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Citi has reaffirmed its Neutral stance on Pilbara Minerals Ltd (PLS: AU), keeping its price target unchanged at AUD2.90 while the firm updated its financial model to reflect the fiscal year 2024 results for the lithium mining company.
The revised model anticipates that Pilbara Minerals will use its cash reserves to pay off the existing $368 million in project and syndicated debt, while not drawing on the forthcoming AUD1 billion debt facility expected to be accessible in the December quarter.
In a conference call, it was clarified that the new debt facility is not directly tied to lithium market pricing and is not exclusively earmarked for funding growth. However, it does provide the flexibility to do so if needed.
The terms of the new facility, including net debt to EBITDA covenants, are deemed to be more favorable to the company's operations. Pilbara Minerals' leverage ratio has been set at 1.5 times, a figure derived from peer benchmarking and the company's internal assessments.
The development timeline for Lumsden Point was also addressed, with expectations for it to be operational by late calendar year 2025. Pilbara Minerals is set to contribute to the capital expenditures related to the construction of the shed and land-side infrastructure, although specific details have not been finalized.
The existing Port Hedland facilities are currently considered adequate to handle the export of the P1000 product.
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