PLS Faces Growth Timing Questions Despite Robust Quarter and Market Recovery

Robust Financial Performance Amid Market Recovery

PLS Group Limited has delivered a strong December Quarter FY26, reporting a 49% increase in revenue to A$373 million. This surge was driven by an 8% rise in sales volumes to 232kt and a significant 57% improvement in average realised lithium prices, reflecting tightening market inventories and improving demand fundamentals.

The company’s production remained solid at 208kt, consistent with its operational plan. This performance was supported by enhanced mining efficiencies and a strategic shift to increase contact ore feed, optimising ore sorting throughput. Despite a modest 7% decline in production volume compared to the previous quarter, sales outpaced production, leading to a drawdown in spodumene inventory.

Operational Costs and Safety Metrics

Unit operating costs rose moderately, with FOB costs increasing 8% to A$585 per tonne, primarily due to lower production volumes and inventory drawdown. Including freight and royalties, CIF costs rose 11% to A$717 per tonne, reflecting stronger pricing and higher royalty expenses. Safety performance remained stable, with total recordable injury frequency rates consistent with prior periods, underscoring the company’s commitment to workplace safety.

Strategic Positioning and Growth Optionality

PLS continues to hold a strong cash position, with a 12% increase to A$954 million, bolstered by disciplined capital management and robust cash flow generation. The company is actively reassessing its growth options amid improving lithium market conditions. Notably, the potential restart of the Ngungaju Processing Plant is under review, with early works completed and a board decision expected in the March Quarter 2026.

Feasibility studies for the P2000 expansion project and the Colina Project in Brazil are ongoing, with timelines under review to align with market dynamics. Meanwhile, the lithium hydroxide chemical facility in South Korea, operated through the POSCO Pilbara Lithium Solution joint venture, remains idled to preserve capital amid supply chain disruptions, although PLS retains its 18% ownership stake.

Market Outlook and Demand Drivers

The lithium market shows signs of recovery with average spodumene concentrate prices rising and inventory levels tightening. Structural demand remains intact, underpinned by accelerating electric vehicle adoption and energy storage growth. PLS’s diversified portfolio, spanning upstream mining and downstream chemical processing, positions it well to capitalise on these long-term trends.

Looking ahead, the company emphasises disciplined capital allocation and balance sheet resilience as it navigates market volatility and evaluates growth timing. Updates on key projects and market developments are anticipated in the upcoming March Quarter.