Pilbara Minerals has approved the P2000 expansion project for Pilgangoora, committing A$1.9 billion in capital expenditure to increase production capacity to approximately 2 million tonnes per annum at steady state. The project targets an incremental post-tax net present value of A$2.7 billion and an internal rate of return of 29.5 percent, both measured against management’s latest operating plan excluding P2000. First production is scheduled for the September quarter of calendar year 2029, with a six-month ramp to steady state.
The expansion’s returns rest on processing improvements that unlock approximately 67 million tonnes of previously uneconomic mineralised material. Enhanced ore sorting and flotation reduce the life-of-mine strip ratio from 7.7 times to 5.6 times, allowing more efficient ore extraction. These changes support the projected unit operating cost of approximately A$620 per tonne on a free-on-board basis at Port Hedland, calculated as a 10-year average in real terms. The company has simultaneously updated its Pilgangoora Ore Reserve upward by 31 percent in contained lithium and 23 percent in reserve tonnes, reflecting both the processing improvements and the maiden underground ore reserve of 46.5 million tonnes.
Beyond the core P2000 project, management intends to invest between A$600 million and A$650 million in enhancing infrastructure. This includes sealing the 24-kilometre access road to the Great Northern Highway, building a new 1,200-bed cyclone-rated village, and constructing an eight-bay fleet maintenance facility. The company characterizes these benefits as independent of P2000, suggesting they will improve operational competitiveness under any scenario.
The expansion positions Pilgangoora as a world-scale producer in the second quartile of the global cost curve, with a projected mine life exceeding 20 years. Management notes strong customer engagement on future P2000 volumes and indicates that offtake pricing floors protect earnings as customers increasingly prioritize supply reliability. The company maintains a strong balance sheet with A$2.3 billion in cash as of 30 June 2026, and expects ongoing operating cash generation to support the three-year investment cycle alongside potential debt financing.
The company retains further optionality through underground mining, which the preliminary feasibility study suggests could contribute 2.2 million tonnes per annum at steady state, extending the mine life to over 25 years. Management indicates a feasibility study is underway, with any future underground activity subject to its outcomes, market conditions, and board approval. Key catalysts to track include construction milestones, customer announcements on P2000 offtake commitments, progression of the underground feasibility study, and lithium market conditions. This announcement has been flagged as price sensitive and material by the Australian Securities Exchange.
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About PLS Group Limited (ASX: PLS)
PLS Group Limited is a global producer of lithium materials that explores, develops, and operates mineral resources with a focus on lithium extraction. The company owns and operates the Pilgangoora lithium mine in Western Australia’s Pilbara region and the Colina Project in Brazil, with spodumene concentrate primarily exported to lithium chemical converters in China. The company is also integrated into the lithium value chain through a joint venture with POSCO in South Korea for battery-grade lithium hydroxide production.
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