceeded production, drawing down inventory to meet customer demand and support improved cash generation, management said.
Safety: TRIFR rises, targeted response underway
McFadgin said safety remained the company’s first priority, but the quarter included two injuries and total recordable injury frequency rate (TRIFR) increased to 3.79 from 3.08. He called the outcome “not acceptable” and said the company implemented targeted safety campaigns and strengthened frontline leadership engagement.
He added that quality safety interactions increased to 3.8 per 1,000 hours worked, above a target of 1.6, with the focus on embedding consistent behaviors and controls to “sustainably reduce risk.”
Chemicals and downstream: POSCO JV idled, midstream demo plant built
Henderson said the company’s chemicals initiatives are being progressed in a “staged and disciplined way” to preserve optionality. Construction of the midstream demonstration plant was completed in December, with an update on commissioning plans expected in coming months.
He also discussed the company’s joint venture with POSCO in South Korea (PPLS), saying the Korean battery supply chain faced “significant disruption” following recent U.S. policy changes, resulting in order cancellations and deferrals from multiple certified customers. In response, the JV strategically idled the facility to preserve capital, while Pilbara Minerals reallocated spodumene volumes to alternate customers at prevailing market prices.
During the quarter, Pilbara Minerals contributed AUD 38 million to maintain its 18% interest in the JV. Henderson said no further equity contributions are expected in FY26 and that the company retained call and put options that provide flexibility to maintain its current interest, increase its stake to 30%, or exit over time.
Henderson said a study with Ganfeng for a potential downstream partnership is continuing, with the “sunset date” extended to September 27 to allow additional time for site evaluation and market outlook clarity. On a webcast question about a recent Ganfeng share sale, Henderson said he spoke with Ganfeng, which described it as cash management and that he had “no concerns” about the sale or the broader relationship.
Growth options: Ngungaju restart under review; updates expected in March quarter
As prices improved, Henderson said the company’s focus was on “sequencing growth through the cycle rather than accelerating investment,” with capital discipline unchanged. He described the Ngungaju plant as short-term cycle optionality, with the company evaluating a potential restart of about 200,000 tonnes per annum. Early works have been completed and customer engagement is underway, with the board expected to consider the restart during the March quarter. No decision has been made.
In the Q&A, Henderson said the company is considering price floors in offtake discussions for Ngungaju, but stated that a floor price would not necessarily be a “deal breaker” for a restart decision. He also said Ngungaju remains higher cost than the Pilgangoora processing plant, and that the sustainability of operating Ngungaju is a function of market pricing, which he cautioned can be volatile and sentiment-driven.
Henderson said the company continues feasibility work on the larger P2000 option, with study timing under review and an update expected in the March quarter. He also said work continues at the Colina project in Brazil, including drilling and study optimization, with study timing similarly under review and updates expected in the March quarter. In response to a question, Henderson said the comments about Australia were “about an organic growth profile at Pilgangoora.”
On shareholder returns, Henderson said the company’s capital management framework contemplates dividends based on certain thresholds, and that distribution decisions would be made in accordance with that framework if market conditions continue to perform strongly, with the matter for the board to review later in the financial year.
Looking ahead, Henderson said the company believes lithium inventories tightened following an extended period of destocking, citing Chinese domestic carbonate inventories ending December at around two to three weeks of consumption. He also cited EV sales and accelerating energy storage demand as drivers of the pricing recovery, while emphasizing that volatility remains a defining feature of the sector and that growth investments would be evaluated for resilience across a range of market conditions.
About Pilbara Minerals (ASX:PLS)
Pilbara Minerals Limited engages in the exploration, development, and operation of mineral resources in Australia. The company primarily explores for lithium. It primarily holds a 100% interest in the Pilgangoora project located in the Pilbara region of Western Australia. The company was incorporated in 2005 and is based in West Perth, Australia.
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