PLS disclosed during its Q3 FY2026 earnings call that Pilgangoora lithium concentrate production reached approximately 267,000 mt, up 25% QoQ and a record quarterly high; FOB unit operating costs fell to A$539/mt, down 12% QoQ. With Ngungaju completing its production resumption ramp-up, the company's production has further increased, and the P2000 expansion project has also been approved. Although the decline in lithium prices had some impact on quarterly revenue, management believes there is still a healthy profit margin at current prices and has no near-term plan to adjust Ngungaju production.
The production increase this quarter was mainly driven by improved performance at the Pilgan beneficiation plant and the resumption of production at Ngungaju. Pilgan benefited from higher-quality ore feed, improved pre-concentration performance, and stable operations, with overall lithium recovery at Pilgangoora at approximately 75%. Ngungaju resumed production in July and completed its ramp-up in October, with production expected to increase further over the next three quarters. The company maintained its FY27 full-year production guidance, with quarterly production expected to fluctuate with ore characteristics, maintenance schedules, and weather conditions.
On the sales side, quarterly lithium concentrate sales were approximately 223,000 mt, down 11% QoQ, which the company attributed mainly to shipment timing. Management noted during the Q&A session that current concentrate demand is solid and PLS sales remain smooth. Affected by policy changes in Zimbabwe, uncertainties related to Mali, and production suspensions at some Chinese mines, some lithium chemical plants are placing greater emphasis on the stability of raw material supply.
The market is also watching whether falling lithium prices will prompt Ngungaju production cuts. In response to an analyst's reference to a market price of approximately $1,300/mt, management stated that at current prices the company's overall operations remain strongly profitable and there are no near-term plans to adjust production. In addition, some of the offtake agreements the company recently signed include a price floor of $1,000/mt, which helps it maintain production during periods of price declines.
From the company's production schedule perspective, after Ngungaju completes its ramp-up, PLS still has room for short-term production growth. The decline in lithium prices has not yet prompted the company to cut production, and lower production costs along with price protection in some offtake contracts are important supports for maintaining production.
On the cost side, the FOB cost of A$539/mt this quarter benefited from improved operational efficiency, higher production, and favorable weather conditions; greater capitalization of stripping expenditures also reduced current-period costs. The company expects that the upcoming rainy season and changes in diesel prices will bring cost pressure, and therefore maintained its full-year cost guidance. Capitalized stripping levels over the next three quarters are expected to remain higher than the previous fiscal year, but the unit cost reduction benefit is expected to be smaller than in Q1. The company will provide further details in the December quarter results on how the new reserves and strip ratio affect the allocation between operating costs and capital expenditure.
The quarterly average provisional selling price was $1,809/mt on a 5.2% grade basis, down 14% QoQ; revenue was A$563 million, down 24% QoQ.
On the expansion front, the P2000 project is planned to invest approximately A$1.9 billion, with the new Jimmagunya beneficiation plant expected to commence production in Q3 2029, followed by a ramp-up of approximately six months. In the first ten years after reaching full production, Pilgangoora's overall lithium concentrates production is expected to average approximately 2 million mt/year, with an average FOB cost of approximately A$600/mt on an actual price basis. The updated ore reserves contain 31% more lithium, which can still support approximately 20 years of open-pit mining after the expanded production scale.
The company is also advancing power and supporting infrastructure construction. The 20-year power purchase agreement signed with Fortescue is expected to reduce FOB costs by A$15–20/mt from 2029 compared with the original P2000 plan, and these savings have been incorporated into the future cost expectation of approximately A$600/mt. Road upgrades, a new camp, and mine service facilities will also improve transportation efficiency, mining arrangements, and equipment maintenance respectively.
On the funding side, PLS had cash of A$2.2 billion at quarter-end. After completing a $700 million bond issuance post-quarter, the company's cash and available credit facilities totaled approximately A$3.7 billion, providing funding support for project construction over the next two to three years.
PLS's recent production increase mainly came from the Ngungaju production resumption, while P2000 will further expand the company's supply scale after 2029. Low costs, partial contract price protection, and capital reserves enable it to maintain production and continue expansion during the period of drifting lithium prices. In the short term, attention should be paid to Ngungaju's subsequent production, the impact of the rainy season on production, and actual shipment conditions, while in the medium and long term, the focus should be on P2000 construction and commissioning progress.
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