In a first-of-its-kind move for Pilbara Minerals, the company has entered into a sales arrangement for a 15,000t cargo of spodumene concentrate for delivery in the 2023 March Quarter, utilising a new commercial model based on lithium hydroxide tolling.
Pilbara Minerals selected this model for the cargo having explored various other sales pathways including short-dated off-take and spot sales through the BMX platform.
The sale, which was made to a chemical converter, was structured to be based on a tolling arrangement under which Pilbara Minerals will receive the value of lithium hydroxide price for the product sold, less an agreed amount for conversion and other costs.
This is the first time Pilbara Minerals has utilised such a pricing methodology, which has the potential to be highly favourable to the company and opens the door for future tolling arrangements.
Under the terms of the agreement, based on the current pricing for lithium hydroxide, pricing for the cargo would be aligned with previous spot sales including those achieved on the BMX platform.
The actual price received for this cargo will be calculated, however, using future lithium hydroxide pricing at the time of conversion to lithium hydroxide.
Pilbara Minerals had intended to sell a cargo of spodumene concentrate via a BMX auction. However, it opted not to proceed with the auction after receiving the strong offer from the chemical converter.
As part of its sales strategy, the company will continue to run parallel processes exploring various avenues to sell its unallocated tonnes, which includes the BMX platform, spot sales and other commercial opportunities which maximise value creation.
In doing so, the company will continue to provide updates on its sales and production in accordance with its disclosure obligations, including in respect of overall pricing outcomes achieved for product sold each quarter as part of its Quarterly Activities Report.
