Is Pilbara Minerals Still a Buy After Its 157% Rally? What Investors Need to Know

Pilbara Minerals (ASX: PLS) has surged 157% from its June low of $1.07, recently trading around $2.94. The rally reflects a broader lithium sector recovery after a brutal 18-month downturn. Chinese battery makers are restocking inventories, marginal producers have shut down operations, and spodumene prices have climbed roughly 30% from their lows.
For investors who watched Pilbara collapse from its peak of $5.66 in October 2022, losing more than 80% of its value, this comeback raises a critical question: has the easy money already been made, or is this lithium producer positioned for another leg higher?

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Pilbara Can Profit When Competitors Can’t

Pilbara Minerals is outperforming its lithium peers by doing what others can’t: staying profitable in a down market. Operating costs have dropped to $540 per tonne, down 13%. That may sound technical, but here’s what it means: with spodumene prices currently around $700 to $820 per tonne, Pilbara earns roughly $160 to $280 margin on every tonne sold. At these prices, three out of four lithium producers lose money.
The cost improvements stem from smart capital deployment. Pilbara’s P1000 expansion uses ore-sorting technology, essentially sensors that separate valuable lithium ore from waste before processing. By processing only the good stuff, the company cuts both energy use and costs per tonne. September quarter revenue jumped 30% to $251 million from $193 million, with prices up 24%.

Meanwhile, high-cost producers are exiting. Major Chinese producer CATL suspended operations at its lepidolite mine, tightening supply and reinforcing Pilbara’s competitive edge. JPMorgan recently upgraded the stock to overweight, citing improving market fundamentals. Pilbara’s scale, producing over 750,000 tonnes annually, positions it to capture outsized gains.
Compare this to ASX peers. Liontown Resources remains in ramp-up mode at Kathleen Valley, burning cash. Mineral Resources carries higher debt and operates higher-cost assets. Only Pilbara combines scale, low costs, and financial strength.

Strong Balance Sheet Provides Runway Others Lack

Pilbara closed its recent quarter with $852 million in cash and minimal debt. Combined with undrawn facilities, total liquidity exceeds $1.6 billion. What this means: multiple years of runway to operate through price weakness, and capital available for acquisitions.
This balance sheet allowed Pilbara to complete its expansion during the downturn while competitors cut back. The P1000 project added 420,000 tonnes of annual capacity. Now that capital spending has dropped by nearly half, from $650 million in FY25 to a planned $300-330 million in FY26, Pilbara can generate substantial cash flow as prices recover.

The Investor’s Takeaway for Pilbara Minerals

The bull case is straightforward. Global lithium demand continues growing as EV sales expand, while supply discipline improves as marginal producers exit. Pilbara’s low costs and strong balance sheet position it to thrive. Major investment banks have upgraded their outlook, forecasting a significant lithium price recovery ahead.

However, much optimism is priced in:

– UBS maintains a cautious stance with concerns that the rally has moved ahead of fundamentals
– Short interest remains elevated at approximately 16%, ranking among the ASX’s most heavily shorted stocks
– Shares remain down roughly 48% from their October 2022 peak

The risks are real. EV adoption could slow without subsidies. South American brine projects offer lower costs. Chinese producers remain aggressive.
For growth investors who believe in the EV transition, Pilbara offers leveraged exposure through a financially strong, low-cost producer. If lithium prices continue to recover, meaningful upside exists.
Conservative investors might prefer waiting for clearer evidence that prices have bottomed, particularly given how far this stock has moved. Either way, Pilbara’s transformation from struggling survivor to profitable producer makes it impossible to ignore.