Calix Limited (CXL) Earnings Call Transcript & Summary

Welcome to the Annual General Meeting of Calix Limited. My name is Darren Charles, and I'm the company's Secretary. Today's meeting is being held as a hybrid meeting with a combination of shareholders present in the meeting room here in Sydney and others participating online in an audio and video format via the Lumi platform. We hope that this hybrid format allows as many of our shareholders, proxy holders and guests to attend the meeting as possible. Shareholders and proxy holders who are attending online have the same ability to ask questions to the Board and submit votes on the resolutions of the meeting as those who are in person with us today. To help facilitate the structured process for the business of the meeting, for each individual item of business, we will ask those in the room to ask any questions. First, before turning to those joining virtually and inviting them to ask questions via the platform. For online attendees, written questions can be submitted at any time during the meeting. You can also ask questions directly during the business of the meeting when each resolution is being considered. We ask that if you do wish to ask a question using the audio system that you introduce yourself, so the Chair can directly address you in response. To ask a written question via Lumi, press on the speech bubble icon towards the top of the window. This will open a new screen. At the top of that screen, there is a section for you to type your question. Once you have finished typing, please hit the arrow symbol to send. Please note that while you can submit questions from now, they will not be addressed until the relevant time in the meeting. Please also note that your questions may be amalgamated if we receive multiple questions on 1 topic. Finally, due to time constraints, we may run out of time to answer all of the questions. If this happens, we will answer them as quickly as possible via e-mail or by posting responses on our website. To ask an audio question using the online system, click on the request-to-speak button at the bottom of the broadcast window. The broadcast window will be replaced with the audio question interface. Please confirm your name and the topic of your question and click submit request, following instructions to grant access to your microphone and to join the queue. This second slide illustrates what happens to the interface when clicking on the request to speak about. Voting today will be conducted by way of a poll on all items of business. To provide you with enough time to vote for those joining virtually polling on the resolutions is now open. Equally, for those in the room, the polling cards handed to you on arrival can be filled out at any time. If you are eligible to vote at this meeting with the Lumi platform, a polling icon will appear at the top of the window adjacent to the speech bubble icon. Selecting this icon will bring up a list of resolutions and present you with voting options. To cast your vote, simply select 1 of the options. There is no need to click submit or enter button as the vote is automatically recorded. You are, however, able to change your vote up until the time the chair declares voting closed at the end of the meeting. For those of you in the room, once your voting cards are complete, they will be collected by staff from Boardroom and tabulated with the online votes. The results of the polls will be published on the ASX platform later today. I will now hand over to Peter [ Chip ] Turnbull, Chair of the Board of Directors for the commencement of the Calix AGM.

Thank you very much, Darren, and good morning, everyone. Thank you all for joining us, some physically here in the meeting room today, and I think quite a bigger group online. So we're very pleased to have you with us. As Darren noted, I'm Peter Turnbull the Chair of the Calix Board. I would like to welcome everyone to Calix's 2022 Annual General Meeting, which is, in fact, our fifth -- only our fifth as a listed company. Our third using a virtual meeting platform and our first using this hybrid format. I expect that most people now are fairly familiar with the operation and structure of hybrid meetings. But if you need any assistance during the meeting, just let us know. As always, as Darren touched on, our goal for this year's AGM is to make the meeting as interactive as possible for shareholders using the Lumi platform. it will enable you to make comments, ask questions and vote whether you are here in person or with us virtually as Darren has just touched on. First up, I'd like to introduce the Board and management team who are attending here with me today. We have Helen Fisher, Non-Executive Director and Chair of the Audit and Risk Committee. We have Jack Hamilton, Non-Executive Director and Chair of the Technology Committee; Phil Hodgson on my left, the Managing Director and CEO; Mark Sceats Executive Director and the Chief Scientist, and Darren Charles, on my right, the Company Secretary and Chief Financial Officer. I would also like to welcome and note the presence -- well thank them for the presence of our company's auditor, Ian Hooper of BDO and from our legal advisers, James Delesclefs and Michael Jefferies with Hamilton Locke. So thank you for being with us here today. I'd just like to make a few introductory remarks, and then I'll turn to the formal business of the meeting, and then Phil will provide a more forward-looking presentation after that. Government's organizations and investors are increasingly focused on environmental, social and governance principles, commonly known as ESG principles. This theme of this movement is very much propelling what Calix is doing, really helping us to move forward. Some of you may have seen the speech is made today that COP 27 in Egypt to underscore the need for change, particularly in relation to decarbonization inequality and proper standards of governance just feeding back into those ESG principles. One demonstration of the growing ESG momentum is in the '22 -- 2022 global investor statement to governments on the climate crisis which was submitted to governments before COP27. This statement was signed by 602 institutional investors representing almost $42 trillion in assets under management. Globally, there is a rapid and urgent shift towards electrification and sustainability with investment funds backing these themes at a very rapid pace. It represents a unified investor call for governments to implement the policies needed to address decarbonization and accelerate the transition to a net-zero emissions economy. McKinsey notes that in the first half of 2022 alone, investors have channeled almost USD 90 billion into companies that are developing new climate-related technologies. The Inflation Reduction Act recently passed in the United States is also noteworthy at this stage. It includes approximately USD 270 billion to accelerate the energy transition and to support U.S. domestic manufacturing, which will include the reengineering of the whole energy value chain. McKinsey also estimates the need for some U.S. $275 trillion to be spent between 2021 and 2050 to fund the global energy transition. This equates to some USD 9.5 million trillion per annum on a global basis. So the figures are staggering. McKinsey also -- the McKinsey estimate represents about 7.5% of GDP annually on average, with the biggest increase in spend on physical assets expected to occur between 2026 and 2030. Calix's technology solutions, particularly those aimed at solving global challenges in industrial decarbonization therefore, extremely well placed to capitalize on the strong and growing market tailwinds. Our core technology platform is being leveraged by each of our 5 lines of business. to progress innovative technology solutions, targeting various specifically identified global challenges. In the 2022 financial year, Calix's commercialization strategies gathered significant momentum despite the considerable economic uncertainty as the world emerges from the COVID-19 pandemic and also grappled with the impact of the war in the Ukraine and the associated energy and inflationary pressures caused by that war. As shared at our last AGM financial year 2022 marked the first material transaction in Calix's global commercialization strategy with leading decarbonization investor carbon direct capital management investing EUR 15 million in Calix cement and lime decarbonization technology business, which most of you would know, is referred to as LEILAC for low emissions intensity lime and cement. The strategic sale at a 6.98% stake in LEILAC demonstrated the underlying value of the technology platform and provided an example of the flexible funding options available to Calix to accelerate and scale its multiple lines of business. In parallel with this equity transaction, Calix put a license agreement in place directly with the LEILAC Group, which will deliver 30% of LEILAC's future royalty income to Calix regardless of Calix's subsequent shareholding in the LEILAC business. The scope and scale of Calix's ambitions in industrial decarbonization continue to grow as we seek to fulfill a very significant potential of our unique technology solutions offered to pressing societal and economic needs. I'd like to now just turn to take a brief look at Calix's financials. This is focusing on the financial year 2022. So in the 2022 year, we achieved a gross profit of $5.2 million, up from $5 million in the 2021 financial year. Higher-margin sales offset a 4% decline in sales revenue to $18.5 million. The slight reduction in revenue followed the anticipated cessation of a coal emissions reduction tax credit in the U.S.A., thereby affecting Calix's water business owned and operated in the USA. We concluded the financial year with $25 million cash on hand and minimal debt providing financial and balance sheet strength and flexibility. Grant income recognized in the '22 financial year was lower than in the previous '21 year due to the timing of key project dates within that financial year. Almost $3 million in grant funding was received in financial year 2022 and deferred to be recognized in later periods. A further 10 grant-funded projects were announced in the last 12 months, excluding the recently canceled and soon to be replaced Australian government's carbon capture, use and storage hubs and technologies program. I will leave it to Phil, the MD and CEO, to update you further on these projects following my address and the formal business of the meeting. As we said we would do in financial year 2022, Calix invested significantly in its people, including the addition of 10 new engineers the purchase of significant capital items and sourcing professional services to advance our commercialization goals on various fronts. Our focus on people, combined with our traditional ongoing fiscal prudence has given Calix a unique opportunity to continue to grow multiple successful lines of business, simultaneously into large addressable markets. So if we turn to the various -- just a bit of a brief overview of the various 5 lines of business. Just as a reminder of what those are, there's CO2 mitigation, sustainable processing, advanced batteries, biotech and the water business. Then we had an internal reorganization of our structure in this 2022 financial year. The benefits of this internal reorganization combined with the successful capital raising of $19 million in the same year, helped to accelerate multiple environmental business opportunities in financial year 2022. These are now being commercialized through a combination of joint ventures, licensing agreements and spin-out strategies. So turning in a bit more detail to look at each of the lines of business, in particular as well as the various trends and key achievements in financial year. Again, Phil will cover the key priorities looking forward to financial year 2023 as well as the key milestones we've set ourselves looking forward. So if we start with the CO2 mitigation business, LEILAC has undertaken a significant transformation in the past year as its focus to commercializing and in particular, scaling up the LEILAC technologies, the cement and lime decarbonization -- as mentioned earlier in my address, in September '21, one of the world's largest decarbonization investors, Carbon Direct invested EUR 15 million in LEILAC for 6.98% state to help accelerate the deployment of the LEILAC technology. In March of this year, LEILAC-2, a commercial scale retrofit of the LEILAC technology destined for construction of the Heidelberg Materials plant in Hanover in Germany passed its financial investment decision point, which is an important milestone. Over the course of financial year 2022, the LEILAC project pipeline grew by 63%, with a number of projects progressing through initial design and scoping work, LEILAC's rapidly growing pipeline of projects is a testament to the very significant demand for technically viable low-cost decarbonization solutions for cement and lime. This demand continues to grow, driven by increasingly ambitious net zero commitments from industry and strong carbon pricing incentives in Europe as well as carbon tax credits in the U.S.A., again, very significant tailwinds. Turning to sustainable processing, Calix's line of business developing decarbonization solutions for chemical and mineral processing. Industrial decarbonization tailwinds continue to drive demand for low carbon and low waste processing solutions for the materials of our future economy. Australia currently produces nearly half the world's lithium with the global market for lithium carbonate and equivalents projected to grow by a staggering 6x by 2030. Calix's lithium processing technology has the potential to greatly reduce the waste and CO2 footprint of Australian lithium and create a significantly higher value export product. Calix's codevelopment of a midstream lithium chemical plant with Pilbara Minerals, which many of you will be aware of is progressing well. This plant will utilize Calix's technology to produce a concentrated lithium salt product or lithium batteries. Following the award of the 20 million grant from the Australian government, Calix and Pilbara Minerals have agreed to commercial terms for a joint venture for sustainable processing of lithium sold and has completed an initial scoping study. In financial year '22, Calix announced the application of its technology for the decarbonization of iron and steel. While iron and steel are essential to today's society's continued development, they are responsible for around 7% of global CO2 emissions and are one of the most carbon-intensive and hard to abate sectors. Calix's zero emission steel technology, which many of you all know is referred to as ZESTY has the potential to enable electrification and hydrogen reduction in the processing of iron ore, thus providing new pathways to green in and steel. The initial testing conducted in the financial year just ended, pleasingly shows promising results for a range of iron ore types and the technology continues to develop at a rapid pace. Turning to advanced batteries -- advanced batteries line of business, advanced battery line of business also leverages Calix's unique flash calcination technology to produce novel battery materials that exhibit promising high-performance characteristics, which will be coupled with more affordable and sustainable production. Following early-stage research and development and positive collaboration with industry and academia, Calix's pilot production is on track for the first electric vehicle test application due in early 2023. So not too far away. At scale, Calix's advanced lithium manganese oxide cathode materials are estimated to reduce the energy required for production by approximately 6x compared with conventional lithium manganese oxide production, thereby helping to minimize the battery CO2 footprint and cost. With significant growth in demand expected for more simple, safe and affordable battery chemistries Calix's novel battery materials continue to show a very exciting promise. Turning to our biotech line business. Significant progress was also made there in the financial year 2022. The benefits of a safe, effective, environmentally friendly bioactive magnesium oxide continue to be identified and validated. I'm pleased to report that following more than 5 years of independent testing and trials in Australia. The registration of our core product, BOOSTER-Mag was approved by the Australian Pesticides and Veterinary Medicines Authority for crop protection purposes. Significant progress was also made on various trials, licenses and other agreements, including a broad spectrum antifungal and anti-pest crop protector. Demand for nonchemical alternative crop production products has continued to grow, and we expect that growth to continue. Dutch-based -- let's get this -- it's a difficult name. Dutch-based ProfytoDSD is seeking a replacement for the now-banned anti-fungal Mancozeb product. So ProfytoDSD has included BOOSTER-Mag in their crop protection protocols for the first time in the past European summer. Trials in marine coatings are also continuing with promising results achieved to date there as well. Turning to Water. The Water business. This is predominantly based in the U.S.A. As many of you recall. We acquired a business Inland Environmental there in 3 years ago. As mentioned earlier, revenues in the water business was slightly lower in financial year 2022 compared with the prior year, down by about $1.7 million in dollar terms. Gross margins, however, increased by a full year financial year 2022 to 33% achieving a higher gross profit despite the lower sales revenue. In Texas, Calix's market entry continues with strong sales and a growing pipeline of further opportunities. The plant location has been identified and lease agreed in Texas with procurement work for a new manufacturing facility well underway. Calix's growth plans for its water business also include market entry into 2 new states in the U.S. in addition to the establishment of 2 new hydration plants. And as mentioned earlier, Phil will provide an update on the key milestones achieved so in this financial year 2023 as well as the properties for each line of business for the remainder of this current financial year. Just turning to sustainability. As you've noted -- recognized sustainability sets at the core of Calix's purpose driving our innovations in industrial decarbonization and a range of environmental solutions. In our own operations, we are no different. Calix is equally committed to sustainability internally and we have undertaken several important steps to drive continuous improvement in our own internal environmental, social and governance practices. In the '22 financial year, we reaffirmed our commitment to the United Nations Global Compact, which is the world's largest corporate sustainability initiative, and we continue to integrate with the UNGC 10 principles throughout our own business. Calix is also committed to measuring, monitoring and reducing its carbon footprint in line with the Paris agreement and the 1.5-degree Celsius pathway. To this end, we've engaged external consultants to assist in developing our own emissions reduction road map for financial -- we also recently installed a very significant solar array of panels at Bacchus Marsh at our operations there with a maximum capacity of 334 kilowatts. The installation will generate about 408-megawatt hours a year, preventing an estimated 437 tonnes of annual CO2 equivalent emissions entering the atmosphere. The solar installation is designed to cover the total energy consumption of the BATMn reactor, which is there at Bacchus Marsh, which is our all-electric calciner. Calix is also committed to measuring and reducing the total amount of waste generated by Australian operations in this financial year '23 with an ambition to reach 100% sustainable material inputs that are either renewable, recyclable or reusable by 2030. Continuing to evolve our internal governance structure to support and controllable business as we grow is also an ongoing focus. So to further strengthen our own internal governance structure and practices. Over the next year, the Board will do 3 -- well, more than 3 things, for 3 key things: introduce a new code of conduct and Board charter; two establish a new Sustainability Committee of the Board; and three, update the charters for the Audit and Risk, Remuneration and Nomination and Technology Committees. Board renewal and succession has also been a focus for some time. Calix has had a very stable board with some minor comings and goings for quite a long time. But we're at a point now where we really need to cast our minds forward on what we need in terms of the Board for the future. So the Board continues to maintain a proactive and prudent process of Board succession and renewal helping to ensure the size and composition of the Board is appropriate to support the continued delivery of Calix's growth strategies as well as making the highest standards of governance. We welcomed Helen Fisher as a Non-Executive Director in September 2020, and we farewelled Lance O'Neill in November 2021. I might just say Lance was one of the longest-serving members of the Calix Board. We are very grateful for his considerable contribution to Calix as an investor and Board member. So at this stage, I'm pleased to report the next stage of Board renewal is well underway. It is anticipated that additional nonexecutive directors with the requisite skills and experience to bolster Calix's growth strategies will be appointed in the 2023 financial year and that 1 or more retirements will also occur to facilitate those appointments. This Board succession process also represents a near-term opportunity to progress Calix's long-held ambition to meet or exceed ASX Corporate Governance Council guidelines with respect to diversity, including gender diversity representation on the Board. On behalf of the Board of Directors, I would like to conclude my address today by sincerely thanking Calix's partners and customers for their continued commitment to solving global challenges especially during a period of significant economic and global uncertainty. Calix is an organization quite simply made up of great people. We thank every employee for their unwavering commitment to our purpose and to the goals we have set ourselves. I would also like to thank my Board and senior management colleagues, Helen Fisher, Jack Hamilton, Phil Hodgson, Mark Sceats and Darren Charles for their dedication to the goals Calix has set and for the considerable progress achieved during the 2022 financial year. We look forward to accelerating the key lines of business activity, aided by the recently closed $81.6 million capital raise. The AUD 60 million institutional placement and the $21.6 million share purchase plan. We're very well supported by both institutional and retail shareholders as well as a number of new institutional investors who have joined the register as a result of this recent capital raising. These funds will provide the resources needed to accelerate our commercialization strategies and further realize the potential of Calix's core technology platform. Finally, on behalf of the Calix Board, the management team and all the staff, I would like to thank each and every one of our Calix shareholders for your ongoing and very much valued support. So at this point, I'd like to turn to the formal business of the meeting. So just as some background in terms of how the voting is gone, leading up to the meeting. I can advise you that 202 valid proxy forms have been received by the cutoff date, totaling some 95.477 million shares, being equal to 54.4% of the shares on issue. So that's a pretty healthy voting outcome. There were no invalid proxy forms received nor were there any proxies lodged by security holders with a nil balance. And I just note, too, that each resolution before the meeting on which a vote is required will be conducted by way of a poll. So I'll turn to the first item of business. First item of individual item of business before the meeting. This is to consider the financial report and the reports of the directors and auditors for the year ended 30 June 2022. There's no formal vote on this item, and I note that Calix did not receive any questions prior to this meeting on the accounts for the auditors. However, for those shareholders present today, if you have any questions on the accounts that you wish to ask, please do so now. And again, we will take questions from the room here first before turning to any online questions received. So are there any questions from the room here to start with on the accounts -- no -- do we have anything online? Darren?

No, there are no online questions for this item of business, Peter.

Okay. All right. Well, thank you, everyone. I'll move on to the 3 resolutions before the meet

Ing and open the voting process. As Darren mentioned earlier, you can vote anywhere during the meeting. The first resolution is the remuneration report to consider and if thought fit to pass the following resolution as an ordinary resolution. That being -- that the remuneration report for the company for the financial year ended 30 June 2022, which forms part of the Director's report be adopted. Please note that the vote on the remuneration report is advisory and does not bind the directors of the company. Noting that each director has a personal interest in their own remuneration as described in the remuneration report. The Board unanimously recommends the adoption of the remuneration report. And as Chair of the meeting, I intend to vote undirected proxies in favor of this item. This resolution is also subject to various voting exclusions, which we noted in the Notice of Meeting. The proxy votes received for Resolution 1 are presented on the screen, which I think everybody should be able to see, including online. So at this point, can I ask if there's any questions on the remuneration report first from within the room here? No. Online, Darren?

There are no questions online for this item of business, Peter.

Okay. All right. Well, if you've not yet done so, please vote using the online voting tool as indicated earlier, or the proxy at here with us in the room. We will now move to the next resolution. At this time, I -- because this involves myself, I will hand over to Jack Hamilton to chair the meeting for this particular item.

Resolution 2 is to consider and if thought fit pass the following resolution is displayed on the screens, which is to being available is to reelect Peter Turnbull, who retires under the company's constitution and being eligible, offers himself for reelection to be reelected as a director. The Board unanimously recommends the election of Peter as a director. Again, proxy votes that have been received are shown on your screens. Are there any questions with the resolution, again, first in the room. Darren, any on the platform?

There are no questions online regarding this item of business, Jack.

All right. Again, if you haven't done so, online, please, the online tool is available and again, new proxy cards here in the room. And with that, thank you. I'll back to Peter.

Thanks very much, Jack. Thanks all. So I'd like to now move to the third and final resolution before the meeting. This relates to the Nonexecutive Director fee pool. There was a hopefully, a fairly detailed background explanation in the notice of meeting and the explanatory memorandum. But the resolution itself is to consider an if thought fit to pass the following resolution as an ordinary resolution. That for the purposes of ASX Listing Rule of 10.17 and Clause 13.19 of the Company's Constitution. The maximum aggregate amount of directors' fees that may be paid by the company to the non-executive directors per annum as increased by $400,000 per annum, from $500,000 to $900,000 per annum. The Board unanimously recommends the increase in the non-executive fee pool, recognizing our interest in this item. The proxy votes received for Resolution 3 are presented on the screen. For those -- yes. So again, if there's any questions on this non-executive director fee pool item, please feel free to ask from within the room here first. Darren, do we have anything online?

There are no questions online for this item of business, Peter.

Okay. Well, again, please using the online tools or the proxy voting papers at this end. Thanks. So that concludes the discussion of the formal items of business. So I'll just give a few minute or so to -- for people to get any last minute voting in and we'll close the poll voting system shortly. [Voting]

Okay. Well, hopefully, that's given everyone enough time to properly record their votes. So at this point, I'd like to invite Phil Hodgson, the MD and CEO, to provide a presentation which is going to focus more on the current financial year '23, what we're hoping to achieve and where we are at present. So thank you, Phil.

Thanks. Thanks very much, Peter, and thanks all for your attendance today, whether here in the room for the first I'm meeting to or online as well. I'll just -- we're sort of struggling with the face-to-face, but the online meeting seems to be working really well for us. But the face-to-face I can't see what's going on here, but only what's sort of going on up there. For those of you who are new to the company, Calix was found in 2005, we're fortunate enough to have one of the founders here with us, Mark Sceats, our Chief Scientist. And so Mark and another chap called Connor Horley founded the company back in 2005, unfortunately, Connor passed away, but Mark still with us, the powerhouse behind it. You can see the 28 patented inventions on 28 patent families. And it's all ours. It's all Calix IP. We are not licensing IP of CSIRO, as I've heard someone say, it's all ours. And a lot of it's originated just over there. But of course, the growing Calix team is contributing now to the patents that we're putting in place. And so it's a very important part of our company. It's the core of our company. It is our IP. And the other thing is with the sort of macroeconomic environment, I reflect on what Calix is and what we're trying to achieve, often 2 years ago. It was just 2 years ago that no country committed to net-zero emissions. No companies or hardly any had started to commit to net-zero emissions. And so everything that you see today that Peter presented in his slides about the trends that are happening in the financial markets. That has only started to really get the momentum over 2 years. So what is going to happen over the next 10 as Peter said, as the real wave of capital required to decarbonize the plant really starts to hit. And so we're only just at the start of a pretty amazing trend I think, as Peter mentioned, we IPO-ed in 2018, there was no interest in anything we were doing on decarbonization in 2018. The price of a tonne of CO2 on the EU Emissions Trading System was EUR 5 per tonne. It's now over EUR 80. And so all of that has happened in a very short space of time. And we just happen to be the right technology in the right place amazingly. And the other thing that have constantly amazes me is how many applications this technology can be applied to -- and often, people ask us, "Well, you look like sort of the people doing 100-meter dash for people we know a sense of direction. There's so many things you're trying to do, how -- are you going to do all those things? Well, when I go into what it is and how we're going to do this, hopefully, that starts to become clear for each of you because with the technology with this potential. We just cannot not do something if we see a great idea. And only in 2021, I think, Mark, we -- Mark came up with the idea of looking at this for iron and steel and the progress and the pace at which we've started to develop that particular application. [indiscernible] should be a great indication for how we do this quickly and how we can focus on developing these new applications for continuing to deliver on the other applications in our business. So if I move through. Some of you may not be familiar with the core technology or we may have not really sort of had it explained to you. So I'm going to do that now in -- this is my rock and roll part of the talk. I'll explain it with the rock and a roll. Normally, in a conventional kiln -- our technology is just a new way to heat things up. That's all what it is. In a conventional kiln, you put what you heat and how you heat in the 1 vessel. And normally, that's a fuel and there's a few rocks and a lot of match. And we've done much the same way in this sort of 5,000 to 7,000 years. And so what we do is a bit different. We separate how you heat from our heat. And we do that with a rather large steel tube. So here's where my roll comes in. So we have a rather large steel tube. The biggest ones we've made in nearly 2 meters in diameter, over 30 meters high. And so they're quite big -- bigger than this. But we heat that up to about 1,000 degrees centigrades. And then we heat that externally. Flames, we can heat it with biomass waste, we can heat it with renewable electrons. We can have like electric elements around it, like in the toaster, but obviously much bigger scale. We just heat this up to over 1,000 degrees centigrade. And whatever we're trying to heat goes down the middle, it needs to be a fairly small particle size. I mean, holding up a [indiscernible] in your hand, that's sort of particle size and then imagine dropping that to the floor and just watching that float down. That's all we're doing inside our tube. We're dropping it is whatever we're trying to heat down on the inside, it floats down through the tube -- and it's the red hot walls of the tube radiating heat into those particles that does the heating force. There's no flames or hot gases touching those particles from burning. It's just the radiated heat from walls of the tube heating up the particles. So that's how we do it, just separating how you heat from what you heat. So why do we do it this way? What's the point? Here's where the rock comes in. So this is a lump of limestone. This is 44% by CO2 for those who want to be chemically accurate. I usually go about half by way. But that we feel that way, that is half -- nearly half CO2 by weight in the form of carbonate -- calcium carbonate. And when the cement and lime industry heat this up, it releases that carbon dioxide out of the rock. And it makes lime and cement. But of course, all of the CO2 that's released out of the rock, they just leave it to go up into the atmosphere. And the cement and line industries together roughly 8% of global CO2 emissions, and over half those emissions are coming from the rock. And so the problem those industries face is the fact that their raw material is over half their emissions, not how they heat, even if they were able to heat with renewable electrons, which obviously our new as well, half conditions are coming from the low. So what does our kiln do that's a little different. Well, when you grinned this up into small particles as the cement and lime industry currently do and you drop it down at tube and the CO2 comes out of those particles. It comes at the top as a pretty pure stream of CO2. So it directly separates the CO2 that currently is being mixed in with all of their flue gases and just ejected out the stack. And so it directly separates that CO2 just from a different way to heat stuff up. And so that's 1 reason this technology is really quite interesting. There's a couple of other areas that it's getting a lot of traction in the marketplace for as well. And that's the ability for this thing to be renewably powered. So I talked a bit before about electrons elements around the outside of the tube. The ability to hit those elements with renewable electrons is actually causing a lot of interest in the technology. And the Pilbara Minerals opportunity that I'll talk about is actually centered around that. And I'll tell you why, when I talk a bit about Pilbara Minerals and what's happening there. And the last interesting thing about the technology is because there's no flames and smoke and hot points, touching the stuff you're trying to heat up, you can actually make uncontaminated high surface area materials. There's no contamination, as I mentioned before. There's no hotspots that burn these things. we can make it just right. Popcorn, as Mark likes to call it or I like to call it but Mark hates me calling it that. So that particular aspect is where your heating particles up and activating them. In a lot of mineral processing, in a lot of chemical processing, they do heating to activate or to extract those minerals even the Pilbara Minerals example as well, I'll talk a bit about what actually that heat is doing to extract that and why an even temperature uncontaminated by flame uncontaminated by smoke actually gives this kiln a huge advantage over conventional ways of heading up. And so there are 3 different advantages to heating this way. And so it sounds like -- and often, we get asked, well, it just sends a simple, why hadn't someone thought of that before. My usual flipped answer is, well, I wish I'd invented the wheel and patented that too. But in this one, it's actually when you get into the smarts of it, pretty elegant, let me put it that way, elegant. This tube will grow by 1.5 meters when you heat it to 1,000 degrees center grade. So a big 30-meter tube will grow 1.5 meters. How do you mechanically seal that so that you are having an atmosphere inside the tube that is what you want pure. And so our engineers have been working really hard on perfecting the application of the technology. There's all sorts of things that we do inside the tube as well. So are there tunnels in the tube. Do we have gases and particles moving in different directions or the same directions in the tube? Do we have all sorts of different temperature profiles on the tube to get what it is that we want when we process these things. They're not any of marked patents. They're not there because we don't want people to read them. So when it comes to patent protection, it's great to have the 28 patents, but the know-how of our engineers is really important as well. The trade secrets we have around this process is critical and thank you for voting for the Rem report. It's not just for meeting that same system that under, we receive share awards by options is available to all of our employees. And so it's critical in terms of retention of those employees and reward because they hold so much of the value of the company in their heads that they remain committed to the company. So they only get their rewards like I do over several years. They earn out those rewards over several years. And so it's a really important way to get the intellectual property within the company. And so the system that we have around Rem is not necessarily a conventional system with short-term cash and long-term cash or whatever. It is very much around incentive program designed for our employees because that's core to the value of this company. So anyway, on egress. Let me just keep moving on and less political about the technology. What we do is... Okay. Good. So if I start to touch on what is really quite exciting about the technology comment. We've talked about a lot of the -- every line of business under Peter's speech, but perhaps I'm going to focus on just a few key areas because -- if I look ahead to this year and what really is going to continue to propel the company this year, it is around decarbonization and around those huge things that we talked about. Cement and lime as I said, responsible for about 8% of global CO2 over 4 billion tonnes of cement and lime made every year and will likely be made every year all the way out to 2050, not easily replaced. We can see there are some sort of new cements and geo polars and those sort of things. But we were in the building products industry back in 2015, trying to make a magnesium cement. And I'll tell you what, every time we try to sell that cement in the building products industry, we've got asked a question, well, where's the building that you built with that, that had been around for 20 to 40 years. And so that question always then comes circularly back to cement building skyscrapers, 70-megapascal compressive strength what is the only material that we could trust to do that, and that's cement and lime. Massive amount of urbanization taking place over the course of the next 20 to 30 years in developing countries cement will be critical. There's not going to be a replacement for it. And so it has to be decarbonized. The other one up there is iron and steel, which I mentioned before. As I say, Mark, a wonderful idea in late eventually persuaded me that it was a good idea. It comes up with about 100 a week, and I'll try and hold that down about 1 a year that we actually pursue. But iron and steel did pick my interest. It's the same core technology. So in this case, we have hydrogen in the center of the tube. And we have iron ore that's introduced in the top, and iron ore fines. In some of this case, iron ore fines are millions of tonnes a year produced of iron ore fines, too small, obviously, lump is probably the prize of the iron ore industry because they don't actually do much to it. They just crushed it down a bit and sell it. smaller stuff, they have to pelletize. And they pelletize and sell overseas these pellets to iron ore -- to steelmakers, but there is stuff that's too small to that. This still loves small stuff. And so the iron and steel piece was hydrogen in the middle, iron ore fines in the top. And that hydrogen loves oxygen. Iron ore is basically rust to iron oxide. The hydrogen pulls that oxygen off the iron ore to make iron. Now there are other hydrogen reduction techniques. But what the genius of Mark's idea is we use our [ kiln ], we don't lose any hydrogen. We don't lose it to a furnace. It's all contained in there and outside, we head with renewable energy and the ability to reduce the amount of green hydrogen that is used to make a green iron and steel is critical to being the lowest cost. And so on iron and steel, pretty exciting, 7% of global CO2 emissions associated with iron and steel. And the other thing that's interesting about these technologies people ask me about competitive technologies. Yes, there are competitive technologies in these spaces. I can count on sort of 1 hand, maybe on in a bit, the number of technologies that are addressing the cement and lime issue, very few are actually going to solve that issue. I can count on a similar number, the number of technologies are going to address the iron and steel emissions issue. And so I can only count on 1 finger a single technology that does both core technology. So that's what's exciting for us at the moment. And a lot of the, I guess, momentum behind the company and while the progress that's being made in those areas is driving a lot of the interest. The third one I'll touch up here, materials for a clean economy. In this case, I'll talk a bit more about the Pilbara Minerals joint venture, and I'll run down to that particular slide. But it's an area where we're applying our core technology for spodumene and lithium extraction from spodumene. But there are other many other areas that we're developing this core technology into. We've talked about Illumina, we talked about clays, rare earths, all of these use a heating system to heat up a mineral to crack it open so that you can then extract okay? And when I go into the example I'll use in the Pilbara Minerals joint venture that we're forming the importance of having a much lower carbon footprint production economy here in Australia is only going to get more and more important. So we're really well placed across a number of critical minerals. Okay. Let's keep moving. I'll jump this one. I'm conscious of time. I've sort of late on a bit of that. But this is sort of a structure of our business. As Peter had covered off, there's 5 different lines of business we're pursuing. Why I put this one up is if you look to the right of this slide, you'll see there a Carbon Direct investment that Peter talked about during the last financial year. where an impact fund called Carbon Direct invested EUR 15 million for just under 7% of that business. Why is that so really important deal for us. Well, first of all, if you do the maths, you can work out how they value that business. So certainly, [indiscernible], you can look below that at a different line of business. And for this point over here called [ Water ], you can actually start to see a value for that line of business. And as a reminder, we always get 30% of the revenue of that business regardless of our equity stake as a license fee. So that particular deal sets us up to show what equity value these businesses start to have. And the fact that the headcount will always receive an income from that as well on top because the IP will remain with Calix, that entity LEILAC has a global exclusive license from Calix to go and commercialize the technology. And so that style of deal is a deal that we are looking at for other parts of our business. And secondly, it's the way we do all the things we do. People say, "How can you concentrate on so many things at once. This is how we do it. That money is going to LEILAC to resource that business up to chase its commercialization. We're hiring engineers, business development people, senior people from that industry, lime and cement to resource up that line of business to chase commercialization. We're not experts in cement and lime or iron or steel were experts in this. So how do we do it? That's how we do it, okay? That's why this slide is important. That's why that deal is so important for us. So what's this space? So just quickly in terms of LEILAC itself, where we're at on the journey with the LEILAC. For those who are unfamiliar, LEILAC, low-emission intensity lime and cement. That 1 over there on the left of the slide, 1 that we've built in Belgium and a Heidelberg Cement facility, 25,000 tonne a year capacity of CO2 separation but that's only 5% of the throughput of the cement plant. One of these tubes in that little tower there to the right of the big cement precalciner tower. As Peter said, past financial investment decision in March this year to scale up. We're not making bigger tubes. We're just making more of them. So we have 4 tubes in that particular version there. that we're now just into full detail design and hopefully commencing site works and long lead procurement items really soon. We're targeting 2024 for that 1 to be up and running. It will take a 20% slipstream and have 100,000 tonnes a year of CO2 separation capacity. And then from there, we just multiply that one several times over to match the full scale of a cement plant okay? So from here to here, we have risk. The risk is around process and heat integration. And so what LEILAC-2 has to solve for us is minimizing the losses associated with this retrofit moving process and heat stream without the heat distribution around the 4 tubes, making sure it's as efficient as possible. If we can hit our targets around 12% in efficiency, then we can start to see the costs of using our technology as being the lowest. Yes, question.

So just from what you said, LEILAC as a separate entity where the investment came in, Yes, is now your sales exclusive sales are?

For the cement line application. Yes.

You're not going into sales from a Calix point of view, that's LEILAC, will be doing that yield leading the technology?

Correct. Yes. And just for cement and lime, LEILAC is good...

Can I just a follow-on question. Yes. So turnover last year was 25 million with a pro 5 million. Shares on issue are 175 million and that following the share placement there are 175 million.

At 180 after the SPP 180.

So it's a PE ratio of about 170, which means that over your 10-year forecast, hopefully, you'll increase sales say, tenfold. So what strategies do you have through LEILAC to actually get to those figures?

Yes. So the business model, the LEILAC, is a license and royalty business model. So in other words, we will charge a customer per tonne of CO2 that the technology captures. Now in fact, the first license agreement has just been signed with Heidelberg Cement. So I think that's the next slide --. So the business model for the LEILAC group is to obviously roll out the technology by signing these license agreements. It's not a capital-heavy business model. Although at the start, we will be using capital to help derisk for our counterparties, for our customers. okay? But ultimately, you move into, I call it the blueprint stage where you have a license and royalty type of income based upon the tonne of CO2 and a price per tonne of CO2.

Can you maintain the profit margin you're currently getting, do you think 75 for 25?

So the margins when we get into the blueprint stage will be license and royalty, which is extremely high gross margins. We don't actually supply these plants ourselves Yes.

Sorry, the current income and margin that you referred to actually comes from the water business, we don't currently -- so that margin calculation doesn't -- won't apply yes, sorry.

What you think it will be with the cement company?

The gross margin? Yes. So essentially, we're selling a license. I spent 13 years at a software company. And essentially, it's technology IP that we're licensing, the gross margin will be very high because essentially, it's just -- we have no operating costs other than the sales team. and some business development support for the minor engineering group, and we're collecting royalties for every tonne of CO2 that's captured so it will be a very high gross margin business -- per tonne of CO2 every year.

The gross margin doesn't depend on how many times you sell. So the investment happens upfront when you develop IP, et cetera. And then you kind of almost think of the royalties are 100% profits, like there's no expenditure that goes into earnings -- into dollar of the royalty business.

So the success depends upon the amount of contractual relationships correct and you are hopeful on that front now?

Well, other people are creating the furnace. So you're not building the furnace?

No. I mean in the blueprint stage of the -- let's call it the blueprint stage once we go past this initial stage, the cement company can choose whoever they like to fill the and that's to both of that benefit. It's not capital heavy for us. And the cement company use and drive down the cost of the technology by having competitive tendering, they're very strong on those procurement fronts. So they can get whoever they like to build it.

How many cement operations could take a 1, 2 solution for their capacity? Because that's proven now.

So that capacity there, which is 25,000 tonnes, that is too small for a cement mark, about 5% of the throughput. But it's small scale line. Okay. And in fact, some of the projects that we talk about in our pipeline, and I'll talk about our pipeline shortly, our lime projects. But for a cement plant, this one here, which is 100,000 tonnes a year, that's not a bad what we call commercial demonstration model -- module, 100,000 tonne CO2 separation because it's dealing with about 20% of the throughput of the cement plant, 20% of CO2 emissions. And if you're in Europe, you're facing 2.2% year-on-year reduction in your allowed CO2 emitted each year. And that's coming down. So you have to go on market and buy CO2 permits if you go above that. So that could actually be a net solution for 5 to 10 years for a cement banner. But ultimately, to be carbonized fully, we're going to have to multiply that out 3, 4, 5x depending on the capacity.

So there's not a varying size of cement plants, like Brisbane like be smaller than Heidelberg here so that may actually be a fortune or.

Yes. this site here. There's not many cement plants down around 100,000 tonnes a year, there's not many. Typical size, average size are about 0.5 million. 1 million tonnes per annum clinker, 0.5 million tonnes per annum CO2. And in fact, the ones we have in Australia are about that size, they were all about 0.5 million tonnes for CO2.

Yes. You seem to be getting into the question you probably really wanted to, is that right?

I don't mind, this needs to be interactive.

So I had a few, but the main 1 is on the royalty agreement with Heidelberg. And that is the key to our value of the company. Unfortunately, you're able to tell us what the details are. However I'm taking you could give some sort of broad indication?

Yes. So we would certainly let you know if the royalty was outside what would be normal balance.

What are normal now balances?

1% to 2% is pretty low. 8% to 9% is pretty high on revenue -- on revenue of whatever the value is okay? And now in this case, the value is per tonne CO2. There are benchmarkable markets and systems where CO2 can be valued. It's over -- it's around EUR 80 per tonne in EU, it is $85 in the 45 tax credits.

1% or 2% of revenue. [indiscernible]

1% or 2% is a typical low royalty rate. 8% or 9% is a typical high. All I'm saying is we're not outside those bounds.

Share price [indiscernible] when you made the announcement about the withdrawal of the government's subsidy. And would you want to expand or that situation because it was giving the impression that the government may not be behind the technology?

Yes, no, interesting. It's -- well, hopefully, I didn't give that impression. I think look we're out on the official meeting. I'm not being recorded anymore there, I'm not going to make a comment about politicization of grant funding, but suffice to say, I've just made one. We put in for grant funding here as we do overseas. And -- those are 2 projects, the Boral and Adbri projects represent less than 1% of the total amount of CO2 in our pipeline up behind me. So this pipeline, 67 projects in the pipeline. Okay, at various stages. And you can see how the pipelines grew since August '21 till now. Boral and Adbri are in this pre-feedbasis of design stage because we're -- this announcement happened in May, just -- and obviously, the new government came in and didn't like the look at the CCUS program, maybe because it didn't have their brand on it, and it had Santoso at Glencore on it. And I think that was a lightning rod for a fossil fuel backlash for the current government. But moving forward, they've got their own plans, which we're starting to gather a little bit. We don't know at all yet, but $141 million, I think, has been set aside with the new government, and they say they are supportive of this technology. So over the next month or 2, we'll probably learn where we fit into all of that. But the front end looks positive. We were surprised by what happened. The market is very skittish with everyone at the minute. So I wouldn't put it all down to just an immaterial pulling of a small amount of grant money.

Yes, that will double the share price, I think, [indiscernible] so what sort of view does a green on this sort of technology that they behind it? That it seems to me that they don't like to sort of carbon capture stuff and that sort of thing -- are they coming around to it or?

I think, yes, it's fairly broad group of greens but well, a lot of -- Okay. But there's certainly a lot of carbon catcher it's caught up in an overall bucket that includes carbon capture from fossil fuel systems. So power systems and these sorts of things that capture the carbon after you burn coal or burn gas. With industrial decarbonization, carbon capture to reduce absolutely necessary for cement and lime. And as I mentioned, that's because what a lot of people don't realize is half the CO2 is coming from this, and you aren't replacing cement line any time soon. So for those who actually think about it and increasingly governments and environmental groups do understand the need for industrial carbon capture storage, not energy, not extending life of coal, et cetera. So the debate is becoming more sophisticated. And we've seen that happen. We're not lumped in that same basket all the time anymore. And in fact, the current government, even in his budget speech said it will continue to support industrial decarbonization for industries such as cement.

I think -- it may be worth adding a couple of comments as well. Just to reinforce that -- there's no debate about the need for our technology outside of Australia. CCS is critical in Europe. CCS is critical in the U.S. and the rest of the world. In Australia, as Phil said, the current federal government has acknowledged that the technology is important for decarbonization for both industries. And not only is that federal government funding available, there is also a state government funding available for the project. So it's really unfortunately that we were caught up in a bit of a political activity in Australia, but the rest of the world has moved on. There's no debate. And we Yes, we're fairly positive given what the government has announced, but things will settle down in Australia. But again, just to reinforce, as Phil said, to the 2 smallest projects in our pipeline were the ones here in Australia. We'd like to do them because we're an Australian tech company. And it would be great to have some projects here locally, but the company is a global technology business and globally is where the technology will to track.

Whether you're in love with CCS or not, what happens in the next 8 years is going to be extremely difficult and extremely complex, and it's going to be there as part of the solution.

Fact of matter to is that Calix only solved half of the trouble. You kept very well and careful and fantastic, you yourselves don't do anything in the sequestration -- so that's the problem that you rely on others, and it may not be forthcoming as crypto could be very expensive. Chevron admit their problems. -- sure that's probably nothing to do with probably other factors involved [indiscernible].

Yes. Look, it's certainly not part of our technology, the transport storage. But I will say if you have a look at the United States, they've got CO2 pipeline infrastructure that they've had since the '70s. It has been used for enhanced ore recovery, but that infrastructure is being repurposed for sequestration. Their typical costs for the transport and sequestration are under EUR 20 a tonne. And so once that infrastructure is in place, and I think in the previous talk, I had a mud map of all the CO2 pipelines in the U.S. and where the cement plants were. So surely, yes, our first deployments are going to be proximate to infrastructure in the States. In Europe, they are developing their infrastructure, moving as fast as they can to. Port of Rotterdam is developing one of the biggest, they're part of our LEILAC-2 consortium. And obviously, there's others in the North Sea. There's a couple of others in the U.K. and the TARMAC project that you see here that's now into feed. That's part of the HYNET infrastructure system they're developing. So yes, we -- if we were developing this in isolation of any other of those developments taking place. Yes, there's a chasm. But it's not huge for us because we are developing with those other developments that have taken place.

For that reason, LEILAC is not as important, not as interest for me as a [indiscernible] the industry as you do to it, you don't have a CO2 sequestration problem. And there was something that's far -- has far more impact on the industry than the LEILAC process by itself because it's not going to be fundamentally trend in the industry.

Yes. Look, just -- I don't disagree that the CO2 part of the equation is important in LEILAC. But I will say it's not the only part of the equation. The interest we've had in the technology say from Adbri is CO2's sprinkle on top of the icing. What's the icing renewable-powered calcination. They want to access accounts, I don't know that they could switch on and off when electrons are cheap and then expensive. And they cannot do that with their current kilns. So I'm not saying that, that is the global domination strategy for us. But I'm saying that these are opportunities for us with this technology where CO2 is great to have and to separate down the track when the infrastructure is there or when you use it. But that's not what drove, say, an [indiscernible] to work with this. So I don't disagree, though, that the fact that ZESTY doesn't have a CO2 component to it, allows us to perhaps deploy that technology independent of CO2 infrastructure, which is attractive. Yes. But we need solar infrastructure, we need hydrogen infrastructure for ZESTY. Yes, no, it's a good point. But there are maybe just to detect other than just CO2 separate. Yes. Sorry, yes.

Can I just ask the question on the timing our commercialization of LEILAC. Some of the comments that you've made today in [ informed ] my question a little bit. How would [indiscernible] you've just -- so -- what we've seen to date is the LEILAC-1 the 25,000, the LEILAC-2, which has just been developed for 100,000 -- you said today I thought usefully be 500,000 size and a 2.2% reduction so that the 100,000 would be a likely useful scale for your customers to justify the work to introduce in their existing plants, which they [ are likely ]. Heidelberg are a major producer. They've got some 150 plants worldwide. And you've -- you're in the process of jumping from Stage 1 to Stage 2 with Stage 3 being dotted out for the full plan as you've got on your screen. The question is, what is the likely try and frame for the update for Heidelberg in terms of how many applications across their after plants? And how quickly, do you foresee other similar companies or other major companies coming on board such as to give some business to our understanding of your commercialization of the LEILAC aspects of the business?

Yes. Good question, good question. So you can see down here, who we're working with. Hardware materials, obviously, the major TARMAC is a CRH company, 1 of the top 5 cement building companies in the world also CEMEX also on the top 5 or 6, I think, it is 2 or 3 Chinese companies in there, but these 3 apart from Lafarge also would be 3 to 4 biggest outside of China. So we're not just working with -- now in terms of timing, we want to get this thing up and running to 2024. And that provides a proof point forwards because as I mentioned before, the key challenges with this is making sure we don't interrupt the operation of the cement plant using all the process and heat streams really efficiently. And provided we can do that, then from there to there is actually a fairly trivial scale. Now with that one, who is interested in that sort of scale or rolling out more of those scales. And here's where I go to the pipeline. This pipeline we're not outbound marketing. These are where quarries coming in. And in there, there's several Heidelberg cement projects. But there's also many, many others. It's outlaid by other projects from other companies under NDA. But the distribution of those is Europe, the States, South America, and Asia Pacific.

Are any of those chinese companies, because they dominate the cement industry..

Yes. Yes. None. Chinese at this point. Okay. We are engaging with Chinese companies and people always ask about acquisition because as you say, China is 50% of global cement production. But we're engaging carefully. We said there's enough acceleration deployment of the technology happening now, not to be dealing with any sort of sovereign risk sort of capability. We do have a strategy for how we do with China, and that will unfold over time. But it starts with those Chinese companies to have global operations because they have play by the rules. But suffice to say, just to go back to the original question. In this pipeline about 2/3 of are cement plants at scale. They're in there because if you do the timeline calculation and you're looking at 2024 as a proving point for LEILAC-2 -- these guys -- Peter mentioned before, the amount of investment that starts from about 2026 onwards is phenomenal. These cement plants, not only do they have net zero by 2050, they've got targets by 2030. So they have to start to deploy from, say, 2026 onwards. Now if you count back, that means they're going to reach their final investment decision point in 2024. That means they're going to start their project planning today, okay? So 4 years from inception to completion of construction of a full-scale plant, if everything goes well. So these guys are under immense pressure to deploy. So they want to hit that financial investment decision point at the same time that we're running through our proof points for LEILAC-2. And so that's why this pipeline is building because they're going to start that planning now. So 2026, as we're all going well, everything will start. That's the timing that these guys are aiming for to hit their first deployment at full scale.

And Calix will get the royalty, not LEILAC.

LEILAC will get all the royalties -- and Calix will get 30% of that. But also, we're 93% of this at the moment anyway. So we'll get 93% of that too.

Just on the ZESTY [indiscernible] you're probably going to cover that later maybe later in future presentation.

I can jump ran I'll touch on I'll touch on Pilbara and then touch on ZESTY -- So, [indiscernible] in the last. Okay, Pilbara, this is an application of the tech because it can process tiny particles and be renewably powered as simple as that. With spodumene mining, you blast the rock out, you crush it down. These guys sell the rock offshore, filter minerals. And it's got to be a large enough particle size, it can go in a rotary kiln. So rotary kiln does that rotates around with a big flame up there and they introduce the pebbles there and the pebbles like their way down and they heat up. What happens with tiny particles in that rotary kiln, either blown out or they just melt. And so you can't extract the lithium from them. And so Pilbara Minerals separated out those tiny particles. At the moment, it's a beneficiation circuit is called flotation finds. We love small particles. So the work started with Pilbara Minerals over 2 years ago to have a look at putting their floatation finds or waste. We still have sort of 4%, 5%, 6% lithium into Calciner renewably powered, as Peter said, we now connect up with solar panels. And what happens in [indiscernible] is you crack it open. You go from alpha to beta [ fortunately ], crack it open, and that then allows you to extract the lithium. And this project, we obviously got some good results, finished the scoping study, moved into feasibility, which we're now in. We've taken those calcine particles that we've produced from their finds. We've got a bench scale, full hydrometallurgical flow sheet setup, we've produced already 75 kilos of our lithium phosphate salt. This project, we're in final documentation stage for the joint venture. The key terms of the joint venture already been announced, 45% Calix, 55% Pilbara, 3,000 tonnes per annum of lithium phosphate salt. We're targeting before the end of this financial year to get to the final investment decision on that project, $50 million to $70 million capital investment. Calix is contributing 35% of the capital required because we get 10% free carry in the joint venture, so 45-55 Calix-Pilbara. This one has $20 million funding for the model manufacturing modernization initiative. That funding was in pooled thank God, by the current government. And we've got -- so our contribution to about 17.5%. And so part of the cap rates that we did that we did recently was to cover our part of the contribution to this project. 3,000 tonnes today, just on the lithium content of lithium phosphate salt as a street value of USD 180 million to USD 190 million. When we started this project, it was around $10,000 to $12,000 a tonne for lithium -- lithium carbonate. It's now over 70 ups and downs aside. So this project, which was about putting together a demonstration unit for the technology is suddenly quite a reasonable and serious commercial opportunities.

$5,000 a tonne making some operating cost?

Operating costs. We haven't talked about the operating cost yet. It will -- we're obviously undertaking the feasibility now, which will include the CapEx and OpEx studies. So suffice to say both companies are very enthused by the gross margins available there.

I was a bit surprised that you gave a range of [indiscernible] majority interest in joint venture, but or technology [indiscernible]. They've got a long [indiscernible] and obviously you have to gauge that. What are your comments on that?

Look, I think the deal -- they've got to do a lot they've got access, obviously, to their mind. They're producing these materials. They've got access to the markets for the end product. They've got all the relationships in the markets for the end product. For us to develop that sort of expertise would have taken a hell of time and effort.

There's hydrometallurgy to extract the mineral.

So that that's a 5- to 10-year process. Yes. So people have asked, why didn't you go with Albemarle, too slow, that's why -- why do we go with Pilbara and why this deal much quicker. Is our aim to be a 45% joint venture partner with Pilbara for millions of tonnes a year of lithium? This is to demonstrate the technology and then license it to whoever wants to use it.

Yes. So license share 45, 50...

Yes. Yes, okay. So look, in the end, I think the value of the technology there as part of the overall lithium supply chain will be seen by us. And we do want -- as I said before, the overwriting strategy is very low touch business models that allows us to develop the next application mix. Do we give a bit of value along the way in retrospect? -- sometimes we might. Sometimes we get extra value along the way in retrospect.

It's got to be compared to some of our other priorities too -- there's a priority list that sits in...

I think your plans are very clear because you're leveraging the best companies in the world and what they do. You don't reinvent the wheel but concentrate on you technology gauge [indiscernible] in terms of the results for the world, you get your technology out way quicker. So it's great to [indiscernible] and great outcome for that...

And so that's a good point because, I mean, speed is something we constantly think about. LEILAC from patent to that 100,000-tonne module, which will be our commercial demonstration module will be 10 years, okay? How do we do something in half that time is always at the top of our mind. Iron and steel -- lithium, how do we do it in half that time. Okay. And you always are on that curve. Do we do try and do more ourselves and give less away upfront for. So we could have this argument sort of all day. But honestly, I think speed will really help us here. And if you look at where lithium supply and demand is, I think we'll be very pleased that we work quickly.

I understand the argument, that's true.

The first thing is to get it completed we're close, but we're not quite there.

So look, that's Pilbara. I'll go on still quickly because this is the other one we're trying to do really quickly. Let's say, 10 years for LEILAC, how do we do in still with our first demonstration in 5 years from when the patent was filed. So this one here. We're lucky enough to have a fully electric calciner Bacchus Marsh. After Mark came up with the idea. In 3 months, we've converted that to be able to run hydrogen in 3 months. And we got several different ores, and tested excellent results for metals -- what's called metalization turning the iron ore into the iron. Magnesite, we're still going to do a bit more work on, but hematite was excellent -- siderite excellent. And we don't think there will be too many other points with other types of iron either. So this one here. The path from here is to design this 30,000 tonne per annum demonstration unit. And obviously, last week, we recently announced that ARENA would be funding just under $1 million of that. I know that doesn't sound like it's going to set the world on fire, $1 million. But obviously, all things going well. ARENA is in very much across this application of the technology. Obviously, where would it be? We need sun for solar power. We need hydrogen, and we need iron ore fines. So that sort of suggests where the technology will be placed. Why is this important? And one thing I didn't touch on why the lithium parts are important either. In lithium, Australia is responsible for majority of the worlds lithium currently. You've got to decarbonize your supply chain, how does that leave Australia. Most of the carbon footprint in the spodumene supply chain is calculation, is heating that stuff up. And so the ability to renewable power this is critical for the spodumene industry. So when we go to via Pilbara, we can move really quickly with them and develop the technology to be applied to the whole industry because I believe they will need it. Back to iron ore, same thing. Australia, 96% of our exports is hematite. Hematite is not suitable for an electric arc furnace. Every other technology being developed for the carbonization line of steel is being developed with magnetite for an electric arc furnace. So what does Australia do as the steel -- iron steel industry decarbonized and all those hematite deposits start to become unsuitable. So in terms of what we do, hematite is working very well through our technology. Once we counsel on it, we can look to how we beneficiate the hematite, separate it from lower grade gain and materials. And thirdly, if you're producing a green iron, you can send that overseas to a blast furnace. Every tonne of green iron they put in their blast furnace, they save 1.8 tonnes of carbon. It's various -- depending on which blast furnace you look at 5, 10, 15, 20, I've seen up to 30% replacement of impure iron ore with green iron. So it's a way for Australia to remain relevant in terms of hematite exports, while that industry decarbonizes without destroying -- putting a big red line through their some capital in blast furnaces. So that's the start of it. That's ZESTY -- ZESTY steel is where these actually do get deployed on steel sites. So anyway, an exciting application of the technology designing, I want to get to a final investment decision on this towards the end of next calendar year and obviously then go build it. We're part of what's called the HILT CRC. They include some of the biggest iron ore players in Australia. And so they're rich source, if you like, for engagement on developing this project.

[indiscernible] would be your prime target of -- in steelmaking where [indiscernible].

In steelmaking, you get its metallurgical coal or cokes that they use?

No. I mean, ZESTY.

ZESTY process. You might need 1% or 2% steel in your final product.

Let me from [indiscernible] from the carbon dioxide or [indiscernible].

So you need lime to flux your steel, to slag it. You have a LEILAC unit to produce the lime. You've got the CO2 from LEILAC. That gives you plenty of carbon for your steel.

I've got a question on share placement. So it's about $176 million now. Shares on issue. Who are the major shareholders?

Biggest shareholder is Australia and South Africa.

How many shares in Australian do [indiscernible]

So it's a great -- shareholder greater than 5% they disclosed recently at about 10.7% in the company, something like that. After AustralianSuper, the next largest shareholder would actually be -- there's a couple of high net-worth individuals who live in the U.K. One of which is named in the presentation, actually, Nick, the Board and the management and the senior executives and all of the staff collectively own 13.5% of the company. So collectively, we're actually the largest single group. But in terms of -- beyond those that have named, we've got an incredibly well-developed institutional investor shareholder base. I must -- both domestically and internationally as well, increasingly, we're getting interest from Europe and the U.S. in investing in the technology. So we've got a fabulous institutional -- very, very well supportive institutional shareholder base and a growing retail base as well. When we did the placement in the beginning of 2001 -- 2021, we had 1,000 shareholders. We now have almost 7,000 shareholders. So we're very pleased that we've got a large and growing retail shareholder basis...

[indiscernible] share placements.

Not at this stage, no, we have -- we have capitalized the company to get us through to significant commercialization across a couple of these key lines of business. And for us, we talked about 2026 for the cement opportunity as the CFO, I'm very excited about the spodumene opportunity and the nearer-term opportunity the revenues that, that presents. We're talking 2024 calendar year when the target for that project to come online is. So at this point, there's no -- there's no plan for any further capital raises of the headcount to develop the company.

And you want capital raising rather than debt because you don't -- you get the capital raising...

Yes. We were incredibly well supported through the 2 -- both the placement and the SPP and that was, for us, it's the quickest...

And it could be done quickly.

There's no reason why in terms of as the company develops across each line of business, specific project-related financing may be looked at. That's open to us, and that's one of the advantages of splitting the business up on a line of business basis. We can almost look kind of in a bespoke way as what's the right capital mix for each development each of those lines of business. But yes, speed. And as Phil said, we want to move quickly because the world needs it to your point earlier on -- and as Peter said at the top of the presentation, there's an incredible amount of investment money available to help companies like Calix achieve its objectives. Just in terms of where we're at, these are the milestones that we've set ourselves for this year, this financial year. Everything is on track except for a couple of little watch points, basically centered around Europe. We wanted to get a European water entry underway. That's proven difficult with the distractions associated with the conflict, et cetera, happening there and refractories. So we've been working on a project with RHIM. That's currently on hold because they're basically wondering whether they have a future in Europe at all. At this point in time with gas -- we can plan about gas process. They're facing an existential issue right now. Everything else to working to achieve all of those different dock points along those different lines of business as published earlier. So that's a very quick update on where we're at you today.

This presentation will be on the ASX platform.

Okay. No worries. But look, I'll finish my sort of formal speech there. But thanks hugely for, as Peter said, all the support for shareholders online and here today, any questions, and we can obviously stay behind to answer some further questions. But also, thanks to the Board also. -- and Darren and all of the team at Calix for their support for what we've been able to achieve over the course of the last year and looking very much forward to the remainder of this financial because there's a lot on, but there's a hell a lot we want to try to achieve as well. And it's a technology for the time right now. So we're going in as hard as fast as we can. So thanks all.

Thank you, Phil. That concludes the business of the meeting. Can I just say again, we really appreciate you being here and being online as well and your support of what Calix is doing. The questioning today shows that you really do understand what we're doing and the sensitivities and the nuances around that. So we really value your support. And we take very seriously keeping you informed as I think you probably already know with the newsletters and the presentations that are regular. So we look forward to doing just that, keeping you informed of progress across the '23 financial year. So thank you all very much.