Pilbara Minerals (ASX:PLS) reported a “very strong” first half of FY2026, returning to profitability as higher realized pricing and improved operating leverage helped lift earnings and margins, management said on the company’s results call. The company also announced board approval for a capital-light restart of its Ngungaju Processing Facility, with production scheduled to recommence in July 2026.
First-half earnings rebound on higher pricing and volumes
Managing Director and CEO Dale Henderson said the first half demonstrated how the company’s operational improvements made during the downturn are now converting into earnings as market conditions improve. “Revenue, EBITDA, and NPAT increased significantly year-on-year, unit costs reduced, and our balance sheet remains strong,” he said.
Net profit after tax was AUD 33 million, compared with a loss of AUD 69 million in the prior corresponding half. Garofalo noted NPAT included AUD 16 million in midstream demonstration plant project costs and AUD 39 million of non-cash impacts relating to PPLS, comprising a AUD 16 million write-down in the group’s call option and a AUD 23 million equity-accounted share of PPLS losses.
Costs and cash flow: unit cost improvement and strong liquidity
On costs, Garofalo said FOB unit operating costs decreased to AUD 563 per tonne, “driven by operational efficiencies and the benefit of higher sales volume.” He also said closing cash remained “strong” at AUD 954 million, down AUD 20 million during the half, which he attributed primarily to working capital timing.
Cash margin from operations was AUD 174 million, and cash margin from operations including mine development and sustaining capital was AUD 111 million. Garofalo pointed to pricing-related timing effects, including AUD 32 million in customer refunds tied to lower final pricing on FY2025 shipments that were settled in early H1 FY2026, and approximately AUD 85 million in positive pricing adjustments on December quarter shipments expected in the March quarter.
He said that when adjusted for these timing differences, underlying cash margin would be approximately AUD 291 million, or AUD 228 million including mine development and sustaining capital.
The company also emphasized liquidity and balance sheet capacity. In addition to AUD 954 million in cash, Garofalo said Pilbara has an undrawn debt capacity of AUD 625 million under its revolving credit facility, providing “over AUD 1.6 billion in total liquidity.”
Ngungaju restart approved; most restart costs to be expensed
Henderson said the Ngungaju restart is a “tactical reactivation of existing infrastructure,” with “modest” capital requirements and limited execution risk. He added that operating costs are expected to remain within the company’s broader cost guidance range.
Asked about ore sourcing for Ngungaju, management said feed will come from the full mine rather than a single pit, with optimization across available pits depending on mine plans. Henderson said the restart requires a small increase in fleet and some additional operators, but said the main uplift is onboarding processing operators for the plant.
On capital expenditure guidance, management told analysts that “the majority of the costs in relation to the [Ngungaju] restart will actually be expensed,” flowing through the profit and loss statement. The company linked this to its FOB guidance being “towards the upper end of the scale from $560-$600 a ton.”
On ramp-up, management said it would provide more visibility with next year’s guidance, targeted to be released with the June quarter results, and described the restart as a “staged ramp-up.”
Contracting, price floors, and market commentary
During Q&A, Henderson discussed the company’s offtake agreement with Canmax, including a $1,000 per tonne price floor referenced by analysts. He said the company likely would have proceeded with the Ngungaju restart decision even without that offtake, citing “strong inbounds seeking supply” and a competitive process with multiple potential counterparties.
On how the price floor was determined, Henderson described it as the result of negotiation and market testing through a tender process. He said product specifications were consistent with how the company engages other customers, and characterized the final terms as a “sensible landing point.” He also said the agreement reflected what he described as a “premium” for contracting with Pilbara as a reliable supplier.
Asked whether the floor price was sufficient to underpin positive cash margins specifically for Ngungaju, Henderson said the company views the operation on an aggregate basis across the two operations combined, and said management was “very happy” with the $1,000 per tonne floor.
Henderson also commented on recent pricing trends, saying the company viewed the market as “short” and that “recent pricing today is approximately around $2,100 per ton for spodumene.” He said the strength was notable given the Chinese New Year period, which has “typically” seen seasonal softness. He described price increases of about 5% over the prior week, 50% over two months, and 150% over six months, and said inbound demand for supply remained strong.
Growth pipeline updates: P2000, Colina, and midstream/downstream initiatives
Beyond the restart, the company provided updates on study timelines for its larger growth options. Henderson said P2000 is a brownfields expansion at Pilgangoora that would increase capacity to approximately 2 million tonnes per annum, subject to a final investment decision, with a feasibility study targeted for the December quarter of this calendar year. He added that future production from P2000 remains unallocated.
For Colina in Brazil, Henderson said work is focused on drilling, resource growth, and optimizing the development pathway, with a feasibility study targeted for the December quarter next year. He described the effort as prioritizing drilling to grow the resource before finalizing the optimal processing plant size, and said the company would provide more color on timing, including first production, in future disclosures.
On permitting, Henderson said the permits required for the P2000 expansion have been secured.
Pilbara also discussed value chain initiatives. Management said the midstream demonstration plant was construction complete in the December quarter, with commissioning updates expected in the coming months. The company said it agreed a strategic restructure with Calix and would acquire full ownership of the demonstration plant, simplifying governance, strengthening operational control, and securing a perpetual royalty-free license for the technology within its primary lithium operations.
On the PPLS joint venture with POSCO, Henderson said both trains at the hydroxide facility were idled in the December quarter to preserve capital and align with market conditions.
Henderson also addressed downstream processing outside China, highlighting that Australia faces challenges including higher power, labor, and capital costs and a lack of an integrated battery ecosystem, while noting midstream processing could be a more viable variant. He said midstream could reduce transport costs by leaving alumina silicate at the mine site, shipping a more concentrated lithium salt, and potentially reducing carbon footprint through Calix’s electric calciner technology. He added that validating production costs and margins is a key purpose of the demonstration plant.
On safety, Henderson said the company’s total recordable injury frequency rate increased to 3.79 from 3.1 in the prior period, calling the result “not acceptable” and outlining intensified targeted safety initiatives and increased frontline leadership engagement.
Looking ahead, Henderson said the company’s approach remains anchored in disciplined capital allocation and balance sheet resilience through a volatile cycle, with growth described as “an option, not an obligation,” gated by study outcomes, sustainable market conditions, return thresholds, and funding capacity.
About Pilbara Minerals (ASX:PLS)
Pilbara Minerals Limited engages in the exploration, development, and operation of mineral resources in Australia. The company primarily explores for lithium. It primarily holds a 100% interest in the Pilgangoora project located in the Pilbara region of Western Australia. The company was incorporated in 2005 and is based in West Perth, Australia.
