Junior lithium mining company Pilbara Minerals (OTC:$PILBF) has just recently announced that it has completely all that is necessary for its AUD$133 million bond issue — making up more half the funding — for its $234 million Pilgangoora project. The coupon rate on the company’s bond issue is around 12%, which reflects the company’s risk in conducting a greenfield project while having no significant assets currently in production. However, with all the investors vying for lithium investments these days, a bond issue made sense for the company.
Just last month, Ken Brinsden, Pilbara Minerals’ managing director, commented on the company’s decision to make use of the bond market to finance the company’s Pilgangoora project, saying that it was the most logical option when compared with conventional bank finance.
Along with the bond issue, the Australian-based startup miner will be using about AUD$65 million in cash reserves and AUD$41 million from its offtake partners in China to secure full funding for the Pilgangoora project. Pilbara Minerals’ offtake partners are General Lithium (traded privately) and Jiangxi Ganfeng Lithium (SHE:$002460) — 300,000 tonnes of concentrate production will be given to the partners from the Pilgangoora after it begins production.
A small equity raising is expected to be announced soon, along with a resource upgrade that can help with a feasibility study. The feasibility study can help double the processing capacity in the Pilgangoora project.
Currently, the company’s biggest competitor is Altura Mining (ASX:$AJM). The two companies are fighting to become Western Australia’s next major lithium producer.
Pilbara Minerals had a market capitalisation of around AUD$492 million after its shares ended up with a price of AUD0.38 after closing last Friday, June 9th.
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