Pilbara Minerals (PLS.ASX) 15 September 2014 Producing Copper Documents/PLS... · PLS has an...

Pilbara Minerals (PLS.ASX) 15 September 2014

Producing cash by end 2014Tabba Tabba : high grade tantalite, 2014 Pilgangoora : spodumene and tantalite

See Page 29 for Disclaimer and Disclosures 15 September 2014

Recommendation ■ Tabba Tabba is small high grade deposit with out-cropping mineralisaiton. The processing plant is being constructed and PLS is fully funded to ship first product before the end of 2014.

■ PLS has an agreement to supply Global Advanced Metals with concentrate for 5 years, at a secured price.

■ Pilgangoora is a much larger deposit with significant spodumene, which is now in demand for ceramics and cook-ware. Beer & Co projects expenditure of about $23m to bring it into production by mid 2017.

BUY; High Risk Price

2.5c Valuation

10c

Snapshot Market Cap $14.9m

Shares on Issue 594.1m

Cash on hand (pro‐forma, 14

July 2014) $5.0m

52 Week High 2.8c

52 Week Low 0.8cc

1 month / 6 month VWAP 2.4c /2.2c

PLS Share price v. volume

$ 0

$ 20,000

$ 40,000

$ 60,000

$ 80,000

$ 100,000

$ 120,000

$ 140,000

$ 160,000

0.0 c

0.5 c

1.0 c

1.5 c

2.0 c

2.5 c

3.0 c

3.5 c

4.0 c

9‐Jul‐12

27‐Jul‐12

16‐Aug‐12

5‐Sep‐12

25‐Sep‐12

15‐Oct‐12

2‐Nov‐12

22‐Nov‐12

12‐Dec‐12

21‐Jan‐13

8‐Feb‐13

28‐Feb‐13

20‐M

ar‐13

9‐Apr‐13

29‐Apr‐13

17‐M

ay‐13

6‐Jun‐13

26‐Jun‐13

16‐Jul‐13

5‐Aug‐13

23‐Aug‐13

12‐Sep‐13

2‐Oct‐13

22‐Oct‐13

11‐Nov‐13

29‐Nov‐13

19‐Dec‐13

8‐Jan‐14

28‐Jan‐14

17‐Feb‐14

7‐M

ar‐14

27‐M

ar‐14

16‐Apr‐14

6‐M

ay‐14

26‐M

ay‐14

13‐Jun‐14

3‐Jul‐14

23‐Jul‐14

12‐Aug‐14

1‐Sep‐14

PLS value traded

Pilbara Minerals share price

Pilbara Minerals acquired a 50% stake in the Tabba Tabba project in October 2013. Its partner is the privately owned metal‐urgical engineering company Nagrom.

PLS published a feasibility study on Tabba Tabba i February and has since raised equity to bring it into production before the end of 2014.

In May 2014, PLS announced the acquisition of 100% of Pilgangoora, 55km from Tabba Tabba in the the Pilbara region.

Author : Pieter Bruinstroop [email protected]

Tabba Tabba – high grade tantalite

Tabba Tabba was mined artisanally in the 1950s and earlier. It was previously owned by GAM which was seeking high grade material to feed its plant at Wodgina. PLS has been able to quote a Measured & Indicated Resource estimate based on GAM’s work, of 155kt grading 1330ppm.

Processing by Nagrom, a world leader

PLS was invited to become a 50% partner in Tabba Tabba by Nagrom, which is a privately owned metallurgical engineering company that has developed and operated many of the plants used to produce tantalite as well as spodumene, significantly reducing process risk.

Firm sales contract with Global Advanced Metals (GAM)

GAM supplies high performance tantalum metallurgical and powder products to the electronics, aerospace, automotive, chemical manufacturing and other industries. Tabba Tabba has executed a 5 year sales agreement at a fixed price, subject to CPI adjustment.

Tabba Tabba is developing a plant to process 120kt/yr of ore. While this is a small volume, the present resources are less than 2 years of operation. There is significant further mineralisaiton, though we do not know the grade.

Beer & Co’s risked valuation is 10c.

In our analysis, Beer & Co estimates that the current market value of PLS is their 50% share of Tabba Tabba resources.

Beer & Co sees significant value in the Pilgangoora resources as well as the potential for extensions to Tabba Tabba.

Our risked valuation is 10c and Beer & Co imitates research with a BUY, High Risk recommendation.

This report was produced by Beer & Co Research, an independent research and advisory firm. It is intended for wholesale investors ONLY.

If you do not wish to receive our research, please email to [email protected] with “unsubscribe”. If you wish to receive, free of charge, Beer & Co research, please register at http://beerandco.com.au/all‐research/

Pilbara Minerals (PLS)


PLS : Tantalite and Spodumene

Tabba Tabba ‐ Tantalite

Tabba Tabba is in the Pilbara region, about 70km by road from Port Hedland.

On 24 October 2013, PLS announced that it was entering into a n Joint Venture for a 50% interest in the Tabba Tabba tantalite project.

On 18 November 2013, PLS announced a maiden Resource estimate, of 213kt of ore, grading 0.122% Ta2O5, for 572,200lb of contained Ta2O5, as shown in Figure 1.

Figure 1 : Tabba Tabba Resource estimate

Ta2O5 grade contained Ta2O5

Measured 30.1 kt 1,610 ppm 106,960 lb

Indicated 124.4 kt 1,260 ppm 346,040 lb

Inferred 58.4 kt 925 ppm 119,200 lb

TOTAL 212.9 kt 1,220 ppm 572,200 lb Source : PLS ASX announcement, 18 November 2013, Beer & Co

The resource estimate was based of drilling by the vendor, Global Advanced Metals (GAM), and applied a top cut of 5,500ppm, with a cut‐off grade of 400ppm.

On 19 February 2014, PLS announced the results of their Feasibility Study on Tabba Tabba. Figure 2 shows the reported Reserve, of 378,000lb of contained Ta2O5 from 133kt of ore grading 1,290ppm. The Reserve estimate also included Niobium.

The pit design from the Reserve included other material so that the feasibility study was based on processing 162kt of ore.

Figure 2 : Tabba Tabba Reserves and mining inventory

Ta2O5 grade contained Ta2O5 Nb2O5 grade contained Nb2O5

Proved 32.0 kt 1,420 ppm 100,178 lb 294 ppm 20,741 lb

Probable 101.0 kt 1,249 ppm 278,111 lb 292 ppm 65,019 lb

Total Reserves 133.0 kt 1,290 ppm 378,289 lb 292 ppm 85,760 lb

Pit Design 162.2 kt 1,240 ppm 443,411 lb

Source : PLS ASX announcement, 19 February 2014, Beer & Co

Other details from the feasibility study included :

Plant capital cost estimated to be $3.9m, of which $1.5m had already been spent, plus a further $1.53m in mine development;

Processing rate of 118kt/yr, from a single shift, of 10 hours an day, 5 days a week;

Life of mine (LoM) ore mined is 162kt, plus 1,672kt of waste, for a strip ratio of 10.3;



Workforce of 18 and operating costs of $34.74/lb

While recovery of 88% had been achieved in testwork, 82% was assumed in the feasibility study; and

Expected LoM revenue of $30.2m from production of 365,000lb of Ta2O5 in concentrate.

PLS also announced an agreement to supply GAM with Ta2O5 in concentrate for 5 years, compared with the feasibility study mine life of 19 months.

Figure 3 shows the areas of mineralisation included in the Resource estimate. It shows an area that is not classified.

The tantalite included in the Resource estimate has been located by out‐copping pegmatites. Figure 4 shows extensive out‐cropping pegmatites, as well as an area that could host pegmatites under cover.

Figure 3 : Resources v. pit design Figure 4 : extensive out‐crops of pegmatite

Source : PLS ASX announcement, 19 February 2014 Source : PLS Resources estimate

In this analysis, Beer & Co has assumed the mining inventory shown in Figure 5.

Figure 5 : Assumed mining inventory Ta2O5 grade contained Ta2O5

Inferred 51 kt 1,151 ppm 129k lb

near Tabba Tabba 50 kt 900 ppm 99k lb

Along strike 500 kt 750 ppm 827k lb

Strelly, high grade 500 kt 600 ppm 661k lb

Strelly, balance 900 kt 450 ppm 892k lb

TOTAL 2,000 kt 592 ppm 2,608k lb Source : Beer & Co estimates



Figure 6 shows the operational outcomes projected by Beer & Co. It shows that we projected that volumes processed will rise to compensate for lower grades over time.

Figure 6 : Beer & Co’s projected operational outcomes for Tabba Tabba

2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23

Ore mined 65 kt 120 kt 120 kt 240 kt 240 kt 240 kt 240 kt 480 kt 418 kt

waste : ore 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1

Waste moved 664 kt 1,236 kt 1,236 kt 2,472 kt 2,472 kt 2,472 kt 2,472 kt 4,944 kt 4,302 kt

Ore Processed 65 kt 120 kt 120 kt 240 kt 240 kt 240 kt 240 kt 480 kt 418 kt

grade 1,240 ppm 1,224 ppm 908 ppm 750 ppm 737 ppm 600 ppm 599 ppm 450 ppm 450 ppm

Recovery 74 % 81 % 82 % 82 % 82 % 82 % 82 % 82 % 82 %

Ta2O5 recovered 130,212 lb 262,907 lb 196,895 lb 325,402 lb 319,554 lb 260,322 lb 259,788 lb 390,482 lb 339,747 lb

Source : Beer & Co estimates

Figure 7 shows the detail of Beer & Co’s projected costs over time. It shows that increasing volume reduces costs in terms of AUD/t of ore, the costs in terms AUD/lb of product rise due to the lower grades. Figure 8 shows Beer & Co’s projected financial outcomes.

Figure 7 : Beer & Co’s projected costs for Tabba Tabba

2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23

Mining and Waste $ 2.8m $ 5.1m $ 5.1m $ 10.2m $ 10.3m $ 10.4m $ 10.4m $ 19.5m $ 17.1m

AUD /t material $ 3.9/t $ 3.7/t $ 3.7/t $ 3.8/t $ 3.8/t $ 3.8/t $ 3.8/t $ 3.6/t $ 3.6/t

AUD/t ore $ 44/t $ 42/t $ 42/t $ 43/t $ 43/t $ 43/t $ 43/t $ 41/t $ 41/t

Processing $ 1.1m $ 2.0m $ 2.0m $ 3.8m $ 3.8m $ 3.8m $ 3.8m $ 7.6m $ 6.6m


Admin & Obverhead $ 1.4m $ 1.9m $ 1.9m $ 3.1m $ 3.1m $ 3.1m $ 3.1m $ 4.0m $ 3.7m


TOTAL $ 82/t $ 75/t $ 75/t $ 71/t $ 72/t $ 72/t $ 72/t $ 65/t $ 66/t

$ 40.8 /lb $ 34.1 /lb $ 45.6 /lb $ 52.5 /lb $ 53.7 /lb $ 66.5 /lb $ 66.6 /lb $ 79.4 /lb $ 80.8 /lb


Figure 8 : Beer & Co’s projected financial outcomes for Tabba Tabba

AUD m 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23

Ta2O5 1,302k lb 2,629k lb 1,969k lb 3,254k lb 3,196k lb 2,603k lb 2,598k lb 3,905k lb 3,397k lb

Net Revenue 10.7 21.7 16.2 26.8 26.4 21.5 21.4 32.2 28.0

Cash Costs 5.3 9.0 9.0 17.1 17.2 17.3 17.3 31.0 27.5

Royalties 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Dep'cn & Amort'sn 2.2 3.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6

E B I T 3.2 9.0 6.7 9.1 8.6 3.6 3.5 0.6 (0.0)

Project Cap.Ex 2.9

Sus. Cap. Ex 0.3 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.0

Un‐geared Net Cashflow 1.3 9.4 4.7 6.4 6.0 2.5 2.5 0.4 0.6




Pilgangoora ‐ tantalitte and spodumene

On 2 April 2014, PLS announced that it had reached agreement to acquire 100% of the Pilgangoora project, 55km S‐SW of Tabba Tabba.

On 30 May, PLS announced that it had completed the acquisition of Pilgangoora and also announced an exploration target of 15 – 25 Mt at grades of 1.2% ‐ 1.5% Li2O and 200ppm – 300ppm Ta2O5, as shown in Figure 10. This is in addition to the Inferred Resource announced by PLS on 28 July, shown in Figure 9.

Figure 9 : Pilgangoora Inferred Resource

Ta2O5 grade contained Ta2O5 Li2O grade Contained Li2O

10,400 kt 240 ppm 5,503k lb

8,600 kt 1.01 % 87 ktSource : PLS ASX Announcement, 28 July 2014

Figure 10 : Pilgangoora Exploration Target

Nothern area 5 Mt ‐ 10 Mt 1.2 % ‐ 1.5 % 200 ppm ‐ 300 ppm

Central & Southern 10 Mt ‐ 15 Mt 1.2 % ‐ 1.5 % 200 ppm ‐ 300 ppm

TOTAL 15 Mt ‐ 25 Mt 1.2 % ‐ 1.5 % 200 ppm ‐ 300 ppm

Li2O grade Ta2O5 grade

Source : PLS ASX Announcement, 30 May 2014

Beer & Co estimated a capital cost to bring Pilgangoora into production of about $23m, of which $3m is spent on feasibility studies and $20m on project capital.

Our estimate of project capital is based on Tabba Tabba, which costs $5,6m to bring into production for 120kt/yr. We estimate that this can be lifted to 500kt/yr for capital of about $3m.

The processing route is similar to that for Tabba Tabba, but the foist stage is to float off the spodumene and then gravity separation of the float tails to produce a tantalite concentrate.

As shown in Figure 11, Beer & Co assumes that Pilgangoora will operate at the rate of 1.0Mt/yr to produce 430,000lb/yr of Ta2O5 plus 18M/lb/yr of spodumene.

Figure 11 : Beer & Co’s projections for the operations at Pilgangoora

2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23 2023‐24 2024‐25 2025‐26 2026‐27 2027‐28

Ore mined 675 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt

waste : ore 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1

Waste moved 6,750 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt

Ore Processed 675 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt

Ta2O5 grade 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm

Recovery 73 % 81 % 82 % 82 % 82 % 82 % 82 % 82 % 82 % 82 % 82 %

Ta2O5 recovered 261k lb 430k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb

Li2O grade 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.07 %

Recovery 71 % 79 % 80 % 80 % 80 % 80 % 80 % 80 % 80 % 80 % 80 %

Li2O recovered 10.7 M lb 17.7 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 18.9 M lb




Figure 12 shows the detail of our cost estimates. These are lower than for Tabba Tabba, largely due to the higher volumes. The processing cost is higher due to the float circuit.

Figure 12 : Beer & Co’s estimated costs for Pilgangoora

2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23 2023‐24 2024‐25 2025‐26 2026‐27 2027‐28

Waste $ 17m $ 25m $ 26m $ 27m $ 28m $ 28m $ 28m $ 28m $ 28m $ 28m $ 28m

AUD /t ore $ 25/t $ 25/t $ 26/t $ 27/t $ 28/t $ 28/t $ 28/t $ 28/t $ 28/t $ 28/t $ 28/t

AUD /t material $ 2.5/t $ 2.5/t $ 2.6/t $ 2.7/t $ 2.8/t $ 2.8/t $ 2.8/t $ 2.8/t $ 2.8/t $ 2.8/t $ 2.8/t

Ore Mining $ 2m $ 3m $ 3m $ 3m $ 4m $ 4m $ 4m $ 4m $ 4m $ 4m $ 4m

AUD /t ore $ 3.3/t $ 3.2/t $ 3.3/t $ 3.4/t $ 3.6/t $ 3.7/t $ 3.8/t $ 3.9/t $ 4.0/t $ 4.1/t $ 4.2/t

Processing $ 14m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m

AUD /t $ 20/t $ 19/t $ 19/t $ 19/t $ 19/t $ 19/t $ 19/t $ 19/t $ 19/t $ 19/t $ 19/t

Admin & Obverhe $ 4m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m


Total Cash Costs $ 37m $ 52m $ 53m $ 55m $ 56m $ 56m $ 56m $ 56m $ 56m $ 56m $ 56m



Figure 13 shows the detail of our price assumptions and the financial outcomes.

Figure 13 : Beer & Co’s projected financial outcomes for Pilgangoora

AUD m 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2026‐27 2027‐28 2028‐29

Tantalite $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb

Spodumene $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb

Ta2O5 0k lb 0k lb 261k lb 430k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb

Li2O 0.0 M lb 0.0 M lb 10.7 M lb 17.7 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 18.9 M lb 22.0 M lb

Revenue 0.0 0.0 53.7 88.5 89.3 89.3 89.3 89.3 92.5 101.9

Cash Costs 0.0 0.0 36.8 52.2 53.4 54.7 55.5 56.1 56.2 56.3

Royalties 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Dep'cn & Amort'sn 0.0 0.0 1.6 3.4 3.4 3.4 3.4 3.4 2.8 1.0

E B I T 0.0 0.0 15.2 32.9 32.5 31.2 30.4 29.8 33.5 44.6

Tax Expense 0.0 0.0 4.3 9.6 9.6 9.3 9.1 8.9 10.0 13.4

N P A T 0.0 0.0 10.0 22.5 22.4 21.6 21.2 20.9 23.4 31.2

Feasibiilty / permitting (2.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Project Cap.Ex 0.0 (19.3) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Sus Cap. Ex 0.0 0.0 (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0)

Un‐geared Net Cashflow (2.0) (19.3) 10.7 24.9 24.8 24.1 23.6 23.3 25.2 31.2


Pilbara Minerals ‐ Valuation

Figure 14 shows Beer & Co’s projected outcomes for Pilbara Minerals, from :

Its 50% share of Tabba Tabba; plus

Its 100% share of Pilgangoora.

As shown in Figure 14, Beer & Co projects that PLS does not need to raise further equity; PLS is currently funded to get into production from Tabba Tabba, having raised $5.75m in equity since 30 June 2013, plus issued $1.5m in convertible notes, which we assume in our analysis are converted into equity.

Beer & Co further assumes that 91.8m options on issue, exerciseable at 3.0c by March 2017 are in fact exercised.



Figure 14 : Beer & Co’s projected financial outcomes for PLS

AUD m 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23 2023‐24 2024‐25 2025‐26

Ta2O5 sold 65k lb 131k lb 98k lb 423k lb 590k lb 564k lb 564k lb 629k lb 604k lb 434k lb 434k lb 434k lb

Li2O sold 0.0 M lb 0.0 M lb 0.0 M lb 10.7 M lb 17.7 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb

Ta2O5 revenue 5.4 10.8 8.1 35 49 47 47 52 36 36 36 36

Li2O revenue 0.0 0.0 0.0 32 53 54 54 54 54 54 54 54

Total Revenue 5.6 11.4 8.6 68 103 101 101 106 104 90 90 89

Cost of Goods Sold (2.7) (4.5) (4.5) (45) (61) (62) (63) (71) (69) (56) (56) (56)

Royalties 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Exploration Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Corporate Costs (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0)

Dep'cn & Amort'sn (2.9) (4.5) (0.3) (1.9) (3.7) (3.7) (3.7) (3.7) (3.7) (3.4) (3.4) (3.4)

E B I T (0.9) 1.4 2.8 20 37 34 33 30 30 29 29 29

Interest Expense 0.0 0.0 0.0 (0.9) (0.7) (0.5) (0.3) (0.1) (0.0) (0.0) (0.0) (0.1)

Tax Expense 0.0 (0.4) (0.9) (5.6) (10.9) (10.1) (9.8) (9.1) (8.9) (8.8) (8.8) (8.7)

NPAT (0.9) 1.0 2.0 13.1 25.5 23.6 22.8 21.2 20.8 20.6 20.4 20.3

Ordinary shares ‐ year 594.1m 664.1m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m

Earnings per Share (0.1c) 0.2 c 0.3 c 1.7 c 3.4 c 3.1 c 3.0 c 2.8 c 2.8 c 2.7 c 2.7 c 2.7 c


Figure 15 shows the detail of Beer & Co’s base case valuation of PLS of 10c/share. It also shows :

Beer & Co’s valuation of PLS, based purely on the Tabba Tabba feasibility study, is less than 1.0c;

Adding the extensions to Tabba Tabba adds a further 0.5c to our valuation;

The bulk of the value in PLS is in the Pilgangoora project, but Tabba Tabba is a very necessary first step, operationally and financially, to be able to execute Pilgangoora.

Figure 15 : Beer & Co’s base case value of PLS is 10c/share

15‐Sep‐14

risk : 100% Product per share

Tabba Tabba Resources $ 5m $ 4m 0.5 c 0.6 c

Tabba Tabba Extensions $ 5m $ 3m 0.4 c 0.4 c

Strelly $ 2m $ 1m 0.1 c 0.1 c

fanking credits $ 1m $ 1m 0.1 c 0.1 c

Pilgangoora Resources $ 80m $ 32m 4 c 5 c

Pilgangoora Extension $ 58m $ 12m 2 c 2 c

fanking credits $ 56m $ 12m 2 c 2 c

Corporate ($6m) ($6m) (0.7c) (0.7c)

Cash / debt ($0m) ($0m) (0.1c) 0.0 c

cash to be raised $ 7m $ 7m 0.9 c 0.8 c

TOTAL $ 207m $ 65m 9 c 10 c

Shares on issue 330.3m FPO shares 91.8m options

263.8m issued 2014 91.8m op. ex'd

70.0m CNs converted

discount rate = 12.0 % 30‐Jun‐14


Conclusions

Beer & Co’s risked valuation of PLS is 10c/share, a multiple of the current share price.

We initiate research with a BUY, High Risk, recommendation.



Pilbara Minerals : Introduction

As shown in Figure 16, PLS’s operations are all focussed in the Pilbara region, and on tantalite and spodumeme.

Figure 16 : Pilbara Minerals’ operations

Source : PLS presentation, July 2014

PLS has a 50% stake in Tabba Tabba and Strelley, and 100% of Pilgangoora.

The project was previously owned by Global Advanced Metals (GAM).

About Nagrom

Nagrom are world renowned metallurgical and gravity processing specialists, with a metallurgical laboratory in Perth. It is an independent family business, established in 1978. Their metallurgical division is a global leader in the extraction of metals from ores with clients such as BHP, Rio Tinto, GAM and FMG. They are the “go to” laboratory for beneficiation of tantalite, columbite, tin, tungsten and gold concentrates with over 35 years experience.

Their analytical division augments the metallurgical work assisting with accuracy and fast turnaround. They are specialists in fabricating gravity concentration plants such as Pacific Wildcat’s 35t/hr circuit in Mozambique.



About Global Advanced Metals (GAM)

GAM are a privately owned company. On their web‐site (http://www.globaladvancedmetals.com/home.aspx), GAM states :

“ We are the world leading vertically integrated and conflict‐free provider of tantalum metallurgical products and tantalum powder for high performance capacitors.” and

“ Leading vertically integrated and conflict‐free provider of high performance tantalum metallurgical and powder products to the electronics, aerospace, automotive, chemical manufacturing and other industries.”

GAM operates the Greenbushes tin‐tantalum mine and processing plant (Nagrom designed the tantalite upgrade section at Greenbushes).

GAM also operated the Wodgina mine, until it was shut as the grade decreased with depth, so increasing product costs. GAM had attempted to increase the volume from Wodgina to compensate for the rise in costs, but the resulting volume was more than GAM was able to sell.

About Tantalum

The global tantalum market is about 1,500t/yr. In a recent study, Roskil forecast that this market would grow by about 100t/yr.

Capacitors

About half of tantalum demand is in the manufacture of capacitors in the electronics industry. As the market moves to greater miniaturisation, the tantalum capacitor is favoured in space‐sensitive, high‐end applications in telecommunications, data storage and implantable medical devices.

Semiconductors

Tantalum is a critical component in the manufacture of state‐of‐the art semiconductors. Using the physical vapour deposition process, tantalum is "sputtered" onto semiconductor substrates to form a thin film diffusion barrier to protect the copper interconnects. Tantalum sputtering targets are used in a variety of other products, including magnetic storage media, inkjet printer heads and flat panel displays.

Engine turbine blades

Tantalum's high melting point and resistance to corrosion makes it suitable for alloying applications. Tantalum is used in nickel based superalloys where the principal applications are turbine blades for aircraft engines and land based gas turbines.

Chemical processing equipment

Tantalum's high resistance to corrosion and high temperature makes the metal an ideal material of construction for liners in vessels, piping, valves and heat exchangers in the chemical and pharmaceutical industries.

Other applications

Tantalum is used in a range of other applications requiring strength, ductility, toughness, corrosion resistance, thermal conductivity and high melting point, including ballistics, surgical implants and closures and cemented carbides for cutting tools.



Tabba Tabba project

As shown in Figure 16, is about 75km by road south‐east of Port Hedland.

Geology

The tantalite at Tabba Tabba is hosted in pegmatites that outcrop, as shown in Figure 17.

Figure 17 : Tabba Tabba – drilling showing outcrops

Source : PLS, Resources report, November 2013

The Tabba Tabba pegmatites are part of the later stages of intrusion of Archaean granitic batholiths into Archaean metagabbros and metavolcanics. Tantalum mineralisation occurs in zoned pegmatites that intruded a sheared Archaean metagabbro.

The Main Tabba Tabba pegmatite is a thick (frequently greater than 20m) funnel‐shaped dyke which strikes northwest and dips 30°‐40° NE. It can be followed in outcrop along strike for at least 400m and historical drilling has intercepted it up to 80m down‐dip. The pegmatite is thickest at surface, thinning and bifurcating at depth, and is mineralogically zoned.

Three distinct mineralized zones occur as sheets which average 2m to 3m in thickness, but may be up to 6m thick, which strike and dip in sympathy with the pegmatite margins.

Figure 18 shows the nature of the mineralisation, dipping to the north‐east and in distinct mineralised sheets, with a high grade core generally about 3m thick.

Figure 19 shows the strike of the outcropping mineralisaiton.

Resources

PLS announced the acquisition of Tabba Tabba on 24 October 2013. There had already been significant work done on resource estimation by GAM and PLS were able to announce a JORC 2012 Resource in November 2013.



Figure 18a : cross section of mineralisaiton at Tabba Tabba

Source : PLS ASX announcement, 18 November 2013

Figure 18b : cross section of mineralisaiton at Tabba Tabba

Source : PLS ASX announcement, 18 November 2013

Figure 19 : Tabba Tabba strike To complete a Mineral Resource upgrade PLS completed a geotechnical diamond drilling program of 5 holes totalling 242.4m and sterilisation Reverse Circulation drilling of 10 holes totalling 518m.

The resource estimate, of 213kt at 1220ppm Ta2O5, for 572,000lnb contained Ta2O5, is shown in Figure 4The resource estimate, of 213kt at 1220ppm Ta2O5, for 572,000lb contained Ta2O5, is shown in Figure 4.

Figure 3a and 3b both show significant intercepts at grades well above the average resource grade, including :

6m at 3,110ppm;

3m at 2,796ppm; Source : PLS ASX announcement, 18 November 2013



2m at 3,145ppm;

4m at 1,920ppm; and

3m at 2,031ppm

The mineralisation has a high “nugget” effect, and a top‐cut of 5,500ppm was applied to the results, especially from the RC drilling.

Figure 20 :Tabba Tabba estimated Mineral Resource


Measured 30.1 kt 1,610 ppm 106,960 lb

Indicated 124.4 kt 1,260 ppm 346,040 lb

Inferred 58.4 kt 925 ppm 119,200 lb

TOTAL 212.9 kt 1,220 ppm 572,200 lb Source : PLS ASX announcement, 18 November 2013

Reserves and Mining Inventory

Figure 20 shows that over 70% of the Resource tonnes is in the Measured and Indicated category. Figure 21 shows the Ore Reserve estimated by PLS, based on the mineral Resource in Figure 20. It shows a very high conversion of the Measured and Indicated Resources to Reserves.

Figure 21 also shows the total material mined within the pit shell defined by the Reserve.

Figure 21 : Tabba Tabba Reserves and mining inventory


Proved 32.0 kt 1,420 ppm 100,178 lb

Probable 101.0 kt 1,249 ppm 278,111 lb

Total Reserves 133.0 kt 1,290 ppm 378,289 lb

Pit Design 162.2 kt 1,240 ppm 443,411 lb Source : PLS ASX announcement, 19 February 2014

Figure 22 : Tabba Tabba Resource Classification

Source : PLS ASX announcement, 19 February 2014



Figure 22 shows the areas by Resource classification. It shows 2 drill‐holes to the north that are not included in the resource estimate. Beer & Co understand that this is because the mineralised widths intersected here are thin and hence were excluded.

Figure 22 shows an area to the south‐west with no drilling. Figure 23 is an aerial picture of Tabba Tabba and the surrounds. It clearly shows the out‐cropping pegmatites (in white), and these have been the basis of drilling.

Figure 23 : aerial view Tabba Tabba surrounds

Source : PLS, Resources report, November 2013

Tabba Tabba Feasibility Study

When PLS announced the acquisition of Tabba Tabba, on 24 October 2013, it announced that it had secured a 5 year off‐take agreement with GAM, the vendors, which also provided price security.

Following the announcement of the initial resource in November 2013, PLS published the results of its Feasibility Study in February 2014. Key parameters of that study included :

Ore mining and processing rate of 118kt/yr;

Total material moved 1,834kt, comprising 162kt of ore and 1,672kt of waste for a waste : ore ratio (or strip ratio) of 10.3;

Capital cost for processing plant, services and infrastructure of $3.9m;

$1.5m for mine development and commissioning;

Operational employment totalling 18 people, comprising 8 in processing, 6 in mining and 4 in admin and overhead;

Mining cost of $3.3/t material, based on contractor rates for mining equipment.



Processing

As shown in Figure 24, processing at Tabba Tabba consists of :

Mining by drill bad blast;

Feed into a mobile crusher, reflecting the relative softness of the ore and the modest mining rate, to sub 10mm;

Processing through a trammel to eliminate hard over‐size material, with further concentration by jigs;

Grinding in a ball mill to 425 micron (ie. 0.425mm); then

A series of spirals to recover the heavier tantalite to a concentrate about 6% Ta2O5.

Figure 24 : Tabba Tabba processing

Source : PLS ASX announcement, 19 February 2014

Beer & Co’s financial analysis of Tabba Tabba

Mining Inventory

PLS has a 5 year supply agreement, while the mining inventory is less than 18 months.

Figure 22 showed there is an area of unclassified material that Beer & Co expect will be able to be developed into a reserve. PLS is presently executing a drill programme that should achieve this end.

Figure 23 also shows a significant area of outcrop that has not been drilled.

GAM was looking only for very high grade material to be able to truck ore to its plant at Wodgina. Having a plant on‐site lowers the economic cut‐off grade. In our analysis, Beer & Co estimated that the economic grade is about 400ppm Ta2O5, assuming no by‐products such as spodumene or tin.

Beer & Co expects that both GAM and PLS expect that there is a much greater volume of Ta2O5 at Tabba Tabba than is reflected in the current resource estimate, otherwise the contract would not have been for 5 years.



Based on the outcrop shown in Figure 23, Beer & Co expects that drilling will prove up a much greater volume of economic material.

Figure 16 showed an area about 10km from Tabba Tabba, called Strelly, which was acquired as part of the Tabba Tabba acquisition.

Strelly had been drilled in the 1970s but the results are not able to be used in a JORC estimate as key data was not recorded at that time. However, we understand that Strelly is an area of significant mineralisaiton. We can assume it is lower grade than Tabba Tabba, otherwise it would have received attention from GAM.

Beer & Co’s estimated mining inventory

In addition to the reasons above (ie. extensions of out‐cropping pegmatites, GAM’s focus on very high grades and a 5 year supply contract), Beer & Co also feel confident that PLS and Nagrom would not be investing in a plant if they though there was only 19 months of production at Tabba Tabba.

Figure 9 shows the additional mining inventory used by Beer & Co in this analysis.

Figure 9 : Beer & Co’s estimated further mining inventory


Inferred 51 kt 1,151 ppm 129k lb

near Tabba Tabba pit 50 kt 900 ppm 99k lb

Along strike 500 kt 750 ppm 827k lb

Strelly, high grade 500 kt 600 ppm 661k lb

Strelly, balance 900 kt 450 ppm 892k lb

TOTAL 2,000 kt 592 ppm 2,608k lb Source : Beer & Co estimates

Projected Production

Figure 26 shows the detail of Beer & Co’s projected production from Tabba Tabba.

Figure 26 : Beer & Co projected production from Tabba Taba

2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23

Ore mined 65 kt 120 kt 120 kt 240 kt 240 kt 240 kt 240 kt 480 kt 418 kt

waste : ore 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1

Waste moved 664 kt 1,236 kt 1,236 kt 2,472 kt 2,472 kt 2,472 kt 2,472 kt 4,944 kt 4,302 kt

Ore Processed 65 kt 120 kt 120 kt 240 kt 240 kt 240 kt 240 kt 480 kt 418 kt

grade 1,240 ppm 1,224 ppm 908 ppm 750 ppm 737 ppm 600 ppm 599 ppm 450 ppm 450 ppm

Recovery 74 % 81 % 82 % 82 % 82 % 82 % 82 % 82 % 82 %

Ta2O5 recovered 130,212 lb 262,907 lb 196,895 lb 325,402 lb 319,554 lb 260,322 lb 259,788 lb 390,482 lb 339,747 lb


Figure 26 shows that Beer & Co projects a much longer mine life, but at lower grades over time, as suggested by Figure 25. It also shows that we project that the production rate is increased as the grades decline.

Figure 27 shows the impact of our projected production on the mining inventory over time.



Figure 27 : Tabba Tabba projected mining inventory over time

2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23

Ore Reserves 162 kt 98 kt 0 kt 0 kt 0 kt 0 kt 0 kt 0 kt 0 kt

Inferred 51 kt 51 kt 28 kt 0 kt 0 kt 0 kt 0 kt 0 kt 0 kt

near Tabba Tabba pit 50 kt 50 kt 50 kt 0 kt 0 kt 0 kt 0 kt 0 kt 0 kt

Along strike 500 kt 500 kt 500 kt 458 kt 218 kt 0 kt 0 kt 0 kt 0 kt

Strelly, high grade 500 kt 500 kt 500 kt 500 kt 500 kt 478 kt 238 kt 0 kt 0 kt

Strelly, balance 900 kt 900 kt 900 kt 900 kt 900 kt 900 kt 900 kt 898 kt 418 kt


PLS state in their feasibility study that the processing is based on a single shift of 5 days a week by 10 hours a day.

In this analysis, we have assumed that the processing rate is doubled for expenditure of $1m by adding further spirals and upgrading the ball mill, as well as increasing the amount of on‐site accommodation.

Production can then be doubled again by going to a 2 shift (ie. 100 hours a week).

Projected Costs

Figure 28 shows the detail of Beer & Co’s cost estimates for Tabba Tabba. These total $75/t when Tabba Tabba is operating at the 120kt/yr rate.

Figure 28 : Detail of Beer & Co ‘s projected costs for Tabba Tabba

2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23

Mining and Waste $ 2.8m $ 5.1m $ 5.1m $ 10.2m $ 10.3m $ 10.4m $ 10.4m $ 19.5m $ 17.1m

AUD /t material $ 3.9/t $ 3.7/t $ 3.7/t $ 3.8/t $ 3.8/t $ 3.8/t $ 3.8/t $ 3.6/t $ 3.6/t


Processing $ 1.1m $ 2.0m $ 2.0m $ 3.8m $ 3.8m $ 3.8m $ 3.8m $ 7.6m $ 6.6m


Admin & Obverhead $ 1.4m $ 1.9m $ 1.9m $ 3.1m $ 3.1m $ 3.1m $ 3.1m $ 4.0m $ 3.7m



It shows that our costs vary over time

Total costs rising and unit costs falling, slightly, as volumes increase; and

Mining costs rising when Strelly comes into production, with the need to haul ore 10km.

Projected Cashflows

In their announcement of the feasibility study, PLS stated that of the $3.9m in plant cost, $1.5mhad been spent already by February.

PLS has been delayed in the start of its operations as the grant of its Permit of Works has taken longer than expected.

PLS expects the completed plant to be transported to site in October and first product in December.

Figure 29 shows the financial outcomes projected by Beer & Co for Tabba Tabba.

PLS has a 50% share of Tabba Tabba, and PLS raised $4m in equity in July and August so they are fully funded to bring Tabba Tabba into production.



Figure 29 : Beer & Co’s projected financial outcomes for Tabba Tabba

AUD m 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23

Ta2O5 1,302k lb 2,629k lb 1,969k lb 3,254k lb 3,196k lb 2,603k lb 2,598k lb 3,905k lb 3,397k lb

Net Revenue 10.7 21.7 16.2 26.8 26.4 21.5 21.4 32.2 28.0

Cash Costs 5.3 9.0 9.0 17.1 17.2 17.3 17.3 31.0 27.5

Royalties 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Dep'cn & Amort'sn 2.2 3.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6

E B I T 3.2 9.0 6.7 9.1 8.6 3.6 3.5 0.6 (0.0)

Project Cap.Ex 2.9

Sus. Cap. Ex 0.3 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.0

Un‐geared Net Cashflow 1.3 9.4 4.7 6.4 6.0 2.5 2.5 0.4 0.6


In their presentation of July 2014, PLS stated that Ta2O5 has a value of about $200,000/t, or $900/lb. PLS also showed a chart with prices for Ta2O5 around $125/lb.

In their feasibility study of February, PLS showed expected Life of Mine production of 356,000lbs and revenue of $30m, which implies average revenue of $83/lb. In our analysis, Beer & Co has assumed a price of AUD 82.5/lb. We have also assumed that sales are made at mine gate with GAM responsible for taking the concentrate to be further processed.

Figure 29 shows $2.9m in cap.ex for 2014‐15, as most of the plant expenditure has been met, but there is still $1.5m in mine development.

Figure 29 shows that the cashflow generated by the 450ppm material form Strelly is marginal.

Tabba Tabba Valuation

Figure 30 shows the NPV of the after‐tax cashflows projected by Beer & Co for PLS’s Tabba Tabba project.

Figure 30 : Valuation of Tabba Tabba

AUD m 10 % 12 % 10 % 12 %

Reserves 0.7 0.5 5.0 4.8

Extension 10.3 9.7 10.3 9.7

TOTAL 11.0 10.2 15.3 14.5

Remaining Life Life of Mine


Figure 30 shows that our Beer & Co’s valuation of Tabba Tabba is barely positive if the operation is restricted to the 19 months, as implied in the feasibility study. However, importantly, that 19 months period generates a positive return, justifying the investment, while leaving available significant upside.

Beer & Co projects that Tabba Tabba should have significant extensions to its mine life. Figures 26, 27 and 29 show a project life of 10 years despite increasing rates of ore processing although at progressively lower grades.

Figure 30 shows these extensions add significant value.

Figure 30 also shows that Beer & Co’s valuation of 50% of Tabba Tabba, of about $7.5m, is less than PLS’s current Enterprise Value of about $11m.



Pilgangoora

Figure 1 showed that Pilgangoora is about 55km to the south‐west of Tabba Tabba.

PLS announced the acquisition of Pilgangoora on 2 April 2014 and the completion of its acquisition on 28 July.

Project History

Mining of 4 hard rock tantalite prospects took place from 1947 to 1948 from alluvial and colluvial deposits.

In 1968, Ishihara Sangyo Kaisha carried out sampling of about 30 creeks and gullies in the area. The survey established resources of about 0.288Mm3 of alluvial sediments containing an estimated 220g/m3 Ta2O5 and 100g/m3 of both Nb2O5 and SnO2,using a cut‐off grade of 60g/m3.

About 800,000 bank cubic metres of screened alluvial and eluvial material was processed from 1978 to 1982 and from 1992 to 1996 producing about 140t of tantalite concentrates.

In 2000, Kanowna! Lights drilled over 27 auger holes in areas of tantalum enriched placer deposits. From this drilling the company estimated that the area had a resource of 400,000m3 of treatable sands from placer deposits containing about19.05t of Ta2O5 concentrate.

Resources

On 17 June 2014, PLS announced as JORC 2012 compliant Resource estimate, based on a review of drilling carried by GAM. Figure 31 shows the Inferred Resource that PLS was able to report, of 10.4Mt grading 240ppm for 5.5Mlb of contained Ta2O5. Within this, 8.6Mt was assayed for lithium oxide, which reported an average grade of 1.01%.

Figure 31 : Inferred Resources, Pilgangoora


10,400 kt 240 ppm 5,503k lb

8,600 kt 1.01 % 87 kt Source: PLS ASX announcement, 17 June 2014

PLS was also able to announce an Exploration Target of 15Mt – 25Mt grading 200 to 300ppm Ta2O5 and 1.2% to 1.5% Li2O, as shown in Figure 32.

Figure 32 : Pligangoora Exploration Target

Nothern area 5 Mt ‐ 10 Mt 1.2 % ‐ 1.5 % 200 ppm ‐ 300 ppm

Central & Southern 10 Mt ‐ 15 Mt 1.2 % ‐ 1.5 % 200 ppm ‐ 300 ppm

TOTAL 15 Mt ‐ 25 Mt 1.2 % ‐ 1.5 % 200 ppm ‐ 300 ppm

Li2O grade Ta2O5 grade

Source: PLS ASX announcement, 17 June 2014

The tantalite and the lithia are not directly associated and areas will tend to higher in one than the other; the Li2O grade was not assessed when the Ta2O5 was below the 200ppm cut‐off.



The Pilgangoora pegmatite field comprises a series of extremely fractionated dykes and veins up to 15m thick. These dykes and veins dip to the east at 45‐60° and thicken slightly with depth, are parallel to sub‐parallel to the main schistose fabric within the greenstones and are typically separated by 20‐30m horizontally, as shown in Figure 33.

Figure 33 : Mineralisation at Pilgangoora

Source: PLS ASX announcement, 17 June 2014

Potential Development Plan

As shown in Figure 34, PLS’s tenements at Pilgangoora contain significant extensions of the mineralisation in the tenements of Altura Mining (AJM.ASX).

On 19 November 2012, AJM reported the results of a scoping study on the development of its tenements. It was based on processing 25.16Mt of Indicated and Inferred Resources grading 1.23% Li2O, at a rate of 830kt/yr.

Note that the scoping study was targeted at supplying spodumene to potential producers of Li‐ion batteries.

AJM did not consider the Ta2O5 potential.

Figure 34 : PLS’s Pilgangoora v. Altura Mining

Source: PLS ASX announcement, 28 July 2014



Time Line

On 9 September 2014, PLS has announced that drilling at Tabba Tabba to upgrade the Inferred Resources and the unclassified mineralisation to Measured and Indicated status. PLS will then embark on a 10,000m drill campaign at Pilgangoora to test for high grade tantalite that could be trucked to Tabba Tabba, and also assess the Li2O grades.

In our analysis, Beer & Co has considered only the possibility of a stand‐alone development; partly because this is more “do‐able” and partly because the volume of mineralised material suggests a significant, stand‐alone development.

Figure 35 shows the timetable estimated by Beer & Co for the purposes of this analysis.

It shows first product in mid 2017.

Figure 35 : Indicative timetable

Inferred Resource Mar. 15

Indicated Resoruce Sep. 15

Reserves Dec. 15

Feasibility Jun. 16

Construction Jun. 17

First product Aug. 17


Mining

In our analysis, Beer & Co has assumed :

A mining inventory, as shown in Figure 36, which combines the reported Resource estimate and the low end of the Exploration Target AJM has an estimated Resource totalling 25Mt and Figure 18 shows that PLS

appears to have a greater area of mineralisaiton

A mining rate of 1.0Mt/yr or ore and 19Mt/yr of waste This strip ratio is consistent with that used for Tabba Tabba. Although

comparing Figure 33 with Figure 18 suggests a lower strip ratio might be warranted.

Figure 36 : Mining inventory for Pilgangoorra assumed by Beer & Co


Inferred Resource 10,400 kt 240 ppm 5,503k lb

8,600 kt 1.01 % 87 kt

Extension 15,000 kt 240 ppm 7,937k lb 1.25 % 210 kt

TOTAL 25,400 kt 240 ppm 13,439k lb 1.17 % 297 kt

Source: PLS ASX announcement, 17 June 2014, Beer & Co

Capital Costs

PLS advised expected pre‐production capital costs for Tabba Tabba totalling $5.6m to achieve a throughput of 120kt/yr. This is based on operations 5 days a week for a single 10 hour shift. The throughput can be doubled for about $0.2m, being the extra capital to accommodate the increase in the workforce of 15, doubling the number in mining and processing, plus one extra in admin to maintain the camp.

The throughput can then doubled again for about 0.5Mt/yr for the expenditure of about $0.5m, to double the volume of spirals, add a second small ball mill, plus a further $1.0m on accommodation etc and related costs.

Hence, PLS estimate a cost of $8.2m to get to 0.5Mt/yr, as shown in Figure 37.



Figure 37 : Estimated cost for 500kt/yr

Tabba Tabba, 120kt/yr $ 5.6m

to 240kt/yr $ 0.6m accommodation

to 500kt/yr $ 1.0m accommodation

$ 0.5m ball mill, spirals, pumps

$ 0.5m tailings, other

TOTAL $ 8.2m

Source : PLS announcement, 19 February 2014, Beer & Co estimates

The plant at Pilgangoora will need to float off a spodumene concentrate before the gravity circuit. Otherwise, it will be a very similar pant to that at Tabba Tabba.

For the purposes of this analysis, Beer & Co assumes a development capital cost of $20m.

Note that this is significantly less than the estimate by AJM of $96.3m, though no detail was given as to how this was composed.

Beer & Co also project that PLS will spend $3m on feasibility studies before committing to the development. This low amount reflects the historical geological work and the work being done at Tabba Tabba which will guide work at Pilgangoora.

Operating Costs

Figure 28 detailed Beer & Co’s estimated operating costs for Tabba Tabba. In their PFS, PLS advised a total cost estimate of $78.3/t of ore processed. Figure 12 showed that Beer & Co’s cost estimates were $75/t at the rate of 120kt/yr, declining to $66/t when throughput was at the rate of 480kt/yr.

Figure 22 shows that Beer & Co estimates that the costs for Pilgangoora will be about $55/t, allowing for some economies of scale, especially in waste removal and also admin and overhead, though our processing costs are assumed to be higher due to the extra step in flotation.

Figure 38 : Beer & Co’s estimated operating costs for Pilgangoora

2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23 2023‐24 2024‐25 2025‐26 2026‐27 2027‐28

Waste $ 17m $ 25m $ 26m $ 27m $ 28m $ 28m $ 28m $ 28m $ 28m $ 28m $ 28m


AUD /t material $ 2.5/t $ 2.5/t $ 2.6/t $ 2.7/t $ 2.8/t $ 2.8/t $ 2.8/t $ 2.8/t $ 2.8/t $ 2.8/t $ 2.8/t

Ore Mining $ 2m $ 3m $ 3m $ 3m $ 4m $ 4m $ 4m $ 4m $ 4m $ 4m $ 4m

AUD /t ore $ 3.3/t $ 3.2/t $ 3.3/t $ 3.4/t $ 3.6/t $ 3.7/t $ 3.8/t $ 3.9/t $ 4.0/t $ 4.1/t $ 4.2/t

Processing $ 14m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m $ 19m


Admin & Obverhead $ 4m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m $ 5m


Total Cash Costs $ 37m $ 52m $ 53m $ 55m $ 56m $ 56m $ 56m $ 56m $ 56m $ 56m $ 56m


AUD /lb Ta2O5 ($ 4/lb) ($ 24/lb) ($ 22/lb) ($ 19/lb) ($ 17/lb) ($ 17/lb) ($ 17/lb) ($ 16/lb) ($ 16/lb) ($ 16/lb) ($ 24/lb)

AUD /lb Li2O $ 1.1 /lb $ 0.6 /lb $ 0.6 /lb $ 0.7 /lb $ 0.8 /lb $ 0.8 /lb $ 0.8 /lb $ 0.8 /lb $ 0.8 /lb $ 0.8 /lb $ 0.7 /lb




Operations

Figure 39 shows Beer & Co’s projected operational outcomes. It shows that Beer & Co has assumed that the resources are exploited first before going to the further material, despite that material having a higher Li2O grade.

It shows that Beer & Co projects production of 434,000 lb of Ta2O5 for Pilgangoora, which greater than the volume from Tabba Tabba.

Figure 39 : Beer & Co’s projected operating outcomes for Pilgangoora

2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23 2023‐24 2024‐25 2025‐26 2026‐27 2027‐28

Ore mined 675 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt

waste : ore 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1 10 : 1

Waste moved 6,750 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt 10,000 kt

Ore Processed 675 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt 1,000 kt

Ta2O5 grade 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm 240 ppm

Recovery 73 % 81 % 82 % 82 % 82 % 82 % 82 % 82 % 82 % 82 % 82 %

Ta2O5 recovered 261k lb 430k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb

Li2O grade 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.01 % 1.07 %

Recovery 71 % 79 % 80 % 80 % 80 % 80 % 80 % 80 % 80 % 80 % 80 %

Li2O recovered 10.7 M lb 17.7 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 18.9 M lb


Valuation of Pilgangoora

Beer & Co assumes that PLS will sell the Ta2O5 concentrate from Pligangoora on the same basis as the sales from Tabba Tabba, which is $82.5/lb of contained Ta2O5, at mine gate.

Spodumene

Spodumene can be used a source for the production of Li2CO3, which is used in the manufacture of Li‐ion batteries.

Spodumene has a zero co‐efficient of expansion. It can be used in the manufacture of ceramics. Beer & Co understands that PLS has a demand for spodumene in the manufacture of ceramic cook‐tops. German manufacturers are not able to source their traditional supplies and are relying on artisanal production from Africa.

In this analysis, Beer & Co assumes a price of $3.00/lb of contained Li2O in the spodumene concentrate, sold at the mine gate.

Other revenue sources

Previous exploration has shown Niobium oxide (Nb2O5) and cassiterite (SnO2), the ore of tin.

Beer & Co expects that commercial quantities of both metals will be recovered from the Pilgangoora ores. However, we have not allowed for any of this potential value in this analysis.

Projected Cashflows

Figure 40 shows the cashflows projected by Beer & Co for the Pilgangoora project.



Figure 40 : Beer & Co’s projected cashflows for Pilgangoora

AUD m 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2026‐27 2027‐28 2028‐29 2029‐30 2030‐31 2031‐32

Tantalite $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb $ 82.5 /lb

Spodumene $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb $ 3.0 /lb

Ta2O5 0k lb 0k lb 261k lb 430k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb 434k lb

Li2O 0.0 M lb 0.0 M lb 10.7 M lb 17.7 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 18.9 M lb 22.0 M lb 22.0 M lb 22.0 M lb 22.0 M lb

Revenue 0.0 0.0 59.4 97.9 98.8 98.8 98.8 98.8 102.5 113.6 113.6 119.9 119.9

Cash Costs 0.0 0.0 36.8 52.2 53.4 54.7 55.5 56.1 56.2 56.3 56.5 56.6 56.7

Royalties 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Dep'cn & Amort'sn 0.0 0.0 1.6 3.4 3.4 3.4 3.4 3.4 2.8 1.0 1.0 1.0 1.0

E B I T 0.0 0.0 20.9 42.3 41.9 40.7 39.8 39.3 43.5 56.3 56.2 62.4 62.3

Tax Expense 0.0 0.0 6.0 12.5 12.4 12.1 11.9 11.8 13.1 16.9 16.8 18.7 18.7

N P A T 0.0 0.0 14.0 29.1 29.0 28.3 27.8 27.5 30.5 39.4 39.3 43.7 43.6

Feasibii lty / permitting (2.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Project Cap.Ex 0.0 (19.3) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Sus Cap. Ex 0.0 0.0 (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0)

Un‐geared Net Cashflow (2.0) (19.3) 14.7 31.5 31.4 30.7 30.2 29.9 32.2 39.4 40.3 43.7 43.6


The NPV of the net after‐tax cashflows shown in Figure 24, using a 10% discount rate, as at 30 June 2014, is $206m.

Valuation of Pilbara Minerals

Background

PLS has a 50% stake in the Tabba Tabba project.

Tabba Tabba is fully funded and first product is expected before the end of 2014.

Beer & Co’s analysis shows that Tabba Tabba project has a small value if the project is based on its published mining inventory. However, Beer & Co is confident that the project will have a much longer life, though there is uncertainty about the grades.

We expect to get better information on the likely grades beyond the current 19 months project life and into the 5 year sales contract, when PLS has completed the drill programme that it will be starting very soon. These results should be available before the end of 2014.

PLS has 100% of the Pilgangoora project, which Beer & Co estimate will be a very valuable project.

Financing

Beer & Co has evaluated Pilgangoora as a stand‐alone project, even though some high grade material may be trucked to Tabba Tabba if that gives a better financial outcome.

Beer & Co estimates expenditure of $23m from now until Pilgangoora is generating cashflow.

Beer & Co estimates that PLS will have about $10m in cash when it has completed the feasibility study for Pilgangoora. Beer & Co expect that, given the cash being generated by Tabba Tabba coupled with the security of its off‐take agreements, PLS will be able to fund the extra capital required to develop Pilgangoora by debt or similar, without needing to raise further equity.



Figure 41 shows Beer & Co’s projected financial outcomes for PLS.

Figure 41 : Beer & Co’s projected financial outcomes for PLS AUD m 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20 2020‐21 2021‐22 2022‐23 2023‐24 2024‐25 2025‐26 2026‐27 2027‐28

Ta2O5 sold 65k lb 131k lb 98k lb 423k lb 590k lb 564k lb 564k lb 629k lb 604k lb 434k lb 434k lb 434k lb 434k lb 434k lb

Li2O sold 0.0 M lb 0.0 M lb 0.0 M lb 10.7 M lb 17.7 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 17.8 M lb 18.9 M lb

Ta2O5 revenue 5.4 10.8 8.1 35 49 47 47 52 36 36 36 36 36 36

Li2O revenue 0.0 0.0 0.0 32 53 54 54 54 54 54 54 54 57 57

Total Revenue 5.6 11.4 8.6 68 103 101 101 106 104 90 90 89 89 92

Cost of Goods Sold (2.7) (4.5) (4.5) (45) (61) (62) (63) (71) (69) (56) (56) (56) (56) (56)

Royalties 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Exploration Expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Corporate Costs (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0) (1.0)

Dep'cn & Amort'sn (2.9) (4.5) (0.3) (1.9) (3.7) (3.7) (3.7) (3.7) (3.7) (3.4) (3.4) (3.4) (3.4) (2.8)

E B I T (0.9) 1.4 2.8 20 37 34 33 30 30 29 29 29 29 33

Interest Expense 0.0 0.0 0.0 (0.9) (0.7) (0.5) (0.3) (0.1) (0.0) (0.0) (0.0) (0.1) (0.1) (0.1)

Tax Expense 0.0 (0.4) (0.9) (5.6) (10.9) (10.1) (9.8) (9.1) (8.9) (8.8) (8.8) (8.7) (8.6) (9.7)

NPAT (0.9) 1.0 2.0 13.1 25.5 23.6 22.8 21.2 20.8 20.6 20.4 20.3 20.1 22.7

Ordinary shares ‐ year end 594.1m 664.0m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m 755.8m

Earnings per Share (0.1c) 0.2 c 0.3 c 1.7 c 3.4 c 3.1 c 3.0 c 2.8 c 2.8 c 2.7 c 2.7 c 2.7 c 2.7 c 3.0 c


Figure 41 shows :

PLS currently has 594m shares on issue following a successful equity raising announced on 30 June and finalised on 7 July, which raised about $4.0m to add to the just over $1.0m that PLS had as at 30 June;

PLS has $1.5m of Convertible Notes on issue which can be redeemed, receiving an annual interest rate of 20%, after a term of 128 months from the time of issue (March 2014) or converted into equity at a discount of 25% to the 5 day VWAP prior to the conversion date; Beer & Co has assumed that the CNs are converted into equity, by the issue of

70m new shares (ie. we assume that the share price will be about 2.8c at the time, which is a 12% compounded annual growth from the current share price)

Issued with the CNs were 91.8m options exerciseable at 3.0c by March 2017

Beer & Co assumes these options are exercised

Valuation

Figure 42 shows the asset by asset detail of Beer & Co’s base case valuation of PLS, which is 10c/share.

Figure 42 shows that we project the estimated after tax cashflows generated by each asset, and then discount these using a 12% discount rate.

These NPVs are then risk weighted.

The risk weighting reflects the uncertainty around the values in our projected cashflows and the discount is reduced as more work is done and the projects increase in certainty.

Figure 42 uses 30 June 2014 as the basis; PLS issued 264m shares in July raising $4.0m, and the balance of the cash raised comes from the options exercised in March 2017.



Figure 42 : Beer & Co valuation of PLS is 10c/share

12‐Sep‐14

risk : 100% Product per share

Tabba Tabba Reserves 90 % $ 4m $ 3m 0.4 c 0.4 c

Tabba Tabba Resources 80 % $ 1m $ 1m 0.1 c 0.1 c

Tabba Tabba undefined 70 % $ 1m $ 0m 0.1 c 0.1 c

Tabba Tabba along strike 60 % $ 4m $ 2m 0.3 c 0.4 c

Strelly, high grade 50 % $ 1m $ 1m 0.1 c 0.1 c

Strelly, balance 40 % $ 0m $ 0m 0.0 c 0.0 c

fanking credits 50 % $ 1m $ 1m 0.1 c 0.1 c

Pilgangoora Resources 40 % $ 80m $ 32m 4.3 c 4.9 c


Pilgangoora Extension 20 % $ 58m $ 12m 1.5 c 1.9 c


Exploraiton 100 % $ 0m $ 0m 0.0 c 0.0 c

Corporate 100 % ($6m) ($6m) (0.7c) (0.7c)

Cash / debt 100 % ($0m) ($0m) (0.1c) 0.0 c

cash to be raised 100 % $ 7m $ 7m 0.9 c 0.8 c

TOTAL $ 207m $ 65m 8.6 c 10.0 c

Shares on issue 330.3m FPO shares 91.8m options

263.8m issued 2014 91.8m op. ex'd

69.9m CNs converted

discount rate = 12.0 % 30‐Jun‐14


Figure 26 also shows :

Beer & Co’s valuation of PLS, based purely on the Tabba Tabba feasibility study, is less than 1.0c;

Adding the extensions to Tabba Tabba adds a further 0.5c to our valulation;

The bulk of the value in PLS is in the Pilgangoora project, but Tabba Tabba is a very necessary first step, operationally and financially, to be able to execute Pilgangoora.

Sensitivity Analyses

The main areas of sensitivity are :

Risk weighting;

Commodity prices;

Grades of the extensions at Tabba Tabba; and

Capital cost of Pilgangoora.

Risk Weighting

Figure 42 shows that Beer & Co has significant risk weighted the outcome. The risk weighting reflects uncertainty; whether the projected results will be achieved

Assuming successful delivery along the line we project (ie. removing the risk weighting) increases the valuation to 31c/share.

Figure 43 shows that the combination of de‐risking over time, as more is known about the project, and the impact of the discount rate, shows the potential for very strong value growth in PLS over time.



Figure 43 : Potential value growth over time, with de‐risking


Commodity prices

Figure 41 shows that when Pilgangoora comes into production, PLS’s revenue is slightly greater form spodumene than it is from tantalite. When Tabba Tabba ceases, spodumene becomes a more dominant revenue source.

Beer & Co is reasonably confident of our projected prices for tantalite, as it is derived from PLS’s ASX announcement of 19 February.

Figure 44 shows that Beer & Co’s derived valuation for PLS is very sensititve to our assumed price for spodumene.

Figure 44 : PLS value v. spodumene price

Spodumene $ 2.0 /lb $ 2.5 /lb $ 3.0 /lb $ 3.5 /lb

PLS value 5.0 c 7.5 c 10.0 c 12.6 c


Tabba Tabba grades

Comparing Figure 21 and Figure 30 shows that Beer & Co has assumed that the grades for the extension of Tabba Tabba are well below those in the current pit design.

Figure 26 shows that falling grades over time are partly compensated for any higher throughput rates, and it also shows that grades of 450ppm are required to generate any cash at all.

PLS is about to being a drill campaign to test some of these assumptions.

If the drill campaign fails to find grades above 450ppm, then the worst case is that our valuation falls, as indicated in Figure 42, by about 5%.

We can have confidence in the grades at Pilgangoora as PLS has a JORC Resource.

Pilgangoora Capital Cost

Beer & Co has assumed $3m in feasibility studies and $20m in project capital to bring Pilgangoora into production.



The main issue with the capital cost of the Pilgangoora project is its financing.

Our present estimate means that Beer & Co projects that PLS will not need to raise any equity to develop Pilgangoora.

Any increase in capital cost will require either equity be raised or that PLS sell a stake in the project.

Figure 45 shows that the value of PLS falls as the capital cost of Pilgangoora rises.

Figure 45 : PLS value v Pilgangoora cap.ex

Capital Costs $ 20m $ 40m $ 60m $ 80m

raise equity 10.0 c 7.2 c 5.8 c 5.0 c

sell proejct stake 10.0 c 9.2 c 8.7 c 8.3 c

stake sold 0 % 10 % 15 % 20 % Source : Beer & Co estimates

However, Figure 45 shows that the impact on Beer & Co’s valuation is modest if PLS is able to sell an appropriate stake in the project for 80% of our estimated NPV at that time, which is $190m.

There is a bigger impact on our valuation if PLS needs to raise equity, as we have assumed that this is done at the current share price.

Conclusions

PLS is currently funded to bring Tabba Tabba into production before the end of this year.

However, the project as defined in PLS’s feasibility study is for only 19 months of production, while the Tabba Tabba operation has a 5 year sales contract.

Beer & Co has derived a valuation for the Tabba Tabba project as defined in the feasibility that is less than PLS’s current enterprise valuation.

Beer & Co expect that Tabba Tabba’s life will be extended by the drill campaign that is to start in the next week or so.

Beer & Co has assumed that the extensions to Tabba Tabba will be at lower grades, which will be partly compensated for by higher throughput rates.

However our valuation even then is not quite as much as PLS’s enterprise valuation.

PLS has acquired Pilgangoora project, which has spodumene in addition to tanatalite.

Adding the Pilgangoora project increases Beer & Co valuation to 10c/share.

We have a BUY recommendation.

We see significant upside potential from other revenues and we see mitigated downside, with a robust valuation.



Beer& Co ResearchPilbara Minerals (PLS.ASX)

Year ended June 2013‐14 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20Section 1 - P&L Commodity price assumptions

Sales revenue $A m 0 5 11 8 67 102 100 Year ended June 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20

Interest revenue $A m 0 0 1 1 1 1 1 AUD/USD 0.890 0.855 0.850 0.850 0.850 0.850

Other revenue $A m 0 0 0 0 0 0 0 Tantal i te US$ / l b 83 83 83 83 83 83

Total Revenue $A m 0 6 11 9 68 103 101 Spodumene US$ / l b 3.0 3.0 3.0 3.0 3.0 3.0

Cost of Goods Sold $A m 0 (3) (4) (4) (45) (61) (62) Mine Production, PLS share, '000 pounds

Royalties $A m 0 0 0 0 0 0 0 Tabba Tabba Ta2O5 65 131 98 163 160 130

Exploration Expense $A m 0 0 0 0 0 0 0 Pi lgangoora Ta2O5 0 0 0 261 430 434

Corporate Costs $A m (1) (1) (1) (1) (1) (1) (1) Pi lgangoora Spodumene 0 0 0 10,726 17,681 17,849

Other Operating Expenses $A m 0 0 0 0 0 0 0

Total Operating Expenses $A m (1) (4) (5) (5) (46) (62) (63) Resources, Reserves and assumed mining inventory

Tabba Tabba Ore Reserves

EBITDA $A m (1) 2 6 3 22 41 38 Ta2O5 grade conta ined Ta2O5

Dep'cn & Amort'sn $A m 0 (3) (4) (0) (2) (4) (4) Proved 32 kt 1,420 ppm 100k l b

EBIT $A m (1) (1) 1 3 20 37 34 Probable 101 kt 1,249 ppm 278k l b

Interest Expense $A m 0 0 0 0 (1) (1) (1) Tota l Reserves 133 kt 1,290 ppm 378k l b

Other $A m 0 0 0 0 0 0 0 Pi t Des ign 162 kt 1,240 ppm 443k l b

Pre‐Tax Profit $A m (1) (1) 1 3 19 36 34

Tax Expense $A m 0 0 (0) (1) (6) (11) (10) Tabba Rabba Mineral Resources

NPAT $A m (1) (1) 1 2 13 26 24 Ta2O5 grade conta ined Ta2O5

Reported NPAT $A m (1) (1) 1 2 13 26 24 Measured 30 kt 1,610 ppm 107k l b

Indicated 124 kt 1,260 ppm 346k l bSection 2 - Key Data Inferred 58 kt 925 ppm 119k l b

Ordinary shares ‐ year end m 330.3 594 678 769 769 769 769 TOTAL 213 kt 1,220 ppm 572k l b

Fully diluted shares on issue m 492.0 756 769 769 769 769 769

Weighted # shares m 291.5 594 650 723 769 769 769 Beer & Co estimated mining inventory, Tabba Tabba

Earnings per Share (0.3c) (0.1c) 0.2 c 0.3 c 1.7 c 3.3 c 3.1 c Ta2O5 grade conta ined Ta2O5

Dividends Per Share 0.0 c 0.0 c 0.0 c 0.0 c 0.3 c 2.4 c 2.6 c Pi t Des ign 162 kt 1,240 ppm 443k l b

Resources 51 kt 1,151 ppm 129k l bSection 3 - Balance Sheet near Tabba Tabba pit 50 kt 900 ppm 99k l b

Cash $A m 1 4 10 6 24 32 24 Along strike 500 kt 750 ppm 827k l b

Receivables $A m 0 1 1 1 11 13 13 Strel ly, high grade 500 kt 600 ppm 661k l b

Other $A m 0 0 0 0 0 0 0 Strel ly, balance 900 kt 450 ppm 892k l b

CURRENT ASSETS $A m 1 6 11 7 35 44 36 Pi t Des ign 2,162 kt 640 ppm 3,051k l b

Receivables $A m 0 0 0 0 0 0 0 Pilgangoora Mineral Resources

P , P & E $A m 2 3 1 20 20 18 16 Ta2O5 grade conta ined T Li2O grade Conta ined Li2O

Mining Properties / Exploration $A m 4 4 3 3 3 3 2 Inferred Resource 10,400 kt 240 ppm 5,503k l b

Other $A m 0 0 0 0 0 0 0 Inferred Resource 8,600 kt 1.01 % 87 kt

NON‐CURRENT ASSETS $A m 7 6 4 23 23 20 18

TOTAL ASSETS $A m 8 12 15 30 58 65 54 Beer & Co estimated mining inventory, Pilgangoora

Ta2O5 grade ined Ta2O5 Li2O grade ta ined Li2O

Payables $A m 0 1 1 1 6 6 6 25,400 kt 240 ppm 13,439k l b 1.17 % 297 kt

Debt $A m 0 2 0 1 3 3 2

Other $A m 0 0 0 0 0 0 0 Asset based Valuation

CURRENT LIABILITIES $A m 0 2 1 1 8 9 9

12‐Sep‐14

Long Term Debt $A m 2 0 10 9 6 3 1 risking 100% Product per share

Deferred Tax Liability $A m 0 0 0 0 0 0 0 Tabba Tabba Resources $ 5m $ 4m 0.5 c 0.6 c

Other $A m 0 0 0 0 0 0 0 Tabba Tabba Extensions $ 5m $ 3m 0.4 c 0.4 c

Provisions $A m 0 0 0 0 0 0 0 Strel ly $ 2m $ 1m 0.1 c 0.1 c

NON‐CURRENT LIABILITIES $A m 2 0 10 9 6 3 1 fanking credits $ 1m $ 1m 0.1 c 0.1 c

TOTAL LIABILTIES $A m 2 2 10 10 15 12 10 Pilgangoora Resources $ 80m $ 32m 4.2 c 4.8 c

NET ASSETS $A m 6 10 5 20 43 52 44 Pilgangoora Extension $ 58m $ 12m 1.5 c 1.9 c

fanking credits $ 56m $ 12m 1.6 c 1.9 c

Accumulated Profit (Loss) $A m (12) (13) (12) (10) 4 19 22 Corporate ($6m) ($6m) (0.7c) (0.7c)

Reserves $A m 1 2 (7) 3 13 7 (4) Cash / debt ($0m) ($0m) (0.1c) 0.0 c

Contributed Equity $A m 17 20 24 27 27 27 27 cash to be raised $ 7m $ 7m 0.9 c 0.8 c

$A m 6 10 5 20 43 52 44 TOTAL $ 208m $ 65m 8 c 10 c

Minority Interest $A m 0 0 0 0 0 0 0 Shares on issue 330.3m FPO shares 91.8m options

Total Equity $A m 6 10 5 20 43 52 44 263.8m issued 2014 91.8m op. ex'd

69.9m CNs convertedSection 4 - Cashflow 13.6m new equity

Net Cashflow from operations $A m (3) (1) 3 (7) 18 27 22 Financial Ratios

Net Interest Paid $A m 0 0 1 1 (0) 0 0 Year ended June 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20

Taxes Paid $A m 0 0 0 0 (0) (10) (11) Revenue $A m 6 11 9 68 103 101

Change in Working Capital $A m (0) (5) (6) 4 (34) (9) 8 EBITDA $A m (1) 2 6 3 22 41

OPERATING CASHFLOW $A m (4) (6) (2) (2) (17) 8 20 EBIT $A m (1) (1) 1 3 20 37

NPAT (reported) $A m (1) (1) 1 2 13 26

Exploration Expenditures $A m 0 1 2 0 0 0 0 Adjusted EPS (cps) (0.3c) (0.1c) 0.2 c 0.3 c 1.7 c 3.3 c

Maintenace Capex $A m 0 0 0 0 1 1 1 EPS Growth (%) 56 % 202 % 91 % 494 % 95 %

Expansion Capex $A m 2 1 0 19 0 0 0 DPS (c) 0.0 c 0.0 c 0.0 c 0.3 c 2.4 c 2.6 c

PPE Acquisitions (Total Capex) $A m 2 3 2 20 1 1 1 Dividend Yield (%) 0 % 0 % 0 % 12 % 95 % 103 %

PPE Divestments $A m 0 0 0 0 0 0 0 PE adj. (x) x (6) (17) 17 9 1 1

INVESTING CASHFLOW $A m 2 3 2 20 1 1 1 EV / EBITDA (x) x (7) 6 3 7 0 (0)

EV / EBIT (x) x (7) (14) 12 8 0 (0)

Change in Equity $A m 2 4 2 3 0 0 0 Gearing (%) 13 % 63 % 32 % 15 % 10 % 6 %

Dividends Paid $A m 0 0 0 0 0 (10) (20) Return on Assets (7%) 9 % 10 % 34 % 58 % 63 %

Change in Debt $A m 2 0 8 0 (1) (3) (3) Return on Equity (9%) 19 % 10 % 30 % 49 % 53 %

FINANCING CASHFLOW $A m 3 4 10 3 (1) (13) (23) EBITDA Margin (%) n/a 37 % 55 % 39 % 32 % 40 %

Interes t Cover (x) x n/a n/a n/a n/a 22.1 50.3

Free Cashflow $A m (2) (3) 0 17 (15) (1) 1

Net Cashflow $A m 2 1 10 20 (16) (4) (2) Shareholdings

Nei l Biddle 34.438m 5.8 %

Vaughan Blank 33.333m 5.6 %

September 2014

discount rate = 12.0 % 30 June 2014



Important Information Confidential This document is for the confidential use of the recipients only and is not to be reproduced without the authority of Beer & Co Pty Ltd. It has been prepared at the request of Pilbara Minerals Limited and Beer & Co Pty Ltd will receive a fee for its preparation. Disclaimer The persons involved in or responsible for the preparation and publication of this report believe that the information herein has been obtained from reliable sources and that any estimates, opinions, conclusions or recommendations are reasonably held at the time of compilation. No warranty is made as to the accuracy of the information in this document and, to the maximum extent permitted by law, Beer & Co Pty Ltd and its related entities, their respective directors and officers disclaim all liability for any loss or damage which may be suffered by any recipient through relying on anything contained or omitted from this document. General Advice The content is of a general nature and is based on a consideration of the securities alone, and as such is conditional and must not be relied upon without advice from a securities adviser as to the appropriateness to you given your individual investment objectives, financial situation and particular needs. Whilst this document is based on information and assessments that are current at the date of publication, Beer & Co Pty Ltd has not undertaken detailed due diligence on the information provided and has no obligation to provide revised assessments in the event of changed circumstances. Disclosure Beer & Co Pty Ltd has been engaged by Pilbara Minerals Limited to prepare this research report and is being paid a fee for its preparation. In the future, Beer & Co Pty Ltd may provide capital raising services to Pilbara Minerals Limited on commercial terms. Directors of Beer & Co or other associate companies may own securities in Pilbara Minerals Limited. Beer & Co Pty Ltd seeks to do work with those companies it researches. As a result, investors should be aware that Beer & Co Pty Ltd may have a conflict of interest that could affect the objectivity of this report. Analyst Certification The analyst responsible for this research report certifies that all of the views expressed reflect his personal views about the securities and the issuer. Report prepared by : Pieter Bruinstroop [email protected]

BEER & CO PTY LTD ABN 88 158 837 186, AUTHORISED REPRESENTATIVE MELBOURNE VENTURE SECURITIES PTY LTD AFSL No. 224 313

Melbourne Office: Suite 4, Level 2, Bank House 11 - 19 Bank Place, Melbourne, Vic, Australia 3000 Telephone: Facsimile: Email:

(+613) 9600 3599 (+613) 9602 2291 [email protected]

Web: www.beerandco.com.au

Pilbara Minerals (PLS.ASX) 15 September 2014 Producing Copper Documents/PLS... · PLS has an...

Documents

Transcript of Pilbara Minerals (PLS.ASX) 15 September 2014 Producing Copper Documents/PLS... · PLS has an...