PLS are delivering operationally, having beaten market expectations with their Sept production numbers, compounding a strong performance in the June quarter. Higher realised prices of $US742 during the quarter were key positives against the backdrop of ongoing market challenges in the lithium sector – it’s certainly been a shining light amongst its peers. Its large cash pile fell to $852m by quarter end, with growth plans hinging on a more favourable price outlook for Li prices.
Their Ngungaju processing plant at the Pilgangoora Operation is set to remain in care and maintenance throughout FY26, illustrating that even the best operators are feeling the pinch of weak prices. While we see a recovery playing out and are increasingly getting more and more bullish on BESS (Battery Energy Storage System) as a material demand driver, Li spot and futures prices have barely moved yet, and equities are already charging higher. Around current levels, we feel PLS is already factoring in Li prices more than 30% higher. While we can see the euphoria around BESS driving PLS higher, investors must remain conscious of the good news already baked into the respective share prices.
- We believe that PLS remains the best positioned to capitalise on a recovery in prices, but we struggle for valuation support unless we see a meaningful advance in Lithium prices above $US1,000.
- That said, we think an ongoing a short squeeze is a strong possibility, which would drive PLS towards $4.
MM is bullish towards PLS into 2026
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