PLS has approved the A$1.9 billion P2000 expansion, targeting roughly 2 million tonnes a year of spodumene concentrate from Pilgangoora by 2029. The investment comes alongside a 31% increase in contained lithium reserves and a separate underground growth option.
- A$1.9 billion P2000 final investment decision
- Production target rises to approximately 2Mtpa from 2029
- Incremental post-tax NPV of A$2.7 billion and IRR of 29.5%
- Pilgangoora Ore Reserve rises to 249.2Mt at 1.24% Li2O
- Additional A$600 million to A$650 million infrastructure program
PLS commits to 2Mtpa Pilgangoora expansion
PLS Group Limited (ASX:PLS) has moved its flagship Pilgangoora operation into its next investment phase, approving the A$1.9 billion P2000 project to lift spodumene concentrate production to approximately 2 million tonnes a year. First production from the new Jimmagunya processing plant is targeted for the September quarter of calendar 2029, followed by an expected six-month ramp-up.
The feasibility study forecasts average production of about 1.97 million tonnes a year of SC5.2 concentrate during the first decade at steady state, with real FOB operating costs of approximately A$620 a tonne. On PLS’ assumptions, the expansion generates an incremental post-tax NPV of A$2.7 billion and an IRR of 29.5%, based on a long-term SC6 price of US$1,620 a tonne.
The decision formalises the growth plan that had been advanced by the A$175 million P2000 pre-FID spend, which was approved earlier this year to preserve the project schedule. PLS says the new investment will be supported by its A$2.3 billion cash balance at 30 June 2026 and operating cash flow, while leaving open the possibility of debt funding as future requirements develop.
Ore sorting reshapes the mine plan
The most consequential change from the 2024 pre-feasibility study is not simply a bigger processing plant. Improved metallurgical testwork and operating experience with ore sorting have allowed PLS to classify roughly 67 million tonnes of previously uneconomic mineralised contact material as ore.
That change reduces the planned life-of-mine strip ratio from 7.7 times to 5.6 times and increases the overall extraction of the orebody by about 17%, according to the company. Jimmagunya’s wet plant has also been enlarged by 26% to 6.3Mtpa, while its dry plant will have 9.0Mtpa of crushing and sorting capacity. The expanded configuration is expected to concentrate production through Jimmagunya and the Pilgan plant, with Ngungaju retained as flexible capacity that can be used when commercially beneficial.
Reserve growth adds mine life and underground optionality
PLS’ updated Pilgangoora Ore Reserve now stands at 249.2Mt grading 1.24% Li2O, containing approximately 3.1Mt of lithia. The company reports a 23% increase in reserve tonnes and a 31% increase in contained lithium compared with its FY26 Annual Report, although the comparison is affected by a change in the reporting point from run-of-mine material before crushing and sorting to coarse ore stockpile feed after sorting.
The update includes a maiden underground Ore Reserve of 46.5Mt at 1.50% Li2O. PLS says the open-pit reserve supports around 20 years of production under the P2000 schedule, extending beyond 25 years if underground mining is ultimately added. That underground case is not part of the P2000 investment decision, financial returns or capital estimate, and remains subject to a separate feasibility study, a future board decision and market conditions.
The wider Mineral Resource tells a more mixed story: it has been revised to 403Mt at 1.33% Li2O, down 8% in tonnes after updated economic, geotechnical and mining constraints were applied. PLS says the underlying geological model and grade estimation were unchanged. A separate Exploration Target of 75Mt to 150Mt at 1.1% to 1.4% Li2O remains conceptual and is not included in the Mineral Resource or Ore Reserve.
Infrastructure bill adds to the investment cycle
Alongside P2000, PLS intends to spend a further A$600 million to A$650 million through FY29 on infrastructure that it says will benefit the existing operation as well as the expansion. The package includes sealing and upgrading the 24-kilometre Wodgina Road East, a 1,200-bed permanent village and a new mine services facility for larger mining equipment.
The road upgrade is expected to enable RAV10 ultra-quad haulage and reduce concentrate haulage movements by about 35%. The Western Australian government has committed an initial A$11 million towards the Great Northern Highway intersection, with further public-road contributions subject to budget processes. PLS expects the road work to be completed by the end of 2028, while the village is due to begin entering service from late 2027.
The headline economics remain sensitive to lithium prices. PLS estimates that a US$250 a tonne increase in its long-term SC6 price outlook would add roughly A$900 million to P2000’s NPV, while the company’s base case itself relies on construction, commissioning, operating and approval assumptions that have yet to be tested at the expanded scale. The key question now is whether Jimmagunya can convert the newly recoverable material into the forecast tonnes and costs without eroding the value of the project before first production in 2029.
Bottom Line?
PLS has secured a large, apparently well-funded growth project, but the investment case now shifts from study quality to construction discipline, lithium pricing and Jimmagunya’s operating performance.
Questions in the middle?
- Can PLS deliver the A$1.9 billion Jimmagunya project on schedule and within its capital estimate?
- Will ore sorting and the lower strip ratio translate into the forecast A$620 per tonne operating cost?
- How will lithium prices, remaining approvals and the separate underground feasibility study shape the next investment decision?