FWIW a quick summary roundup from various broker reports on PLS in the past 24hrs

Citi:

SepQ: curtailing Ngungaju upgrades sentiment and FY25 cash flow

UBS: Sell 12m PT$2.35

Supply leaving (but it wasn't supposed to be PLS first)

PLS has reported strong Sep-Q production and sales of 220kt and 215kt respectively, ~10% ahead of expectations. Costs are tracking well as it ramps up and the realised price was weak as expected at US$683/t (vs US$872/t for IGO). However, the real news was that PLS will put the Ngungaju plant onto care and maintenance from December, downgrading FY25 production by ~100kt and reducing the FY26 outlook to P850 (UBSe 185kt) pending an improved outlook for market balance/prices. The updated FY25 guidance comes with A$63m shaved off capex and expectations for FOB costs to be A$45/t lower at A$620-640/t. PLS suggest this improves cashflow by ~A$200m at US$700/t spodumene. We are happy to remain slightly above on production and below on costs given PLS's excellent operating performance. We await more supply to exit the market. Our NPV based Price Target of A$2.35/sh remains unchanged and we retain a Sell rating

JP Morgan: Neutral Dec25 PT $3

SepQ24: Turning off Ngungaju, but remains another medium-term option should markets turn; retain Neutral

Key takeaways from the SepQ24 quarterly: 1) PLS has placed the higher cost Ngungaju plant into care and maintenance, citing the weak lithium market outlook with a 150-200ktpa impact on medium-term production, and providing further optionality on matching production to market growth (in addition to LRS Salinas and P2000), 2) FY25 production (-100kt), cost (-$45/t FOB) and capex (-$63m) guidance have all been moved lower, 3) the quarterly result was solid, with production/sales volumes beating our forecasts by 13% and 16%, flowing through to a 12% beat on the cost line, and despite realised pricing missing our numbers by 9%, the higher volumes saw revenues net out in line. Our FY25 earnings fall to -$53m (from -$19m) and our NPV is down 2%. We view the stock as fair value at current levels (1x P/NPV), and retain our Neutral rating

CLSA: Outperform PT$3.20

Strategic cost optimisation and growth planning drive upgrade

Playing the cycle smartly, PLS is optimising operations while preserving future optionality. The strategic move to P850, placing Ngungaju into C&M, should deliver up to A$200m in CF benefits while maintaining restart flexibility for the upturn. With growth capex completing late FY25 and steady-state 850ktpa production expected in FY26, PLS is now showing stronger operational discipline and strategic timing. We upgrade to O-PF and lift our TP from A$2.90 to A$3.20 seeing value in PLS’s medium-term production optionality and counter-cyclical strategy

Goldman Sachs: Not Rated

Pilbara Minerals Ltd. (PLS.AX): 1QFY25: Lithium production guidance cut with smaller plant into care & maintenance on cost management

We estimate revised unit cost guidance implies previously expected plant costs at ~A$870-1,120/t (where we continue to model the separate plants, with Ngungaju costs ~US$200/t higher than Pilgan), with the C&M decision likely only partly relating to plant unit costs, in our view, where turning off the plant also enables other significant cost savings such as a significant reduction in mining fleet on stopping work in the Southern pit while the Central/Eastern pits continue largely as planned (we expect combined mining and stripping costs to fall to ~A$10/t), while also deferring other planned capital spend. PLS expect to be able to ramp the plant back up in ~4 months when market conditions improve (we factor in a restart of Ngungaju in mid-CY26 on our price outlook)

RBC: Outperform PT $3.10

Our view: A strong 1Q was overshadowed by the decision to place Ngungaju on care-and-maintenance (C&M). While we are cognisant of minor near-term FCF benefits from curtailing production in light of spot prices, given Ngungaju's asset quality (mid-cost curve asset) and PLS's balance sheet strength, we think placing the asset on C&M was too conservative. We see other operations having higher risk of curtailment. Further to our first-take (link), incorporating 1Q and assuming Ngungaju is on C&M until 2028, sees FCF increase marginally in FY25E, but notable EPS/EBITDA reductions over FY26-28E. Our price target reduces 20c to A$3.10. Outperform retained

Macquarie:

Key Points

• PLS's 1QFY25 production, sales and cost beats were overshadowed by the decision to cut FY25 production guidance by 12% by placing Ngungaju C&M

• Whilst management believe the Ngungaju suspension saves ~A$200m in FY25 cash flow, the key question is when/if the plant returns to full operability

• We adjust production and costs in line with PLS's new guidance and model a FY28 Ngungaju restart aligning with our view on market rebalance

What we liked: Better grades and recoveries; Value over volume

What we didn't like: Realised pricing

What was interesting: Posco JV production

Morgan Stanley: Equal-Weight PT$3

Ngungaju turning off – not so bad after all

Although results benefitted from higher grades, which will eventually fall, near-term Ngangaju closure is accretive to valuation, reducing capital requirements, improving recoveries + reducing mining complexity. But, Li price still challenged with limited reasons to add exposure. Stay EW

BoFA:

PLS Sir, can we have some more?

DISC: Small Position Held in RL & SM

In todays AFR in a welcome relief from stories on conduct by Richard White and Chris Ellison some reporting on PLS

Pilbara Minerals cuts lithium output, suspends plant

For those outside the paywall...

Pilbara Minerals plans to weather the lithium rout by suspending one of its two processing plants in Western Australia and reducing production of the battery material until the commodity price recovers.

Australia’s largest pure-play lithium miner will shed about 50 workers as part of its decision to mothball the plant, and redeploy the remaining 50 employees from the facility across its operations, in the latest setback for Australia’s struggling critical minerals sector.

Pilbara said its decision to reduce output from its flagship Pilgangoora mine until June next year, and indefinitely pause operations at its Ngungaju ore processing facility starting December 1, was driven by the ongoing supply glut that continues to depress lithium prices.

The price rout over the year has torn through the global lithium sector. In Australia, New York-listed Albemarle, the world’s largest lithium producer, shed 300 jobs as part of a radical downsizing of its Kemerton lithium hydroxide refinery in WA.

Also in WA, Rio Tinto’s $9.9 billion takeover target, Arcadium Lithium, has wound up its Mt Cattlin lithium mine and Mineral Resources has reduced output at its Mt Marion mine. Junior miner Core Lithium has suspended mining at its Northern Territory-based Finniss project.

Lithium supply has far outpaced demand for the key battery commodity over the year, according to CRU Group, a London-based mining consultancy, with supply up almost 30 per cent compared to the same point last year, while demand is just 20 per cent.

“That’s not weak demand growth by any stretch of the imagination, but electric vehicle sales have been weaker than expected outside of China,” said Martin Jackson, the lead lithium analyst at CRU.

Another factor contributing to the lithium glut is that miners have sustained production to pursue shrinking profits and a return on their investment. “In absolute terms, China and Zimbabwe have brought 2½ times more additional annual supply on in 2024 than Australia and Chile combined,” he said.

On the demand side, battery cathode manufacturers made unusually early purchases this year, with a significant surge in April, he said. As a result, they will likely use the excess stock for the remainder of the year, effectively reducing demand.

Pilbara experienced a near 20 per cent drop in the price of its lithium-rich spodumene concentrate, falling to $US682 ($1039) per tonne in the September quarter, missing market consensus which expected the miner to fetch $US716 a tonne. Combined with lower sales, this reduced revenue by 31 per cent to $210 million in the three months to September 30.

Pilbara chief executive Dale Henderson said the Ngungaju plant was put on ice in response to current lithium market conditions, near-term lithium outlook and the ramp-up of its newly expanded processing facility, the Pilgan plant, at the Pilgangoora mine.

Once the lithium price has recovered, Mr Henderson said he expects the Ngungaju plant – which operates at a higher cost and lower capacity than the Pilgan plant – will take four months to gear up into production.

Mr Henderson did not specify the price at which the plant would be brought back into production, but added the lithium market needs further rebalancing, through either increased demand or supply cuts, to catalyse a near-term price improvement.

“The Ngungaju plant will remain in care and maintenance, ready to be fully ramped up in approximately four months when market conditions improve, allowing the company to quickly capitalise and capture value in a rising price environment,” Mr Henderson said on Wednesday.

Mr Jackson said CRU expects the lithium price to remain depressed until the end of the year, making the next six months very difficult for miners.

“Even though all eyes seem to be on this period for higher prices, the market is still in an appreciable surplus in 2025 without a greater response from incumbent producers and project investors,” he said. “Contract pricing mechanisms and built in discounts are going to make the next six months very difficult for miners.”

Battery cathode manufacturers in China have no plans to step up activity until the new lunar year, and there is a lot of uncertainty about the export market, he said. The European Union and the United States have placed tariffs on vehicles imported from China.

Still, Liontown Resources is advancing with plans to increase supply into the market. Liontown, which shipped its first batch of spodumene concentrate last month from its Kathleen Valley mine, is expecting to release its final mine plan by the end of the year. Analysts at Barrenjoey noted that the operation is “progressing well”.

Investors and analysts have been waiting for miners to cut supply from the market. But UBS analysts said Pilbara, a lower cost operation, wasn’t expected to be the first mover.

Over the 2025 financial year, Pilbara now expects to produce about 12 per cent less spodumene concentrate – between 700,000 and 740,000 tonnes – compared to previous guidance of 800,000 to 840,000 tonnes.

Pilbara’s unit operating costs are expected to be between $620 and $640 a tonne, down from $650 to $700 a tonne, reflecting lower costs at the Pilgan plant, which was recently expanded and ramped up.

Capital expenditure will also be lower – between $565 million and $610 million, compared to previous guidance of $615 million to $685 million.

Over the quarter, unit costs were 2.5 per cent higher at $606 per tonne, and production was 2.7 per cent lower at 220,100 tonnes. Spodumene concentrate sales were 9 per cent lower at 214,500 tonnes over the quarter, but 10 per cent above UBS expectations.

Pilbara’s share price closed 1 per cent higher at $2.88. The stock is down 27 per cent since the start of the year.

Since I just posted the two AFR articles on Pilbara's $560 million takeover offer for Latin Resources I'd figured FWIW I'd see what some of the brokers were saying (note most of these (except RBC) were published before yesterdays conf call and market open)...

Morgan Stanley: Underweight PT $2.70

Today's counter cyclical transaction makes sense. However, for PLS we remain concerned about medium-term recoveries and costs, the contract structures and prices achieved (lower vs. peers), and the ramp-up of the downstream conversion plants alongside weakening Chinese EV sales (-10% MoM in July)

JP Morgan: Neutral PT $2.80

PLS have announced today the acquisition of ASX-listed Latin Resources (LRS) in an all-scrip deal. At PLS’ last close price of $2.85/sh, the offer implies 20cps for LRS’ shareholders, a 67% premium to LRS’ last close. LRS own the Salinas lithium development project in Brazil, with a preliminary study indicating stage 1 production potential of 405kt of SC5 and 123ktpa of SC3 production coming online in 2026 for capex of US$253m. Stepping into a new jurisdiction could be challenging, although the LRS MD will be retained on a consulting basis by PLS for 12mths to assist with the transition. Another growth option (in addition to P2000), presents options in terms of sequencing additional capacity into a market that appears to be oversupplied on our S/D market assumptions over the remainder of the decade

Macquarie:

PLS inorganic strategy makes sense: PLS looking to add resource off Pilgangoora tenure is an intelligent move as it grows the company without incrementally adding tonnes to the market. It also arguably is timed appropriately with lithium prices in the doldrums and the retention of balance sheet flexibility important at this point of the cycle

Macquarie aren't providing a rating or PT - and note they "are currently on research restrictions" - digging into their disclosures section ...

Macquarie is currently providing investment banking services to Pilbara Minerals Ltd for which it expects to receive or intends to seek compensation

Macquarie is currently providing investment banking services to Latin Resources Ltd for which it expects to receive or intends to seek compensation

UBS: Sell PT $2.50

While LRS talks to 2026 first production, we're not convinced the market needs the supply and how soon it will come. Deal completion is expected late this calendar year with the Scheme meeting likely in mid-Nov 24. The 100% scrip consideration leaves net cash intact at A$1.6bn ahead of new project funding (debt/gov financing and strategic/ offtake options). However, we remain concerned an over-supplied lithium market will weigh on prices for 1-3yrs ahead and remain unchanged Sell rated at A$2.50/sh

CLSA: Hold PT $2.90

We believe the deal lacks short-term accretiveness, but if timed with a market bottom, which is likely near, and the asset meets its potential, it could offer significant long-term upside. We update our model accordingly and lower our target price from A$3.10 to A$2.90

RBC: Outperform PT $3.90 (up from $3.80)

PLS is offering A20¢ps (all scrip) for LRS. The rationale for the acquisition is to incorporate the 100% LRS-owned Salina project into the portfolio; diversifying the asset base counter cyclically. Based on a recent significant increase in Resources (and pending DFS), our estimates suggest a value accretive acquisition, but near-term earnings/FCF dilution. Further to our first take, we incorporate the Salinas development project in our NAV. Adjusting for the transaction has reduced our FY25e/26e EPS by 6-7%, but increased our price target 3% to A$3.90/sh. We retain our Outperform rating

DISC: Held (very small position) in RL

Two articles in the AFR today covering Pilbara's $560 million takeover offer for Latin Resources

Pilbara Minerals takes $560m punt on Brazil lithium project

and from the Chook The lithium rout can’t seem to stop the ASX’s most shorted stock

For those outside the paywall:

Pilbara Minerals takes $560m punt on Brazil lithium project

Pilbara Minerals boss Dale Henderson says the company acted courageously with a near $560 million takeover offer for Latin Resources and its flagship lithium project Salinas in Brazil, despite analyst and investor doubts about the deal.

In moving on Latin after assessing scores of lithium projects, Pilbara Minerals is making a countercyclical bet on the battery-making ingredient and spreading its wings beyond Western Australia where it is pressing ahead with a massive expansion of its Pilgangoora mine.

RBC Capital Markets analyst Kaan Peker questioned the rationale for the acquisition, saying it was hard to see any synergies given the distance between WA and Brazil. He suggested it was likely to be free cash flow and earnings dilutive.

Ben Lyons, director of equities research at Jarden, queried the quality of the Salinas ore body and whether it could be classified as a top-rank project based on drilling results released by Latin.

The Pilbara Minerals share price fell almost 5 per cent to $2.72 on the back of the takeover announcement, while the Latin price jumped 52 per cent to 18¢. The all-scrip takeover offer – 0.07 new Pilbara shares for each Latin share – values the target at almost $560 million based on Thursday’s prices.

One of the attractions for Pilbara Minerals venturing into Brazil is to diversify its customer base away from China.

The bid for Latin comes as Brazil closes in on a deal with the United States to work more closely on critical minerals supply and improve access to Inflation Reduction Act subsidies.

The US ambassador to Brazil has suggested a deal on preferential treatment in critical minerals could be signed at the G20 leaders’ summit in Rio de Janeiro in November.

Pilbara Minerals has not made an acquisition since it gobbled up Pilgangoora neighbour Altura Mining in 2020 after a collapse in lithium prices.

It is also the first deal spearheaded by former Macquarie investment banker John Stanning since he joined Pilbara Minerals last year on the back of a series of big lithium transactions.

Pilbara Minerals is thought to have assessed lithium projects in its WA backyard, including the Azure assets now owned by Gina Rinehart and the Mineral Resources-backed Wildcat Resources’ Tabba Tabba project that sits close to Pilgangoora.

Mrs Rinehart and Mineral Resources boss Chris Ellison led a spending spree on lithium stocks in WA last year as Pilbara Minerals held fire.

Mr Stanning said that he would “much rather be buying at this point of the cycle than where people were buying last year. We looked at all of those and didn’t see value compared to today.”

Perth-headquartered Latin Resources ended June 30 with $21 million in cash and has been looking for a buyer or partner to develop Salinas.

Asked why Pilbara Minerals did not wait until the Latin share price fell further, or it ran out of cash, Mr Henderson said the takeover target probably had other options.

“Latin ran a process for offtake, and they were engaged with other parties. We don’t know the details of that, but they had other options,” he said.

“We believe that to be true because it’s a great asset, and that obviously weighed on our thinking.”

Latin has put a $US253 million ($383.3 million) price tag on developing the first stage of Salinas, which is next to the Sigma Lithium mine that started production last year in the Minas Gerais region of Brazil. The second stage has a $US55 million price tag.

Pilbara Minerals said it would look at debt, partnerships and funding sources tied to Salinas’ offtake to finance the development. However, it will only press ahead “if and when market conditions are supportive”.

Pilbara Minerals is currently the most shorted stock on the ASX as some investors bet against lithium prices.

Mr Henderson said Pilbara Minerals had been running a rule over the Salinas project for the past six months and saw it as having the potential to become one of the world’s top hard rock lithium mines.

He said the deal was a reflection of the company’s pioneering spirit, which has included developing Pilgangoora and its associated processing plant, breaking new ground in lithium auctions and moving downstream into a lithium hydroxide plant in South Korea.

“There is a level of courage around stepping into this region, but we have conviction,” he said.

“I think in the fullness of time Pilbara will be judged on the agreement we made today, and I think history will look back on us kindly.”

The company has already invested in an expansion project to grow production at Pilgangoora to about 1 million tonnes a year within three years, and signalled it could eventually jump to 2 million tonnes a year.

Mr Henderson said the Latin acquisition provided options to sequence new supply and diversify into new markets such as Europe and North America.

Latin is led by Chris Gale, the founder of boutique corporate advisory firm Allegra Capital.

The lithium rout can’t seem to stop the ASX’s most shorted stock

While there are many things to be wary of in mining, one is domestic champions going offshore. Can Pilbara Minerals become a two-trick pony?

West Australian lithium miner Pilbara Minerals is very good at one thing. In an industry where no one wants to be a one-trick pony, can it be good at two?

If it is, the $8.5 billion Pilbara Minerals is going to have to prove the doubters wrong. You could sense the groans coming out of investors’ offices in Sydney and Melbourne as the domestic champion miner made its big strategic move.

While there are many things to be wary of in mining, one is domestic champions going offshore. Just because you can dig up rocks and build plants in Australia, it doesn’t guarantee you can do it on the other side of the world.

And synergies between farflung assets brought together by M&A deals are usually scant, as Rio Tinto boss Jakob Stausholm reminded us a fortnight ago.

Nevertheless, Pilbara Minerals, which makes more than $500 million digging up and selling WA lithium in a bad year like FY24, is doing it.

It is buying ASX-listed Latin Resources to get it hands on the Salinas lithium project in Brazil. Salinas has a big resource (2.3 million tonnes), potential 10-year-plus mine life and, at best, could be mining hard rock lithium in a couple of years.

The deal values Latin Resources at $560 million; it’s early stages with a definitive feasibility study under way.

If its second trick works, Pilbara Minerals boss Dale Henderson will look like a champion.

The best thing you can say about it is that it is a countercyclical move; Pilbara Minerals is buying when others are retreating (Arcadium Lithium may shut Mt Cattlin, for example), making it a “big surprise”, as Euroz Hartleys analyst Trent Barnett says.

“We assumed Pilbara would buy one of the more obvious projects; so this is left field for us.”

It is using scrip, not cash, offering Latin Resources shareholders a relatively small chunk of the combined group (6.4 per cent), swapping expensive scrip for cheap resources and reserves.

But in times like this, the naysayers win the day. Pilbara Minerals shares were down 3.9 per cent on Thursday, to be down 31 per cent this year and 43 per cent since last August. It’s like this across the lithium sector.

It’s funny how investors change their moods. In tough times like these, they want Pilbara to be a one-asset miner focused only on improving and expanding its Pilgangoora project. In better times, they bag Henderson for having only one asset and not “moving forward”, as he put it.

Now there is competition for capital in the Pilbara Minerals portfolio.

“This is our wheelhouse,” Henderson told some of the sceptical analysts on Thursday. He says Salinas looks similar to Pilgangoora, he likes the geology and the region, and the timing – it’s the pick of 100 projects Pilbara Minerals’ corporate development team has studied.

But is it really better than just focusing on Pilgangoora above all else? Pilbara Minerals, already the most heavily shorted stock on the ASX, isn’t going to win that debate today or this week, while the lithium price is in the toilet. But it is buying now for when things turn.

DISC: Held (very small) in RL

AustralianSuper builds stake in lithium miner Pilbara Minerals

Australia’s largest pension fund on Thursday emerged as a 5.1% stakeholder in Pilbara Minerals after snapping up shares now worth A$558 million ($371 million) at a time of heightened interest in the country’s lithium miners

The only shareholder with a larger stake in Pilbara Minerals is a subsidiary of Ganfeng Lithium Group, which owns 5.7%, according to LSEG data

A stock exchange filing, required as AustralianSuper‘s stake now makes it a “substantial shareholder”, showed the A$300 billion fund had built its position since July, picking up more shares in September and October as Pilbara‘s share price dropped

Lithium stocks have been battered as prices for hard rock lithium, or spodumene, have slumped 70% over the past year. Pilbara Minerals is the most shorted stock on the Australian Stock Exchange, ASX data shows, which has sent its shares down 21% over the past year

However, buyers are betting the plunge in lithium prices will be short-lived as supply shortages for battery makers reemerge

AustralianSuper declined to comment

The pension giant has become a more activist investor, leading opposition to a high-profile $10.6 billion bid for Australia’s top power retailer Origin Energy

Its move into Pilbara Minerals comes at the same time as mining magnates have snapped up stakes in takeover battles for some of Pilbara‘s rivals

Gina Rinehart, Australia’s richest person, spoiled Albemarle’s ALB.N A$6.6 billion bid for Liontown Resources LTR.AX

Pilbara‘s shares closed 2.3% higher on Thursday