The expansion will boost Pilgangoora's capacity from 2 million tonnes per annum to 5Mtpa.
The final investment decision remains subject to approvals and Pilbara securing the balance of project funding, after which major site works will begin.
POSCO, Ganfeng Lithium and Great Wall Motor Company have committed to 100% of the stage two offtake and will provide up to US$100 million of pre-payment or debt financing.
Pilbara had just over A$90 million cash at the end of September and is progressing a number of funding initiatives for the balance of the capital costs.
The expansion would boost Pilgangoora production from 330,000 tonnes per annum of 6% spodumene to around 800,000-850,000tpa over 17 years at cash operating costs of US$233 per tonne cost, insurance, freight for the first five years.
Life-of-mine operating costs would be $263/t.
The August definitive feasibility study returned a post-tax net present value of A$2.16 billion, using a 10% discount rate.
The enlarged project is expected to generate revenue of $12.2 billion and life-of-mine EBITDA of $6.3 billion.
The figures were based on a LOM estimated spodumene price of US$633/t, well below the current spot price of $900-960/t.
Stage two works are already underway and some long-lead items have been ordered.
Pilbara is hoping to commission the expansion in the December quarter of next year.
It comes after stage one started production in late July.
The second shipment departed Port Hedland late last month, carrying 6.3% spodumene.
Pilbara managing director Ken Brinsden said the company would build on the successful commissioning of stage one for the expansion.
"Pilbara Minerals has established a track record of getting things done - developing at scale, successfully executing a rapid build and ramp-up of the stage one project and confirming our ability to deliver high-quality products to our customers," he said.
"These achievements and more have allowed us to attract and grow production with premium customers in the global lithium-ion supply chain."
Brinsden said Pilgangoora's world-class resource of 226Mt at 1.27% lithium oxide for 2.86Mt of contained lithium justified further expansion, against a backdrop of high demand.
"This will ensure it becomes a mainstay in the next generation of large-scale, low-cost mines to support the significant growth in downstream lithium hydroxide capacity," he said.
"In much the same way as we got on with the job in stage one, we will work to the same tune in stage two."
Pilgangoora stage one will be formally opened by Western Australian Mines and Petroleum Minister Bill Johnston on Friday.
Pilbara shares rose 0.6% in early trade to 84c, valuing the company at around $1.5 billion.
