Mineral Resources Limited (MIN) Earnings Call Transcript & Summary

Much appreciated. I'm not going to spend a lot of time on the presentation this morning. I think everyone wants to really get at the Q&A. So probably want to few issues that you want to deal with. Look, it's been a challenging year over the last 12 months. We've had a lot of supply chain issues out there, inflationary pressures, labor, fuel, parts, consumables, everything has been on the move and trying to get equipment into Australia is continues to be reasonably difficult. We've got suppliers making commitments, and they just don't deliver. So we've dealt with all of that. And we have got -- but I think the good news is that we've got a strong track record to be able to understand what it costs to build a project. We've never yet run over, and we're not about to. So over the next 12 months our focus is on delivering the lithium. So we're doing a lot of work around that, that we'll talk about. We're building out 35 million tonnes of iron ore on the Onslow project, which is a great long life, low-cost project. We're developing gas. We found a lot of gas, and we're a strong believer in gas over the next 30 or 40 years. And our Mining Services business naturally follows along when all of those opportunities present. So I'll just quickly run through a few highlights, and then Mark will come up and take us through the financials. And then I'll give you a bit of an overview of where I'm going over the next 3 to 5 years with the business. Headlines. You've seen the numbers. I mean the numbers are okay. We've had a reasonably strong performance in production, but we did miss our targets. We acknowledge that. We had some issues around the lithium and a lot of rock that we got to move. EBITDA, quite respectable. Good cash conversion, finished the year with $1.4 billion in the bank. Net debt, about $1.9 billion. So again, we're in good shape for future growth. We've got about another -- sorry, $620 million due from Albemarle once we close the deal and we get the FIRB approval. So again, I mean, a very robust balance sheet, as we've always had. Second half dividend, $0.70, so total of $1.90 for the year. Our ROIC, 17 years at 20-plus percent return consistently. We've got about $3 billion, as you know, parked up sitting out there in these projects we're developing that isn't earning cash that those earnings will start in earnest from about the end of this year as the lithium really ramps up to its full potential and about June next year when the iron ore starts contributing. So sitting down around December of '24, we're looking to move that ROIC up about -- up around 25%, 26%. So fairly healthy. Mining Services, volumes were impacted a little bit. What had it again by delays that were unexpected, getting approvals on some of the projects are difficult. But good news for that. We've had 6 new contracts and 4 contracts that have been renewed. And we again won the Roy Contractor of the Year Award worldwide. They've only ever done that twice in the history, they did it in 2012. We won it then. And we went along to the grand ballroom, the 1,200 delegates and we were the winners again, pretty tough. I mean we do a lot of work for these guys, and we're fairly large on-site to have a large presence and to have that view by your clients quite exception of something we're very proud of. The iron ore production has been steady. We've improved the product quality. All of the approvals are now through Onslow Iron. So that's sort of full steam ahead, and we're making really good progress on that project. Mt Marion, overshot on the expansion at Mt Marion that took us about 6 months longer than we were hoping for. But again, just getting equipment in from offshore. We've got a couple of major cutbacks running on Wodgina and Mt Marion. So we're taking the pain there and we're taking the top off those mountains. So it's about a 12-month process. Got about 100 bps of yellow gear out there pulling that back, and it's going fairly well, but challenging. So we're moving that cut back while we're operating with the mining operations. Lithium market, we all know changed. We've had some issues out there with the pricing. I mean everyone is concerned about price coming down. I mean I've spent most of the time with lithium around $400 a tonne, and we're getting [ 3,500 ]. So you wonder what the problem is, but it's still a very healthy, healthy business. Mt Marion, we put a couple of drill rods down. We got inquisitive. We -- I drilled Marion out in 2010 to earn 30% of the deposit then. As soon as I spent the required capital, I stopped. We put 4 more drill holes down under the pit about 4 months ago, and we hit what we call the feeder. So it's about 50 meters wide, and we chase it down about 800 meters. We suspect that it goes somewhere down towards the center of the earth. So there's a lot of lithium sitting under there. We'll develop that out a lot more over the next 12 or so months. We renegotiated the deal that we had with Ganfeng Ekos. Hydroxide is crashing quicker than spot. So we pulled up on that. We make -- actually make more money at the moment, selling spot direct than trying to convert it. We've always remained flexible in that regard with our products. We don't have long-term contracts. So we can maneuver when the market changes. And of course, I've renegotiated the Albemarle agreement yet again. We're now at 50% of Wodgina. We're completely out of Kemerton, and we are not investing $1 billion in China. In energy, we had a pretty good time with that. We've board 4 holes up in the Perth Basin. 3 of them have got substantial gas in them and 1 of them has got hot water. People and safety. Tragically, we had a small contract to come on site out at Ken's Bore and they were putting the bitumen on the airstrip and we tragically lost a young guy out there. It was tough, I was up on site early next morning with a team of people to help support our staff up there with the trauma. It was something that you don't ever forget. It's being investigated by the police and the mines department. It will take some time before we get the results of that. We've done an internal investigation getting access to some of the contractors, people has been a little difficult, but we're still working on it. Been strongly supporting the young guy Kieran, his partner, and he had 2 young boys. And we've put in scholarship. So we're providing education for those 2 boys until they get to year 12, and then we're going to put them either 3-year apprenticeship. And hopefully, they'll be working with us. TRIFR. We're in good shape, 2.08. We're at industry-low standards. I mean it's quite incredible. And you can say I've got 7,750 people out there now throwing rocks around all day. We managed to make sure that we don't even have a band-aid. So our safety people and our training people have done an exceptional job. Well-being around our people, really important. We're creating environments for our people that are very different in the mining industry. We've recreated the environment in our head office that we ask people to work in. I have a no work from home policy unless it's for health reasons or something significant, which I've always had around for the last 20 years. But I mean I expect people to come in and collaborate. As we all know, most of our people in the mining industry cannot work from home, pretty hard to drive the dump truck or a digger from there. If we have any entitled people that want to work 3 days a week and get paid for 5, they're not welcome with MinRes. But we've got a pretty amazing workforce. And it works well. If you've been to our head office, you'll see the environment, they come in, in the morning and they don't need for anything during the day. I'm carrying that out to site and to resort style accommodation. So we're upgrading our villages and we all the new villages [ are going ] to be able to cater for couples. Attracting new people. It's something that's getting much easier for us now with those sort of facilities we're putting in and the culture that we have in the business, which is very strong. So over the last year, we've grown by 45% in number of people. So as I said, head count now about 7,750 full time people. '21, we had 550 women on the payroll. In '23, we got 1,300. Once we open these camps up at Onslow Iron and Ken's Bore that is going to accelerate rapidly. Environment, decarbonization. WA, we're a Tier 1 part of the world. We've got probably the best safety standards in the world. We're the most ethical. We understand that we manage the environment extremely well. I mean we are probably the best in the world at what we do and something that we're proud of, but we work hard on. We're all committed in the mining industry to get to net zero by 2050. I mean there's a lot of challenges ahead of us to get there. No one is producing any green juice at the [indiscernible] yet. So we're doing what we can to make sure we decarbonize everywhere we go. So we're basically looking at, natural gas and solar are the prime source of power that we're trying to change over, and we're trying to eliminate diesel wherever we can. That's sort of the short to medium-term focus. We've installed a battery system and a big solar farm out on the 1 mine site. That's live now. It reduces our diesel burn by about 0.75 million liters a year. Head office of course is carbon neutral with a platinum WELL rating. Water, we've got a big focus on water and water reduction. So we've reduced our overall water across the board by about 4.2% through being able to recycle it better. And we're dry stacking all our tailings now down at Mt Marion, something I spoke to a year or so ago where I want to get most of our tailings that we have, wherever we can get them dry stack. So much better environmentally. So look, I'm going to hand over to Mark, and he'll walk you through the financials.

Thanks, Chris, and good morning, everybody. Pleasure to be here to walk you through the MinRes results for FY '23. As Chris said, a reasonably strong financial performance for the year. I've been very pleased by the cash performance, in particular. The business performed evenly through both halves. But the cash, particularly in the second half was very strong. I'm going to go through this reasonably quickly so we can get to the questions. But I want to emphasize, we're investing for the future. The investments we're making are in high-quality assets that are going to deliver a substantial amount of cash for decades to come. Sitting in the business, there's a lot of optionality, lot of optionality that the market may not understand, a lot of flexibility for us to be able to pull levers as we need to, to support the growth going forward. I want to emphasize that. Turning to the P&L. Underlying performance, this is pre-impairments has been very strong year-on-year, as you can see there driven by lithium, record contribution, $1.3 billion of EBITDA in the lithium business, it's 2.3x up out of the growth out of Marion and Wodgina. Iron ore was $185 million of EBITDA for the year, which was a solid performance in the face of some pretty significant cost pressures that Chris mentioned earlier. Mining Services contribution was $484 million of EBITDA. And that was a result -- that was impacted by timing of award of new contracts and also some of those cost pressures. The EBITDA per tonne in the Mining Services came in at $2, which is pretty much where we expect it to be, which was a solid performance. Underlying NPAT was $769 million, and as Chris said, a fully franked dividend -- final dividend of $0.70, taking total for the year to $1.90. Next slide, I won't dwell on, just shows drivers on the year-on-year performance. You can see the impact of both higher costs but also higher commodity prices through the business. In terms of the impairments, as always, we assessed our asset values at the end of the year, lower plates higher costs caused us to choose to impair the iron ore operations in the Yilgarn and at Utah Point, $552 million after tax. That's a noncash charge, of course, has no impact on our debt covenants. I just want to emphasize, those assets have been fantastic assets for this business for over a decade. We estimate that the return on invested capital they've generated something like 26% even after the impairment. They delivered hundreds of millions of dollars of free cash last year, and we expect them to continue to deliver free cash into the future. They provide significant optionality for us also. In terms of the operating -- sorry, the cash flow statement. I've talked in the past and I'll emphasize again, this business has got a very strong record of cash conversion from its operations. Effectively, it was 100% this year in terms of operating cash flow underpinned by very strong second half performance, as I said earlier, co-sustaining CapEx, interest and tax, the cash flow was at over $1 billion. Included this next slide to pick up on one of the points that Chris made earlier. The invested capital as we think of it in the business has grown over the last 3 years from $2.2 billion to $5.3 billion. The investment that sits within that growth in projects like Onslow and others, they're not contributing to our cash generation at the moment. But as Chris said, as we grow out the lithium expansion, and as Onslow comes on middle of next year, you'll see the ROIC generated out of those projects kick up significantly. FY '23 CapEx came in about $500 million less than we guided earlier in the year, primarily because we're no longer investing in China, as Chris mentioned earlier. We're a little bit slower to get started because of approvals at Onslow. So we underspent at Onslow. A little bit more spend at Wodgina as we've started to accelerate the removal of that hill next to us. In terms of the balance sheet, calling out the strong liquidity at the end, $1.4 billion of cash, $400 million of undrawn facilities. So $1.8 billion of liquidity. As Chris mentioned, we're expecting in the final quarter of this calendar year to receive between USD 380 million and USD 400 million from Albemarle as we finalize that transaction, which remains only subject to further approval. Net debt waterfall, next slide takes you through how we get to the closing net debt of $1.8 billion. As I said earlier, strong cash flow and strong investment basically. In terms of our credit metrics, I'll just spend a minute on this because I think it's important that you understand how the company thinks about our credit position. We finished the year at 1.1x net debt, 1.8x gross debt. We've got very strong support from the debt capital markets. Our bonds have traded exceptionally well since we last went to the market in April last year in a period of rising rates. The debt market understands what we're trying to do. First, maturities 2027 on the bonds. We expect to be generating significant cash out of those assets that are coming online over the next 12 months, the expanded lithium assets in the iron ore asset at Onslow. Included a slide here to share with you how we think about capital allocation. The business has a strong track record over 3 decades led by Chris in managing its balance sheet, the way it thinks about capital. We do not blow-up capital. That's why we've been able to generate the returns, we've been able to generate over those decades. We think about the balance sheet every day. We think about how we allocate capital every day, sitting in the business are a number of levers that we have available to us to pull to help fund the growth. One of those, which we've done consistently is to recycle capital. Most recent example of that is the Kemerton transaction as part of the Albemarle deal. In terms of guidance for next year, iron ore largely in line with where we are in the year just gone, cost up a little bit in the Yilgarn. In terms of Wodgina -- sorry, in terms of lithium, we've got spodumene growth at Marion and Wodgina, 40% and 30%, respectively. In terms of Mining Services, expect volumes to come back to where we expected them to be up 10% to 15%. And we expect the margins there to still be sitting between the $1.80 to $2 a tonne historical performance. Finishing on CapEx for the current year. Big investment in Onslow. Some of that spend has been brought into this year from last year because of the delays with the approvals. I'll just pause for a moment on the gas there. So gas, that number there that you see is contingent on where we get to do with government policy. Chris will talk about this a little bit more in this next session. If we can't get to a reasonable outcome with the WA government, that number will come down possibly by half but if we can get -- and this is in the context of being able to export gas, if we can get to a reasonable outcome, we might add $50 million to that number next year or this -- sorry, this new year. As I said, I want to go through that quickly. Lots of time for Q&A after this. I'll hand back now to Chris, and he'll take you through the outlook for the business. Thanks.

Okay. Look, briefly, I'll just run through the operational performance of the business. I mean it is -- and I'm sure you appreciate it's a bit of a moving target. We've got 4 pillars sitting inside the business. All of them have got great assets in them and we're growing the business as I said last time, I done a presentation, I mean the business is doubling over the next couple of years. So hence, the reason why we're always busy. Where do we start? As I said earlier, there's been a lot of pressure around costs, trying to manage them making sure that we -- on one side, we're trying to get labor and balance it and on the other, trying to manage the cost of that labor. It's a juggling act. And all of the yellow goods now, I mean, we're constantly getting increases in yellow goods that 10%, 12%, 15% a year, and they just came out of nowhere unexpectedly. We've been able to manage all of that. Mining Services are able to make sure that they pass that on to our clients, and that's shared in the right way. So margins there under rating. So all of that's gone reasonably well. Lithium, as I said earlier, we've got 2 of the best Tier 1 assets in the world. I mean it's rare to get to own those sort of assets. They need a lot more drilling put into them, not in my lifetime, there's plenty there for the next 20 or 30 years, but we will be drilling them out over the next year or 2. As I said earlier, we're ramping up at both the sites and that's going reasonably well. In terms of our costs, our costs are more than double what they would be ordinarily when we're running. And the reason for that simply is that we've got all of that gear up there, and we're expensing all that pre-strip as we go. So our costs, once we get that strip complete, we'll be under $500 a tonne on both the sites. Wodgina has ramped up extremely well. We've got a lot of work done there and doing a lot of work around recoveries. But again, I mean, that's gone exceptionally well. We've -- we got about 3 months of delay again with -- on part of that cutback. We couldn't get into half of the mountain. So that gives us a little bit of pain. But during the year, we also -- for the first time, we started selling chemicals, so we sold 7,300 tonne of hydroxide. Iron ore, pretty flat and boring, not a lot happening with it. It went reasonably well. It contributes good cash to the business. The 2 iron ore hubs that we run, they're high cost. We started out with the dregs of the industry, and we've been able to grow and where we're heading now with Onslow Iron, I'll be able to talk about that more later. But look, the Yilgarn and the iron ore up in the Pilbara continue to make money every month. So as long as they're making money, we'll keep them operating. Utah hub, we had a few issues down there around port handling and issues with the port, but I mean that's sort of all back to normal. And Onslow Iron, we've spent about almost $900 million. I don't know whether that's a badge of honor or not, but we're trying to get $3 billion out the door as soon as we do will be done. Mining Services has run pretty well. We had a few hiccups in there. We came off 1 of the big contracts early. We didn't finish -- sorry, we didn't get terminated. We finished it early, so we've done really well for our client. A lot of that gear come over onto the lithium on these 2 mountains. During the year, 100% retention, very, very unusual for MinRes to ever lose a contract. It's happened to us twice in 31 years. We have had 6 new contracts were picked up this year, and that's -- it's an exceptional year. And we've got probably 3 or 4 more out there in the pipeline. These are all decent, sort of around crushing the 10 million, 15 million, 25 million tonne contracts. So we're adding real value. We've also had a couple of plants, my very first iron ore plant I put into the industry up in the Pilbara. Finally, it was a 6-year contract for 5 million tonne a year. It went for about 18 years, and it was 10 million tonnes a year. And I mean the client didn't know us much. I got another one on another site with the same client. They've decided we're going to turn them back on again for the next decade. So sometimes you just get lucky. Crushing and processing, we've got 3 new plants were just recently commissioned. We've got 26 of those crushing plants running in WA now. That NextGen technology we've developed over the last decade is quite phenomenal. I mean just to give you an understanding of the quality of those plants. I mean we can put 30 million tonnes of crushing capacity on the ground in about 4 or 5 months. We can do it for less than 1/4 of the traditional type of plant, less than half the people to run it and it will last 20, 30, 40 years. So it's high value to our clients. And the reason why we wouldn't so much work. Construction has gone reasonably well. The other little secret that we have in our business. We're the only mining company probably in the world that's got design engineering in-house and construction. So we own all our own construction people, our equipment and we know how to build projects. I mean, that's the core of where we come from, and that's another secret to be able to be successful in Mining Services. You're going to get those plants built at the right capital base to screw that up in your out-of-pocket forever. So construction is going well. We've trained 3 early in the year up at Wodgina, they brought that on and commissioned it. We're running that alternatively with trains 1 and 2. Mt Marion, they got that expansion done finally, still a little bit to do down there. Haulage, so we've developed and if you paid attention to the pitches, those big road trains, they're developed by MinRes. Their proprietary -- a lot of proprietary information and knowledge has gone into them, but they moved 330 tonne payloads. So for less than $0.04 per tonne per kilometer. We are moving dirt from inland to the port. So about $5.5 a tonne to get our dirt from -- from [indiscernible] into the port into Onslow. So we started building them specifically just for the Onslow job. They have a dedicated road. There's no interaction with traffic whatsoever. We're going to be driverless by the time we get there. We've got about 4 of them running driverless now, but we've got the drivers sitting in them. That means that when we go to Onslow, so there's about 500 people we don't need. And more important than the saving on the labor is the safety. We've got no humans on that road. So it's quite phenomenal. We're aiming within the next 3 years to have them fully electric. So we're going to have basically trains on rubber wheels. Where else -- just 1 more thing on them. We were going to build about 140 of them for Onslow that was the plan. We've got about 51 built now, so they're progressively coming out. By the way, they're all built in Western Australia in 3 workshops in WA. So wherever we can, we're manufacturing local to keep our jobs in Australia, which is really important as well. But we've got -- I can't say exactly how many, but I think we've got somewhere in the order of about 30 out on long-term contracts now with our Tier 1 mining companies, and these things have really been quite a hit to be able to move dirt as quickly as we can. So a big winner for us. And Marine, which started our little Marine division. We have ordered 5 transhippers. You saw them. The first 1 coming off the ship up in -- the COSCO yard up in China. We've now got 2 of the [indiscernible] there was 3 more to follow. It was actually 4 now. I just ordered another 1 a couple of weeks ago. So more about that when we get to the iron ore. Those by the way, too, when you look at those transshippers don't think if they're expensive. When we're running OnSlow it will be our lowest cost port on the West Coast, so highly accretive on the dollars. And energy, look, we're developing energy. We're bullish on the fact that we need clean energy. We've got to get away from diesel, we got to get away from coal-fired power. I've heard some people occasionally say that -- we've got to get away from gas. Well, good luck with that because, I mean, Australia right now is burning coal to make most of its power. And if we can get that converted out to gas, I mean I suspect that gas will be around for the next 40 or 50 years. It's really not our enemy. It's our friend in terms of a transition through. We got a lot of gas down in the holes in both Erregulla and Lockyer. Lockyer was a months to find. It was one of the better ones done in Australia. North Erregulla looks like it's bigger. So we're working towards figuring out how we can develop those. We've got about 7,300 square kilometers of land in the Perth Basin. So most perspective gas country in Australia, and we're the largest landholder up there. We've got a fully intensive program. Carnarvon Basin, we just recently bought out our partner, Buru Energy, they had 25%, we bought them out. We think that's a very highly prospective area out there as well. It's right in the heartland of our Onslow project, and it's right beside pipeline. So we're going to work on that in earnest. So that's sort of where we're at for the year. I'll just give you a bit of a rundown on where we're heading where I'm taking the business over the next sort of 2 to 5 years. So Mining services, look, basically from the beginning of this year to end of '24 -- calendar year '24, the business is going to double. And how do we do that? So we've got a bunch of what you guys call external contracts. So out there with a lot of clients. We -- look like we're speeding out over to Queensland and possibly up into the Northern territory of some of our hardware. And that's all just by demand, and that's sort of the equipment we've got is in demand, and our clients love it. We used to say that we were a pit-to-port contractor, we're in now pit-to-ship. So we're unique in that sense, we're the only ones in the world that can take iron ore or any sort of commodity out of the ground process that take it into the coast and put it on a ship, and we can pretty much do that worldwide now. So it's something that we're sort of pushing. I'm not pushing the worldwide bit right at the moment because we've got a bit on our plate, as you know. And I've got to kind of get through to about the middle of next year. So we can breathe a little bit and have the cash pouring in. We're also in the Mining Services business going forward. I mean, aside from all those things, you know that we do, we're sort of really starting to -- we're getting into the rehab quite a bit with a couple of our larger clients. So we're out there doing quite a lot of rehab work, which is -- it's a good thing. I mean we're very, very good at it. We've opened up a technology center over the last 18 months. We've got a pilot plant. We're doing a lot of lab test work around tailings as an awful lot of metal and material and tailings dams right around Australia. And we've had some very good breakthroughs on how to be able to separate and get some quality product out of some of those big dams. As I said on the workshops, we are the largest workshop owner in WA. We've got 120,000 square meters under cover at the moment, and we're about to develop another 160,000. So just growing our capability on being able to do maintenance and manufacturing and making sure that we're making everything that we can in WA. Our safety record with our innovations makes us in high demand with our customers. NextGen crushers have been a huge hit, and they just keep getting better and better. They're world-class and highly sought outside of Australia as well as around road trains, as I've said are going well, transhippers we've got under control. And we are looking at a lot of equipment coming online over the next 18 months. So the lithium overview. Not a lot more to say about that. I'll probably continue to do what we're doing. We're going to get Train 1 and 2, they'll be getting fresh ore by late this year, 100%. We're getting days now where we're getting quite a lot more fresh ore than we expected. So we got those plants at pumping out on a regular basis. I'm seeing 1,800 to 2,000 tonne a day coming out of those 2 trains. They're sitting on about 330,000 tonne a year run rate. That's spasmodic. We're not going to be able to count on those sort of numbers until we get around November, December, but then we'll get them long term. Train 3 will come online in January. We'll ramp that through. We still got more rock to move. So count on that ramping up over about a 5- or 6-month period, but coming June next year Wodgina will be doing about 1 million tonnes of 6% spot. Mt Marion is right behind it. And it's really coming into its straps the last couple of weeks was really starting to get the separation and working and understand these are the most complicated plants of all the commodities have ever seen out of copper or zinc or nickel or iron ore is always pretty easy. But these are really complicated. They're difficult. So bringing the plants online takes time, but both of them are working well. Strategy. We kind of make it up as we go along, as you can imagine. I mean -- but one thing we do is we don't get tied down to any take-or-pay contracts. We don't get tied to any long term until we understand where the value is, and we've always been able to flex and twist and make sure that we're capturing the right sort of prices. We've had moments last year where we were selling hydroxide for $81,000 a tonne. We were probably the only ones in the industry that were doing that. I'd love to see those days come back again. I think, we're doing a whole range of different things on these plants to make them more productive. I mean we're certainly getting -- we're seeing the recovery rates coming up and above -- I mean, on average, you would be lucky if you're getting 50% recovery going back sort of a year or so ago, and that's about the performance of most. A lot aren't even getting that. What that means is that you put 1.6% in the plant and your tailing 0.8%. That's the way it's been for a long, long time. The lithium business in hard rock is very primitive. It hasn't been around that long. So we're doing a lot of work around how to make sure that we can get a lot more out of it. I mean, our aim is to get up around 80% recovery. That's a few years away, but it's something we're working on pretty hard. Downstreaming. Everyone wants to know what our strategy is on our downstream. I mean it's quite simple what we're doing. We're running some studies at the moment. We want to upgrade our spot from 6% up to 25%, 30% concentrate. So then we are running either a carbonate or a sulfate. We're doing the work around that. That means that this stuff doesn't have a shelf life, hydroxide has a shelf life. I mean you got to package it. You got to handle it with a lot of key, you got to keep oxygen away from it. What we would like to do is go carbonate sulfate. And then we are talking to the OEMs. So our customers are going to be the OEMs, the car manufacturers. We don't want to get involved with the battery manufacturers or the tollers. What we are doing is we're not investing in China. I mean, I had a commitment to put $1 billion in there, and then I just simply pivoted from that and just didn't go there. China and Australia have had some issues in the past. It's high risk for us and I don't want to go there. And I want to be able to go directly with our product in Australia. We've got the most ethical product in the world. I mean anything coming out of Western Australia is more sought after than any other product that comes out of South America or Africa, and that's what they want. So I want to be able to go direct to the OEMs. We're talking to them. We're talking to the head of a range of different vehicle manufacturers. They're very keen to get something better down but we've taken our time because there is no rush. We want to make sure we get the right deals done. I mean we're selling our product now for full value. So going forward too it's actually cheaper to go into China, if you want a toll treat and there's a lot of dirt getting tolled in China. China actually goes and builds hydroxide plants without in the offtake. And I mean, pretty gusty. But there's plenty of tolling available in China. So we can actually toll over there for a less cost than building and operating our own plants. So that's the reason I just said [indiscernible] It's really simple, it's just a money thing. The reason I am not building anywhere at the moment but when we do build, I'm hoping it's in Australia. If we can't get around that with the capital and the help from the government, then we'll build somewhere in Southeast Asia. And then we'll be able to -- we want to make sure that that's aligned with the U.K. and the North American markets. And we will probably finish it off tolling out there. We've been made offers where we can get free carry in hydroxide plants in both Europe and the U.K. And I think the same opportunities available. I mean, there's a huge amount of capital available out of those areas now from the government and then our loans, I mean their grants. So we'll probably have -- by the time we get to about December, we'll have a very clear view on who we're dealing with and what we're going to build and we'll be able to make some more announcements hopefully around AGM time. We may be a bit beyond that. So more to come on that. Where are we going on iron ore? Onslow is our focus. We've got 2 key focuses. We got on Onslow iron and then weigh down the track beyond that. We're up in the Pilbara on that [ Tier 3 ]. we've got a joint venture with Mrs. Rinehart and Hancock. So we've got a berth -- [indiscernible] carrier berth on Port Hedland, 40 million tonnes. So that's shared between us. And I've also got 20 million tonnes of capacity on the Roy Hill rail for life. So very good partnership I've got with Hancock. That's going to take some time. It's probably 1.5 years before we start spending any sort of money on that. And by that time, we'll be halfway through the ramp-up and Onslow. So what am I looking for down in Onslow, we're going to have first ore ship around June next year. The ramp-up period there from the first 12 months will be hitting nameplate around 35 million tonnes within 12 months. I'm hoping to get it a bit sooner, but count on taking the full 12. 18 to 24 months out, we'll be at 40 million tonnes. And then we have got a pathway to go from 40 million out to 50 million. Now I'm guessing on that one. So beyond the 40 million probably about another 18 months, and we'll be there with another 10 million tonnes, high-quality products. So we'll be blending all of that. And the more tonnes, obviously, we put over this, the less the unit cost is. But it's a great project. For those that don't know with the Onslow project, it's a joint venture at the mine site where the ore is, and that's a JV MinRes got 60.3% of that. The balance is between Baowu from China, POSCO and AMCI from the U.S. So they have 40%, roughly 39.5%. From the gate at the mine, all the way in, so the road, the haulage, the crushing, the port is all owned by MinRes 100%. So we own that supply chain, and we own obviously the transhippers. That turns into a mining service -- great Mining Services contract that will last beyond 50 years. And the -- obviously, owning the road is quite an asset and it's something we're looking at the moment. It's the time we finish these sort of assets, they become a bit lazy and they're sitting there with capital tied up. So we're going to have a look and see what we can do with those kind of assets going forward. Mark is going to get that done before Christmas, at least yes. So that's basically -- it's the core of our iron ore business going forward that, and we'll follow that up with that South West Creek operation having an asset like that up in the largest bulk harbor in the world is quite a feat and we've got plenty of iron ore out there to put over it. So iron ore, it's a foundation commodity. It's made the world's biggest miners and there's a reason for that. If you -- I mean if you have a look at the price of iron ore today, I mean we probably would be selling that ore today if it was running for about AUD dollars, about AUD 120 a tonne. And as we've said, time and time again, I know you don't believe me, but no more than AUD 40 a tonne, we're onboard a ship. It's a little bit less than that. And the capital on OnSlow Iron, we will not overrun on the spend. I mean I know everyone is waiting us to say, finally, we're going to overrun, we're not. I mean we've got that well in hand. So the government approvals, we got all the approvals done. And I caught up with our Prime Minister the other night and congratulated them on what they've done 11 months for all the Onslow Iron approvals from the federal government and that they run hand in hand with our state government. So record time. I know we [indiscernible] a lot about the approvals. But I mean the government really got behind us on this when they see the value in the project and what it's going to do for Australia. So we've done well. Energy, as I said, look, we've got a lot of gas. I mean, we're going to do 1 or 2 things. Mark alluded earlier. We're going to spend about $130 million a year on exploration and development wells in the Perth Basin and up in the Carnarvon Basin or we're going to spend about $40 million this year, and that will be it. It will be 1 or the 2. We've had some good discussion with the government. We need to be able to export gas as LNG. If we're going to go and pump a couple of billion dollars into development. So we can see a pathway in the Perth Basin now where we can probably get out to about 350 TJs a day of gas or -- and that's with export approval. And if we're doing that, we need to be exporting about 200 -- at least 200 of those TJs, maybe 250, and then we can keep about 100 back for WA. And we can also flex on that if we need to. If we get down the track around 2030, where they're predicting there may be a shortage of WA, we can flex on that. We can help show that up. But we've had some good discussion with the government so far. And our government of WA has always been very commercially astute. They listened to industry. So we think that we're going to have some success along that line. So we're working towards that over the next few months. That will be a big contributor to the business if we can bring that online. In the meantime, we're just doing a lot of work around seismics and stuff that we're doing up in the Carnarvon Basin. We're starting to get out. So really, I mean, that's sort of the story of the business and where it's heading, conclusion on all of that. We've got some great opportunities in front of us. The projects that we're building today, a high return, as I said earlier, we're going to get out to the end of next year. Our return on capital average over the last 17 years will be beyond 25%. Our total shareholder return to our shareholders, which is why you guys invest in us. We're running at about 33% now for 17 years. I can see that within the next 2 years, I can see that getting significantly higher than that. As I said earlier, the business will double by the time we get to the end of next year, and that's simply through Mining Services, it's through Onslow line, it's through the lithium and we'll keep growing the lithium business. And then I expect sometime early next year, we'll be starting if we have success with the government either way. We're either going to be building a small plant or a large plant in the gas. I mean, at the moment, we're heading towards $0.5 billion a year spend by the time we get Onslow Iron and full production on diesel. And we've got to get rid of that diesel. We've got to eliminate as much of that as we can. And I want to do that primarily with the gas. So if you just think about it like this for the time, we get to June next year, I'll have 3 trains running full steam at Wodgina, Mt Marion. By the time we get to the end of this year, it will be in full production. By the time, I get to the end of next year, I'll be running at least 25 million tonnes run rate coming out of Onslow growing out to 35 million and then to 40 million. And the Mining Services business would have doubled by then and we'll have -- we'll be able to enjoy that income. I think where it's going with Onslow Iron if you think about selling a ton of that for about 120 and you take away 40 to get on a ship and then you take another 10 or 12. Let me think about that for another 15 to get it into China. Whatever is left time 35 is a good healthy income. Beyond that, for the first -- so we've funded the whole project. So our partners owe us money. So 80% of their margin going forward comes back to MinRes and to repay those -- the loans are building it. So our cash inflow out of Onslow Iron is significant over the first couple of years and beyond. I mean it's just a great long-term project. As I said, the lithium, we'll probably announce Train 4 later this year, and we probably want to -- we want to have that built and coming online around about '26 from memory. We've also started the approvals process on trains 5 and 6 and we're going to be a major producer, both in spodumene and downstreaming. So funding, I mean, I hear some noise around our balance sheet occasionally. It drives me insane. We've been doing this. I started this business 31.5 years ago. I started with $10,000 in the bank. Someone goes, I'm worried about your balance sheet, and you go, if you ever run a business, do you actually understand what you're talking about. And I'm not being derogatory, it's just we know what we're doing. I'm not taking this business to the edge. I never have. I mean our track record is pretty good. So I just can't stand here and tell you how I'm going to raise cash, but we know how. We have a very solid plan. I mean I'd love to be able to tell you exactly what I'm going to do. But we can't until the time is right, and you all know that. So you need to cut me a bit of slack. And I mean, if anyone starts writing about my balance sheet again, I only come after you in a nice way, we got that. So -- look, we've got, as Mark said earlier, I mean, we've got a lot of headroom on our balance market. If we want to go out and do something, the bond market in the U.S. loves us. Our bonds have performed well. And the reason for that would perform well. I mean we deliver, we make a commitment, and we deliver. I mean if we say we're going to do something, we get it done. Miami [indiscernible] I run 6 months late on Mt Marion and I pay the price for that. But it is tough. I mean, I've got a lot of things happening right across 4 different pillars, both operating them and expanding them and I'm bringing new stuff online that I haven't been able to share with you today, but we will when we get not too far down the track. So we've got lots of headroom to be able to go and raise money. What I said earlier too is when I was talking about of the assets we've got out there. I mean if we can get someone that can go and take a shareholding -- 49% shareholding in an asset, and they want 8% return, and I want 25%, I think there's business there to be done. And we're going to do that sort of thing. I mean, I want to make our capital work a lot harder because I see a lot more opportunity out there where I can get 25%, 30% return. And to do that, I need capital to do it. As I said earlier, look, our return on invested capital and our total shareholder return, we're at the top of our game. I mean, we're in the top 4 or 5 on the ASX, and we're going to keep doing it. We're going to strengthen that. We're going to get better. We've got very, very solid plans inside the business. We know what we're doing. I've got a great management team, and I define, I mean we've had a company out of Melbourne that's been going through our management team and me included, and interviewing us and scoring us and looking at where our strengths and weaknesses are and scoring us among 7,500 companies nationally and internationally, we're at the top of the spectrum. And I don't mean that in a nut case way, all right? But we've got a pretty amazing management team. They've got ownership of their business units. They make life easier for me, but I make it tough for them because we keep driving development and growth. So we've got some amazing Tier 1 assets. This Onslow Iron, I mean, there's billions of tonnes in that region, and we've got the supply chain for it. We're in the best mining jurisdiction in the world. I mean we've got an amazing federal and state government. They're very, very supportive of mining and development, and we need to be. I mean what I say to them is with gas, by the time we get to 2050, it will probably be out. There'll be no more fossil fuel. But right now, we need gas as a transition fuel to get away from burning coal. That's step #1. And that's probably going to take 30 or 40 years to do that. We need to take a leaf out of say Norway's book, go sell the gas, so we can bank the money and we can use that cash to move forward. We've got great partners. We've got a lot of JV partners in our business and they're good partners. I mean they go from the U.S. to Korea to -- up to China and very shortly, Japan, we're partnering up with another great partner. High-quality people were agile. I mean, we're focused and we deliver. So that's our spill for the day, happy for any questions that you might have. Hopefully, you've gotten none.

Thanks, Chris and Mike. [Operator Instructions]

Chris, Mark and James, Rahul Anand, Morgan Stanley. For my 1 question to start with. Just wanted to touch upon the iron ore business as it stands today. So you've got a bit of sustaining CapEx going in there at $225 million. That's a fair bit of money. I wanted to understand, is that -- how long do you get these operating costs as a return? Or is that basically just for the near term and then you swap over into Onslow and then Southwest Creek in the future. And like you've said, Iron Valley, perhaps [indiscernible], et cetera, the costs are still high. How should we think about that sustaining capital because it seems to have elevated.

Okay. Well, look, first, I mean, the OnSlow Iron project is going to allow us to be a little more critical of what we got. I mean I'm kind of talking to our guys a few weeks here, I'm really falling out of love with the Yilgarn. What I've said to them is my focus on that would be unless you can prove me wrong, I think it's got maximum 3 years life left in it. So let's have a look at the CapEx we're spending and adjust it for that sort of life. There's some aspiration down there for magnetite. Magnetite can be a 30-, 40-, 50-year business, and it's a greener deal. But if I had to guess, I'd say that we're going to be out of the Yilgarn, and we'll get a landing in the next couple of months on the fact that I really don't want to spend too much more sustaining capital in that place. The North is a little different. Out of Iron Valley on one of those, they're high cost at the moment because when we're moving dirt on the government roads, we're spending about $0.10 per tonne per kilometer. So you're getting up around $30 a tonne to get that in, where it's down at Onslow $5.5. Once we get access onto the random, we got the [indiscernible] carrier berth, all of those numbers change. So they're good long-term deposits. We get a couple of hundred million tonnes of those small deposits sitting out there. And then we've got hundreds of millions of tonnes in others. So once I go on rail, I mean -- but look, if something happened with the pricing, I'd turn them off. But -- and the sustaining capital we're spending out there, there's 1 out there that's more than likely going to get shut off at the end of this year anyway. So we're focused on that. We've got the worst-case scenario that Mark has presented, but we are looking at trimming that. You got anything to add to that, Mark?

The other piece I would say is that the -- we've got a view that the iron ore price has got a bit of a floor under it. We don't subscribe to the consensus $80 sort of perspective. We've seen that tested over the course of this year. We see every day, every month, how difficult it's becoming to operate in that space. The OpEx through the industry has gone up significantly. I don't think the consensus figures are giving that sufficient credit. So we do have a different view on iron ore pricing and that then drives it perhaps a slightly different way of thinking about what those mine lives could be. However, and this is the point I was trying to make earlier, we've got the flexibility to be able to pivot. So if we're wrong on that, we can move quickly to cap our exposure, right?

[indiscernible]

Yes, we have. Look up in Yilgarn -- out in the Yilgarn over last sort of 12 to 14 months, we've sort of gone back to producing lump. We have improved the quality of the ore down there. We're getting good branding out in the market, and we're also out there. We're running marketing out of Singapore. And we are getting sort of different brands now up in China, we're getting much more focused on the end users. So there's a lot of improvement in that area and they've done a lot of stuff too around the shipping. So incrementally, we've got inflationary pressure, but we've also got some smart people who have done some really good stuff.

You'll see in the balance sheet that the inventory number has grown a bit over the year. Not all of that lithium. Part of that's iron ore. It's given us that extra flexibility, particularly in the south to be able to manage the product better and drive better realizations.

Chris, Mark, it's Paul Young from Goldman Sachs. Chris, you mentioned at the beginning that this year is really a transitional year. You're investing heavily for growth. And I look at the -- that's reflected in the lithium unit cost guidance, which is remaining elevated. Can I just zone in a little bit on Mt Marion and the unit cost there. You got production up 30% in FY '20. Unit costs aren't really coming down, I presume as you said, because you're expensing the high strip and you're aiming to get to sub-500 tonne for both assets, which would be a great outcome. But I just want to get some color on Mt Marion, how long will the cost stay elevated? Will it be into FY '25 mark? Just trying to get some color about the 30% increase in production yet unit costs aren't really coming down?

Yes, Paul, I mean, where to start. I mean it's complicated with these pits. We've just recently made a lot of changes to the plant because we've got multiple kinds of feed coming out of the pit now unexpectedly. So we've changed the plant. The recoveries now is substantially better with the new plant that we brought online or the changes to it. So those costs are already starting to come down. But the main cost, I mean -- and I'm going to say it's probably about $500 a tonne to move the mountain. So we operated at Mt Marion around about $400 a tonne when you went back a few years ago. We're probably going to go back to around -- it won't go back to $400, but it will certainly be [ sub-5 ]. And I expect that, that would happen the time we get around about November, December. So it's getting there. Look, I get results -- daily results out of every plant. And I mean, just looking at what Mt Marion has done over the last couple of weeks, it's really, really great. It's almost got double the lithium units coming out of it now compared to the older plant. And I shouldn't say the old plant, but it was that configuration that we had. So just to explain a bit more these plants, I mean we're running a whole range of -- the core of Wodgina is flotation, dense medium cyclone down around Mt Marion. But then added to that, we've got ore sorting going in there now, we've got some flotation. So from the minus 1%, we're losing a lot of product out of that and because the ore body has changed. The other thing we're going to do down at Mt Marion is in the next month, I think we'll probably make a decision to go underground. And then in the October quarter, we're probably award a contract to go underground, it's about just guessing, I think it's something like about $35 million for us to [indiscernible] drive underground, so we can start accessing that ore down under the pit. So I mean we'll be open pit mining down there for the next 20, 30 years. But just to have another ore source so that we can get that blend going into the plant is going to make a big difference as well.

I'll just add to that, Chris. In terms of Marion, we saw the strip getting above 20% through FY '23 at times. And whilst a lot of that gets capitalized. It still carries additional cost in the operations through [indiscernible] at side with all the level of activity that we've been managing there, the number of trucks and people and so on. As Chris said, by the end of this calendar year, we're expecting to see cleaner feed through the plant more consistently. I think you'll see that the costs have a bit of a trail on that. But certainly, in the second half, we expect them to come down.

Lachlan Shaw from UBS. Just moving to Wodgina. Look, it's great to see that the pre-strip is well in truly underway there. You've got the pathway through to getting Train 3 up and running sustainably. But I guess sort of 2 questions. So can you just give us a little more insight around that pre-strip. And I guess, how we should think about timing in the mine plan coming into getting full feed in front of the 3 trains. And then just on the recoveries, Chris, you spoke on your introductory remarks about the recoveries that you're doing work to start to try and sort of lift that towards that 70% to 80% level. Can you give us more color in terms of what that work looks like and the critical path perhaps ahead?

Yes, sure. Look, I mean, if you think about generally full feed for 2 trains by December this year. But I am seeing that -- I mean, don't be surprised if we do better than that, but I'm seeing some really good days starting to come through consistently now. But for a budget purpose, start from December 4 full fresh feed and then our ramp-up on Train 3, it's a very conservative approach. But now I'd expect by March, April next year, it will be full blast, but allow out to June, and you'll be pretty safe. Recoveries. Any plant out there that's recovering up around 65% is sort of really at the top of its game of -- none of them are doing any better than that. For us to get to somewhere around 80%, that's the name, and we're working through the Union. We've got a whole lot of -- we've got a little team of excellence that we've put together. We're actually talking at the moment to some of the other hard rock producers in WA, and we're talking about pulling all of that information and working closely together to see if we can -- the ore bodies are also different and partially to help and partially to share information. But to get that, I wouldn't be counting on getting to 80% recovery in the next couple of years. It's a way off. No one's ever done it. But it is doable, and we're looking at a whole range of different ways of getting there. And it's not conventional. So the plants we're using now would sort of have become obsolete for if we can make the system we're looking at work.

Matt Frydman from MST. Chris, you said that your lithium strategy, you make it up as you go along. I'm guessing that was at least mostly tongue in cheek. But I guess, putting aside the debate over whether or not there's a sustainable margin in actually converting spodumene. Can you talk through, I guess, the logic of where [ mene ] has a competitive advantage in building a lithium converter in Southeast Asia? You talked extensively about, I guess, the returns that mene has been able to generate over the years through scale, through in-house expertise. How do those factors apply to a converter in Southeast Asia?

Well, if you wanted to build one, say in Vietnam, and Vietnam would be -- is 1 of the countries we're studying. You can basically get the whole plant manufactured in China, drive it over the fence and build it for about -- now I'll throw some numbers out there. But for about $300 million, you can build 50,000 tonnes in China or beside China. If we're going to build exactly that same plant, we would still do the same. We'd go and -- we would manufacture it in China, [ truck ] it on a boat, bring it out here. And by the time we do all the things we do, it's probably about $1 billion. So that's the capital difference. Once you got the plant operating, if you're operating in China, I'm going to go -- it's probably in terms -- just in terms of taxes, VAT, corporate tax, all of those taxes, [indiscernible] 10% more expensive than in Australia. The operating cost between there and here aren't that much different. I know that sounds great, but it's not. I mean I'd rather operate a plant in China in terms of cost per annum, but it's just getting it built. So if we can -- we're looking for middle ground. So if we can go and get 50,000 tonnes of sulfate or phosphate on the ground here where we've got a product that we can ship anywhere in the world and finish it off in Europe or in North America, that's got shelf life -- that's got endless shelf life, but if we could get something built for sort of $500 million or $600 million, that would work for us because having it here, you got full control over it. It's 100% Australian made. I mean -- and that's what they want at the end of the game. We have had offers, as I said earlier. They're willing to build hydroxide plants in Germany and the U.K., and they've offered us free carry in the plants. So if we go down -- if we were to go down that path, we still want to own the product. They'll only be toll treating it for us, and we'd have some ownership of the plant. And when it comes out the back end, we'll have to deal with the OEMs.

Matt, one thing I'd add, you shouldn't assume that we'd be doing the [indiscernible] in different parts of Southeast Asia. It doesn't mean we couldn't bring the skills to bear, though, to help manage that process effectively.

Kaan from RBC. Two questions really on iron ore. So firstly, with Onslow, could you just confirm that there will be no further spend for the remaining CapEx in FY '25? And also, with iron ore costs, just wondering, the write-down for the iron ore assets, was that really around the product strategy of better grade?

No, that was -- the write-down, that was -- our auditors decided to write it down. They figured out they knew the price better than we did, and it's just the rules that we've got to operate by. If we're an ASX 100 company, we probably wouldn't have done it. The thing that really annoyed me is that we didn't even get a tax deduction for it. It's a total nothing. It didn't cost any cash, but we didn't get any value. What was the other part of your question?

[indiscernible]

Are you asking me if I'm going to overrun the budget on CapEx?

No, I think -- the answer is there's a little bit of CapEx that drifts into the FY '25 phenomena.

Yes. So they've got some of the -- a couple of things that will happen. So at the mine site and around June, we'll be still loading the road trains with front-end loaders, and this is part of the supply chain thing. It's one of the big [ contract ] manufacturers we've used for 20 years. And they let us know a few weeks ago, they kind of got the timing wrong on our truck load out. So we'll be loading the road trains with front-end loaders. It's about a $0.50 a tonne cost. So that will be getting installed, and then there'll be non-process infrastructure, [ ships and bets ]. So there might be -- say, there's $100 million to spend. That's something -- that's not a heap [ event ]. It used to be a lot, but it's not anymore.

Just in terms of the audit and the impairment, the financial set out the key assumptions that we took in reaching the decision to impair. You'll see in there, average price was about $91. So essentially, we get a landing on the price curve. And then we draw up a life of mine plan for that price curve that, in this case, shortens life particularly with the higher costs, which drives the impairment.

It's Glyn Lawcock with Barrenjoey. I know it's 18 months away, you said, before you start committing capital to South West Creek. But just a couple of questions around that. One, just the progress you're having on how it will evolve. We talked about this, I think, 12-plus months ago, you've probably bested/tied up with the existing Roy Hill births. You'll get better capacity, better capital intensity. So just wondering how talks are going between -- I assume [ Gene ] is happy to do it, but I wonder how the government talks are going? And then secondly, any thoughts you can share around the capital intensity of South West Creek? Or is it too early?

Okay. Where do we start with that? Look, Gena is certainly very happy. I mean we're kind of committed to wanting to do it. We've got till December 31 to get to FID with the government, and it's simply that we get to FID. We've got work to do in between the things that concern me, the change of the indigenous what would we call it the new rules that they brought into play that went from August to the end of -- sorry, July and August. They're now gone. They were at a significant concern. We had some serious issues happening around our sites very, very quickly. So I wanted to understand how that was going to impact. We've got to make sure that we've got a spur line that we've got to run out to one of the mines, and all of those are impacted by a native title. It's sort of a no man's land at the moment. Everyone's too scared to do anything particularly government departments. So we're still trying to get our feet on the ground. That is probably the single biggest issue that we've got. And then beyond that, we're doing all the normal stuff you do around making sure that we've nailed down what the capital costs are the intent, I wouldn't want to guess on the spend at the moment. I mean we're just building the transshipping berth down at Onslow gone extremely well. I mean we've got it done for a bit less than we expected, got the dredging done for a bit less. I mean, that's the project is going well. So that experience is we're going to translate that up to Berth 3. I mean there's been a lot of berths built in that in a harbor in Port Hedland. So there's no science to it. We know the ground conditions. But we think we can chase some significant capital off where we thought we were at. But I think by the time we get -- look, maybe to the AGM, I might be able to have some -- I just don't have the information. And sometimes, my guesses get a bit wild.

We might just check the virtual world. Moderator, could you just say if there are any questions online, please?

[Operator Instructions] Our first online question today comes from Robert Stein from CLSA.

Question on optionality which you talked about in the presentation. And this isn't a critique of the balance sheet more trying to understand the options that you have available. The infrastructure asset is according to Onslow in terms of any potential infrastructure sell-downs all around or recycling capital, invest in that project with an infrastructure partner what are the main sort of toll gates that you would expect to hit what went to crystallize that opportunity?

Robert, I think the question was -- sorry, it was a little bit muffled, but I think the question was, as we think about recycling in the balance sheet, particularly with Onslow, what are the key gating items we consider in terms of whether we go down that path or not?

It's just a money thing.

That's right. Yes.

It's simply, look, we can bring in partners, minor partners that will put in capital to have that 30-, 40-, 50-year annuity stream. And we can take the capital and go recycle it and do 20%, 25% return. And this appears there's a fair old number of them out there that want to do it.

Our next question today comes from Ben Lyons from Jarden.

Temptation to ask a balance sheet question, of course, Chris, but I'll resist the temptation and go instead to the upstream lithium part of the business. Just note that you spent over $200 million on listed investments during the year, and that preceded the recent acquisition of a substantial stake in Delta Lithium. So hoping you can elaborate on your strategy here. Obviously, Mt [indiscernible] is proximal to Mt Marion, but the grades that will be coming out of that deposit looks way lower than the sort of 15% that you're getting out of Marion. So, it's hard to see any DSO ever actually displacing whatever you can pull from the ground at Marion. So what's your strategy with Delta Lithium? And if you can elaborate on your broader investment strategy?

Yes, Ben, thanks for staying away from the balance sheet. Good to hear from you. We do -- look, I have got a very clear strategy on what we're doing down in that whole region. Obviously, with Delta, we liked the dirt, particularly up in the gas -- upper gas in Murchison region. But we have also got a strategy on what we're doing with the land down in that whole region around Mt Marion. I can't really share it at the moment because if I do, I'm just sharing it with our competitors and they're going to try and copy me. But I promise that within the next couple of weeks, we'll be able to shine a light on it, maybe even sooner than that, we'll be coming out with some announcements maybe towards the end of this week. But I just not in a position to be able to do it right now. But it will -- I promise it will make sense and well mainly makes sense.

There are no further questions online at this time. So I'll hand back to the room.

Mark and Chris, Kate McCutcheon at Citi. We haven't had a question on gas yet, so let me go there. I just wanted to clarify your earlier questions. Are you saying that without some kind of assurance, the export of 200 to 250 terajoules a day, you would not look to do gas or you would purely look to do a smaller plant just for your internal needs. And then secondly, given gas is somewhat of a different ball game, just your conviction and tools that you're using to ensure comfort on developing a gas projects.

Yes, sure. Of course. To go build out 250 to 350 TJs of gas a day production. We're probably getting up the $1.5 billion to $2 billion. If we're exporting it for LNG, there's a fairly known price. We can go out and lock away a price in WA in the domestic gas plant, you can't. So what we've got out there is we've got the multinationals that I call them. I'm trying to screw over the juniors, that's us. So their expectation is that they're really pushing the government to have the gas producers and WA put as much gas in the market as they can, so they can get the price from, say, $10 down to $3 or $4, if that happens. I mean we have no security in being able to put that sort of capital. And so if we're running on exporting then we've got absolute surety of supply, and we can do more. So WA gets more gas out of us if they give us surety and the investment. So -- if I can't get that, I'm going to build about a 50 TJ a day plant, and that means that there's probably 30 for MinRes and 20 for the local market, and it will still give a return, but it will seriously save us a lot of spend on our fuel. If they go the other way, I can probably pump at least 100 TJs into the local market for a long, long time. So it's really simple, but I have the security to spend the cash. What was the other part of your question?

[indiscernible].

Do I know how to build a gas plant. Okay. So I cut my teeth on gas back in the early days. So I spent quite a bit of time up in Karratha up there with Woodside on the development of that. How else can I give you confidence? It's not uncommon these sort of plants we're talking about. And if we really get stuck, we do it, we always do, we just Google it and we figure it out. Pretty much.

It's actually ChatGPT these days, but anyway. I think the other piece, which is happening now is we're partnering with the right organizations to help through the design phase and as we think about moving in towards delivery and then precommissioning and commissioning.

And we've got a Canadian petrochemical company on board that we've engaged, engineering.

Again Rahul Anand, Morgan Stanley again. Look, I wanted to come back with a second on Wodgina. You have a slide there, Slide 26, where you've talked about Train 4, 5 and 6 in the future. And thanks for the estimates around the train related CapEx. Now I think everyone in this room appreciates the fact that there's a lot that goes into developing the mine and infrastructure required to feed these plants. So can you give us a bit of an indication as to how much development would be required in terms of the mine, the extra infrastructure that you require to feed that train for over and above of that CapEx that you're talking about on that slide.

Okay. So when we designed the existing plant, it was designed with 4 trains. Most of the civil work has happened for Train 4. So we've got the bed that we're going to lie it in. What we want to do is we want to get 5 and 6 underway on the approvals as well. And we're going to start prepping the ground for 5 and 6. But there's not a lot. I mean all of the nonprocess infrastructure is in place, the power stations there, the waters there. It was all really designed. I mean, if I owned 100% of it, I probably would have had Train 4 coming online about now. So my intent wants to build it a lot quicker. We're doing all that now. So once we get the top of the mountain, we're there. So yes, we don't have a repeat of this. I mean this is a once-off.

And then if you want to think about Train 5 and 6 is there any sort of estimate you want to like to [indiscernible] probably differ...

No. Look, it's largely going to be in line with what we're doing around 4. It's not going to be a whole lot of difference. I mean, we're kind of expecting the this inflation to start backing off a little bit. I mean the costs have been going up for probably about 3 years now, I really judge that on our big [indiscernible] the Caterpillar parts. I mean they come through fairly regularly at the moment. And they're starting to back off a little bit. I don't think, look, there's going to be 5 and 6 will be a bit of nonprocess infrastructure. But I mean, we've pretty much got everything. I mean, the camp will grow, of course, but not a whole lot. You don't need a whole lot of people to run these trains. I am definitely going to spend money on the camp, we're turning all of our camps right across the business into resorts. So just to give you a few scary numbers on that. The typical camp, 250 man camp is about $50 million, $55 million we can get them built for. These resorts, we're building about $140 million. That's the difference. Why do we do that? Because we need to add 3,000 to 4,000 more people over the next 18 months to 2 years. We need good quality people. The other thing we need to do is we need to get these -- we need to change the way we're doing it, building these camps doesn't work anymore because we're getting mental health issues. We've got a lot of blokes that get into the wet mess, and they become inappropriate with their behavior. So we're trying to turn them into communities. Our big focus is getting a lot more women into our workforce. They're high quality of the women that we've got now. They have better dump truck drivers, they're better at a whole lot of different things. But it's an untapped workforce, and we've got to move forward and get women much more involved in our business. To do that, we've got to have an environment where they're safe and they're -- to do that, I want to have a couple. So every room, we'll cap a little have a queen size bed. It's got a kitchenette, big screen TV, lounge, barbecue on the balcony, laundry beautiful on suite. And I've got about 4 of them sitting in our car park at -- in Perth. So if anyone's over there, they're welcome to have a look. But it's like literally like going into the cable beach resort Olympic pool. Anything on the case. So the 1 I'm building Onslow right now, it's going to have a day care for 70 kids because they want to be able to hire the local moms, and they need somewhere safe to put the kids. We're really changing the way we're doing things. We're trying to really create communities. I'm building houses and Onslow I've got 10 underway right now, and I'm going to keep building houses and get people residential. Because, I mean, how do I pay for all that? -- If I've got -- I'll have a high-quality workforce. We've got them lining out wanting to come and work for us because of the conditions that we're putting them an unheard of in the mining industry and they trust us to be able to deliver that. So I'll get another -- I mean this is -- on day 1, it's a 20 million tonne project. I'm at 35 on this thing now. And when I go 35 to 40, I'm just going to squeeze the assets and we'll get there. It's cheap, what I'm doing. Don't go and write all that just behave with your pen.

Matt Frydman from MST again. While we're talking about Onslow there that there's going to be no CapEx overrun on OpEx. I don't think that's been updated since you FID-ed the project, despite a backdrop of cost inflation in the industry, including some cost inflation that's led to that impairment at your other iron ore assets. So I guess the question is, is $40 a tonne still the right number? What's gone up since that FID and where have you been able to save in other areas to get back to that $40 a tonne? And also is $40 a tonne, the number 35 million tonnes per annum? Or is it the number of 50 million tonnes per annum? Or what's the flex in between?

No, there is no sliding doors or windows and mirrors here. I can tell you the $40 is still the number. I mean it's the number at 35 million tonne run rate, and it's probably the number at 30 million tonne. I mean when we give you those sort of numbers, no secret. We built a little bit of that and just to make sure we don't look silly. But it will have a change at 35 million tonne run rate. When we get to go from 35 to 40, we've got a few things. So I've got to check in it another lay by berth for the transshipers. So that means that I'll have a transshiper parked and a lay by berth. And when the loaded transhipper moves out, it will slide straight and behind. So I mean I've probably got to spend -- I'm thinking maybe I might have to throw another $50 million or $60 million at the thing to go to there. But I also need that to go from 40 million to 50 million tonnes. The other thing to remember, too, is that, that $40 a tonne has got my little incremental mining services charges sitting in there, and we make a smidge of each one of those. And we've never made that public how much those margins are and we're not going to this time.

Lachlan Shaw, UBS once more. Thanks again, Chris and Mark for the second question. So just another following on from the last question on Onslow going to 40 million to 50 million tonnes. Can you talk to -- is that within current approved resource reserve mine plan and specifically around native title, getting the mine plan into and approved to allow that expansion?

Yes. So the 35 million to 40 million tonnes sits well within all our approvals that we've got. So it's all in the [ Gainsborough ] region. To go out to 50 million tonnes we're hitting [ 170,000 ] further east. So there's another joint venture owned asset out there. It sits at about 61% so we want to bring that into the mix. And obviously, we blend that through -- we're going to blend that through at about 4 to 1, and it really sort of -- it almost puts a 6 in front of everything we're selling. So that makes it pretty attractive. But then, of course, when we do that, I've got another piece of road to build, and I'm really getting to love these roads. But I want to -- I don't want to build anything near the coast anymore.

Just 1 point on that. It's an interesting question because you're highlighting the optionality that sits in the business, right? But also -- the other piece is the planning and the approvals is far more complex than it was 12 months ago or 18 months ago. And so there's a huge amount of effort going into the business to make sure we trying to anticipate where we're going to need to be 5, 10 years down the track and make sure we get in front of it now. That's -- it's a live conversation every day.

I think, too, just to highlight on these approvals. So -- the federal government absolutely bent over backwards to help us get this project go in 11 months as a kind of a record. And the state government were just all over it. They have people specifically appointed to make sure that we can get them done as efficiently as we possibly can. The other thing that did happen as well, it's probably not overly public is when we hit the Northwest highway heading towards Onslow for about 17,000 from there into Onslow. the main roads first time they've ever done it, they give up the easement on the top side of the road. So we can put our haul road down the main roads easement, which just gives us a direct line straight into town. Everything was approved those opportunities now. I mean they're incredibly happy. They actually charge us a rent for it, but they're happy with the outcome on that because what we're doing is we're getting big trucks off the highway. And they love that. So if we can drill carriage those right away, it's 1 of the ways we'll be moving forward.

Chris and Mark, Mitch Ryan from Jefferies. You started to talk to within the Mining Services, some of the -- your the growth opportunities with inside Queensland. I'm just wondering if you can talk to the size and scope and timing of those opportunities.

They're working on them now. I mean, I think it will happen within the next 6 months. they look real. I mean -- and most of these sort of opportunities we do by negotiation, I mean, we're a little bit like McDonald's. I mean, we charge the same amount for our crushing. It doesn't matter if it's good or bad times. We're well known that we flatline on what our charges are the same with these big trucks that we're building. I mean they're attracting a lot of attention. We've got I think we've got about something like 25 of them out there on long-term work now, which we never expected. We actually went in for 1 of our clients had a major breakdown on 1 of their big conveyors, overland can days. And I think within about 72 hours, we're moving 20,000 tonne a shift, which is unheard of. But I mean, those are the sorts of things that we can do now. So look, I think between now and Christmas, that will evolve, and we'll probably have some news for the time we get to Christmas, some of them they're slow to react, but these are long-term sticky type contracts. That will happen quickly.

And Mitch, I'd add to that. And we've talked about it, and I'm sounding a bit like a broken record that the challenges that the larger players are facing in terms of their operations, they don't have the agility. They need to be able to pivot at short notice. There aren't that many alternatives for them. We've got great relationships. We've got the safety track record, which is important to get on the site in the first place. And as Chris said earlier, we're establishing a very strong track record with particularly these large jumbo haulage solutions, which the clients love because it gives them all sorts of options to be able to rethink the way they operate, which they didn't have a year or 2 years ago.

Operator, could we please go back to online and just see if there are any other questions, please?

Next online question comes from Anthony Kavanagh from Chester Asset Management.

Just a point of clarification on the Onslow infrastructure arrangement that you've got with the $7.74 tolling charge. So 12 months ago, you stated that it's a real price subject to inflation. That comment was obviously to June 2023, and we've had a fair bit of inflation since then. I just wanted to clarify, at $7.74 when production starts and not $7.74 at 30th of June 2023. That's the first question. And the follow-up is just that if you go into 50 million tonnes, I presume that the incremental 15 million or 20 million tonnes on top of the original project, is also subject to the same charge?

So Anthony it's Mark Wilson here. The -- the answer is that it was $7.74 when the contracts were signed, so it's been escalating since. So a rough estimate is $8 or thereabouts now. Maybe just a tad over.

$8.23.

$8.23 there you go. It's very roughly estimate -- estimate. In terms of the usage, we've struck an agreement for effectively mine gate to ship for the existing development at [ Gainsborough ] and its surrounds. So anything that we do beyond that going forward into the future, will rethink. I mean, that infrastructure, this is 1 of the points we're trying to help people understand that infrastructure that we've developed or are developing is very strategic in its nature in a region with billions of tons of stranded assets. So we will look to use that infrastructure to release value and optimize our value for MinRes shareholders.

Our next online question comes from Robert Stein, CLSA.

Sorry, just another question for me. You announced to the market a couple of weeks ago, the binding solutions investments. I was just wondering what's the thinking around that investment? Is it to use it to increase the VIU of your envelope products by potentially agitating a lump product? Or is it merely a long-term option on your potential magnetite production that you have down?

Yes, all of the above. So going forward, I mean there's just a great range of opportunities. It's basically just using binders, cold pressing with binders. The product that's been produced is probably 2.5x harder than it needs to be. But our aim is -- I mean, the initial focus was on magnetite. There's literally hundreds of millions of tonnes of low-grade ore lying around the Pilbara that if you ground it up a little bit and you get some of the gang out of it, you can upgrade it into the 6s. But then you need to be environmentally you want to be able to bind it. Lithium goes out of our sites. I mean it's ground down to buck dust, and it goes out with about 12%, 13% moisture, if we bind it, it will go out with 0 moisture and it will be a high-quality product feed. We're doing a lot of scientific work and lab work around a number of the [indiscernible] service around Australia. And again, those are micro size, but -- there's a whole range of different products in those dams. And we've had some very, very good success on being able to get the separation we need. But again, to make that product salable or ship loadable -- you've got to be able to get a no-form where you can handle it without causing any environmental issues. So there's endless opportunity for it. And we come across this product, and we're quite astounded at how the quality of what they're doing. So our aim with that is we're going to build a fairly large demo plant down south of Perth in Kwinana and then start putting a range of products through it. And we'd like to be able to get it to a point where we can send some of the stuff over to the mills in China and even Japan and Korea.

There are no further questions online at this time.

Chris, Mark, Kaan from RBC again. Just a quick one, maybe to build on that -- just -- you talked about tailings processing. Maybe if you can expand on that if that's mainly around customers' tailings or the tailings from your own operations?

No, most of it's customers or opportunities that are sitting out there. There's a number of them, and they're literally spread around Australia, and there's a whole lot of different types of metals from alumina in copper and -- if you have a look at what's actually contained in those tails dams, I mean you have a look at our tails dams. So we got from the old days when [indiscernible] or running Wodgina extracting tantalum. They put 100% of the lithium in the tails dam, so we got 22 million tonnes out there, grading 1.1. So that's better than almost better than a core lithium has got. So all we need to do -- and the work is done its ground. So all we need to do is figure out how to extract it, but we won't be doing it through the existing plant because we're putting head grade and I mean as looking the other day, we're putting in 1.8%, 1.7%, we're putting into watch and we're sucking out 2,000 tonnes a day. So I mean, it needs to be a special plant for it. And the other -- there's a couple of other processes that we're actually looking at, 1 with a little company called Lithium Australia. So we've invested fairly heavily about $4.5 million into this process so far, and we're just building a little pilot plant. But if that works, it will be a bonanza. So that will be we'll do 1 day, we'll do something separate up at Wodgina and we'll process those tails. But we're also putting other tails in there now. And we're probably averaging like 0.8% head grade going to the tails stamp. So 1 day, we'll go back and get all those as well. But it's just how many things we can do at once.

Chris and Mark, a follow-up question, Paul Young from Goldman Sachs. I covered most of the ground, but I just want to talk about Mining Services volumes. With respect to -- just trying to work out why we're only seeing a 10% increase in volumes in '24 where you've signed 6 new contracts you've renewed for you're probably getting some volumes from Ashburton in the June quarter of next year because the projects on track. I know that -- and you also you mentioned some of these crushes next gens, of course, a 15 million tonne per annum plant. So just trying to square away why the 10% increase? Or maybe you can talk about what the exit run rate might be in the June half next year, please?

They're not going to happen instantly, Paul. They take a little bit of time. So a couple of them, there's 2 contracts that we got early in the year, one's 15 million tonnes, one's 10 million tonnes, so it adds another $25 million. They're working on getting those plants built at the moment. And then generally, we'll always have 1 or 2 sitting in the yard. If we got them in the yard, it's about 90 to 120 days. We got them on site, we're doing 15 million tonne. So it's probably going to take -- I'm going to go 6 to 9 months before you really see some of that evolve. Some of those are also the big jumbo trucks. So we've actually -- we're building them about as quick as we can. So right now, I mean, we're building prime movers we're building all of those trailers. So to get up -- we're heading up by the end of next year to about 200 of those big jumbo triples. I think there are about [ $1.25 million ] a hit, prime movers get assembled in Melbourne and all the rest are built and Perth. We're busy. We get a lot happening.

And just lastly, Chris, are the Brazilian opportunity that you mentioned 6 months because that's still there?

I've walked away from it. I mean, they really wanted us to go there. It's just -- we've got so much opportunity sitting here right now, I mean, getting the equipment as the issue. So -- if I had it went down to Vale, I would have had to turn down some of the local jobs to do that. And I mean, I like what I'm doing when I can get at a site and back in a day, I mean, we've got total control over it. when we're down there. And I got to admit I did get a little bit nervous. I haven't been in South America before. And I've had a few friends over the last 25 years that have been down there and kind of come back a little scorched. So I'm not quite -- I mean if I wasn't as busy here, I would give it a shock because they're good people, no doubt about that, and they'd be a great client to work with. But I just don't have the horsepower at the moment.

I know that there will be some that find that hard to believe, right? Because it always feels like there's so many different things happening, but we do say now quite a lot. And that's a really good example because it's a great client they knew we could bring real value to them. We knew we could bring real value to them. But at the end of the day, even though the margins were going to be strong, the risk return wasn't right.

We'll take our last question. Kate?

A question on the tolling strategy at Marion. If you can incur a tolling contract for less than $6,000 a tonne today, what's the rationale for not tolling product today? Are the margins not there with the chemicals or you can get a better spodumene price some comments there. And then secondly, customer appetite to take the lower-grade product from Marion, any color on what you're seeing there?

No. Look, it's just math. So you need about 8-ton of spot to make a ton of hydroxide. And if you can sell in that for around about $3,500 a tonne, and then the end product is about $30,000 a tonne. It's just not worth going there. So what happens is the hydroxide price has come off way quicker than the spot price. And there's always a bit of demand for strong demand for spot because they've got all these converted plants in China that are ever chasing product for. So it's just that 1 come off quicker than the other. It will turn around. When it turns around, I mean, we're tolling in China now with all our Wodgina dirt that goes over there. None of it has ever gone to an old male plant. It's always gone to toll treaters managed by Albemarle. And if you think about it, there's probably -- there's 800,000 tonnes that should be getting tolled at Kwinana with Tianqi and down at Kemerton with Albemarle, and those plants haven't come online. So they've got the dirt for them, all coming out of Greenbushes, there's 800,000 tonne heading out there that should be in Perth, getting toll treated. So eventually 1 day, certainly, the Albemarle plant is starting to work pretty well. That will come out of China, and it will free up those converters. But these converters out there now with lots of capacity.

And appetite for customers to take the 3% portion of the Mt Marion concentrate? Or lots of happy buyers?

Plenty, plenty. Ganfeng Labatt. I mean, I mean you can gang finger a great convert. I mean, you can literally give them gravel off the side of the road and they'll turn it into hydroxide. They're good converters, but they know how to deal. It's basically doing what you do with iron ore, you have a whole range of different products from around the world and you blend it. And if you can get that blending right, I mean that's how they make an extra kicker out of it. But it's good core screen material. All we're doing to do that. We're just going further down. Normally, that would go to tails, and we're just going further down and scavenging that and making a product out of it and we get pretty good money for it. I think we're done. I think James is going to wind this up. Are you? Okay. Well, I appreciate it's all coming. Thanks very much. We are going to do better on making sure that we don't tell you we're going to do 1 thing and then not produce. So we certainly -- look, I just want to reiterate again, with our balance sheet, -- we know what we're doing. We have a plan. We've got plenty of capital sitting out there we can get. I am not going to issue shares. I've never issued shares. I'm not watering our shareholders down. It's not their responsibility to fund our growth. As a management team, we will do that, and we're not going to go out and raise money off your shareholders. But we have right now. We have got 3 separate opportunities that's going to bring capital in this calendar year. And I've got another capital that will bring it in, in the second half of this financial year. And when you read about it, you'll be happy. So I'm going to have my problem, and I guarantee I get to the end of June next year yet, what are you doing with all that cash? You want to pay a special dividend. So thanks, everyone, for coming, and we'll keep doing what we always do.