There has been no company-specific news around PLS since it delivered a solid quarter in April; the share price has declined in line with the Spodumene price, and the ILIT ETF touched on earlier. PLS is one of the most operationally leveraged pure-play spodumene producers globally with a structurally improving cost profile. Every ~US$100/t move in the realised spodumene price translates to a meaningful swing in EBITDA given FY27 production is forecast at ~1,050–1,100kt, implying more than $100mn of EBITDA sensitivity per US$100/t at current volumes, before cost offsets.
- As reference, FOB unit costs fell 11% quarter-on-quarter to US$520/t in the March 2026 quarter, with full-year FY26 guidance of A$560–600/t FOB.
NB FOB means the cost of producing and loading the spodumene concentrate onto a vessel at the Australian port, but excludes freight, insurance, and other costs incurred to deliver the product to the customer (typically CIF China).
It’s important to note there is a very wide gap between analysts’ expectations for the lithium price in 2027, with the bulls in the US$3,000-4000 region while the bears are forecasting an average closer to US$1000, i.e. with the current spot spodumene is ~US$2,215/t, the bull case implies further upside of ~55–80% while the bear case implies a ~50% decline from here.
- Pilbara remains our preferred stock for lithium exposure, and after its 40% correction, its no longer priced for perfection.
The key risk is lithium retreating to the US$800–1,000/t range, which would compress producer margins back towards FY25 breakeven levels. That would be a major headwind for this $13bn producer expected to grow revenue by almost 400% between FY25 and FY27.
- We like the risk/reward towards PLS as it approaches $4 – we have added PLS to the MM Growth Portfolios Hitlist.
MM is cautiously bullish towards PLS around $4
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