PILBF - Pilbara Minerals: Massive Lithium Production Makes The Stock Cheap
- Pilbara Minerals is a lithium mining company operating the Pilgangoora Lithium-Tantalum project.
- Pilbara expects an increase in the price of lithium concentrate, and the management is increasing its production. Most analysts and I are expecting free cash flow to increase gradually.
- With an exit multiple of 10x FCF and the discount at 7%, the terminal value is equal to $1.7 billion. The implied share price is equal to AUD1.6 or $2.2.
- In my base case scenario, I used sales growth of 121% and 177% in 2021 and 2022, respectively. My numbers are approximately similar to the figures delivered by other analysts.
- From 2024, I used a constant sales growth of 15%. I also assumed FCF/Sales of 41%-30% in 2022-2024 and 30% from 2024 to 2030. I believe that my numbers are quite conservative.
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Pilbara Minerals: Massive Lithium Production Makes The Stock Cheap