PLS Group Limited (PLS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, a pleasure to be with you. Thanks to those participating here in the Melbourne hotel. Thanks to those participating via the Chorus line. And a big thank you to those participating via the webcast and especially if you're a Pilbara Minerals shareholder. We really appreciate your attention. Welcome to Pilbara Minerals Strategy and Investor Forum. A slightly different forum to how and where you might have heard from us historically, but we think an important opportunity to present a more fulsome story about what Pilbara Minerals is up to and why and in particular, the important piece that we think we have to play through a fantastic team and an amazing resource at our Pilgangoora Project. A quick reminder that there's a Q&A session running this -- at the end of the presentation, and we'd like to be able to hear questions from each of the forums. So just a reminder, for those that are participating via the webcast, you can ask a question. There's a tab named Ask A Question. And you can log your question. Our team will be paying attention, too, to the chat line. And as a result, we'll do our best to try and address questions from each of the forums. I want to introduce you to the hardest working executive team in Australia. Today, we have presenting Dale Henderson, our Chief Operating Officer; Brian Lynn, Chief Financial Officer; and attending and in particular, for all the tricky Q&A, Alex Eastwood, our General Counsel and Company Secretary. Very, very proud of what the guys have achieved over several years now, and I'm sure, like you, I'm looking forward to hearing from them as well. So we're in this amazing time. We've been through a tough period when the lithium markets, lithium raw materials clearly wasn't working in our favor. But Pilbara Minerals got through it with a plumb, and we are now ready for the global energy transformation. Our opportunity today is to share with you how we think we can go about it and the reason as to why Pilbara Minerals and our Pilgangoora Project can be worth so much more. It starts with some introductory comments. Dale will talk about projects, current operations and also more detail about what we're up to with the combination of our midstream or proposed midstream business and the downstream business. Brian is going to talk about our financial discipline, what we've done to get ourselves in what we think is a great position as the market starts to head in our favor. And lastly, I'll close with a summary, a summary position about our strategic intent. And of course, lastly, followed up by the Q&A. How lucky are we to be living here in Perth almost COVID-free, but we're on the new islands. And in particular, the Whadjuk region, host for the Whadjuk people. We respect their culture and their connection to their country. And obviously, we hope that you do, too. I'd also like to make special mention of Nyamal, our key partners in the development of the Pilgangoora Project. We pay respects to their elders past, present and emerging. Let's get on with it. I'll point you to the usual disclaimers. You can read them at your leisure. That's available via our website and via the ASX. I think it's fair to say that most of you know where we are. We're at the Pilgangoora Project, massive endowment, huge mineral resource, huge reserve, having just got bigger through the acquisition of Altura lithium operations. We now have 2 plants, 2 production facilities with massive flexibility to grow production off a really, really large resource. We've renamed the plants, and I'll explain the history as to why we've got there in a little bit more detail. As a result of a fantastic resource, very, very long-lived mine, we've attracted some incredible partners, both as key shareholders, but also as key partners in the business downstream, including critical offtake positions. And lastly, we've developed an alternate sales channel that I'll explain in a bit more detail and get to the heart of the logic why that model makes sense for our business. I'd like to introduce to you a new addition to the Pilbara Minerals team, David Hann, Investor Relations specialist. David has a long history in the combination of broking, the analyst community and financial sectors. We're lucky to have David on board, and he's a fantastic fit for our team. I encourage you all, whether you're online, via the email or via direct calls to David, you'll find him an important resource for Pilbara Minerals information going forward. Key strategic shareholders, they're all a big part of our business. You might very well be familiar with our team. I think a fantastic Board and a Board that's deeply integrated with the management team and vice versa. I'm really proud of the dynamic that's emerged between the Board, the capability and the skill that they bring to the table and how information is shared seamlessly between the management, the exec and the Board. I think you'd agree that that's one of the reasons why we've been able to develop our company at a great rate of knots. And as I alluded to earlier, they are Australia -- I'm not joking, they are Australia's hardest working executive team. At the heart of it, a lot of it hinges on our people. Who wouldn't want to work for our purpose, making the world a better place by enabling the global energy transformation? If you're at risk of going the way of the dinosaurs and you're in fossil fuels, you need to work for Pilbara Minerals. If you're stuck in the Rust Belt in iron ore, you need to work positioned for the future. You need to work for Pilbara Minerals. There is a big change happening around the world, and we want our employees to be an important part of that change, and that's why we've created what we stand for. This is quite longstanding within our company, albeit the first time we've sort of thrown it out there in the public domain in a meaningful way. But it really gets to the heart of the way we work. We are a bit different, and we don't mind that. The contribution that our team makes is really important as we consider the big changes that are going on around the world. So people, culture, it's right at the center of the work that we do. Of course, we have some fantastic assets. And we've built more sophisticated systems and processes as the company has grown, but it wouldn't happen without our great team, and we really appreciate them. Of course, we also appreciate the Nyamal people. I've been working in the Pilbara for quite a long time now. It's getting close to 20 years. And I'm really proud to have got to know many of the elders in the Pilbara, not just Nyamal elders, and I consider it a privilege. They are constructive and sophisticated partners to our business. We really appreciate their involvement. And that's why we decided to use them to help rename our facilities at the Pilgangoora Project. So now what was formally known as our Pilgangoora Stage 1 project, it's the Pilgan Plant. The Pilgan Plant is a representation of Pilgangoora, the bigger picture. Pilgangoora hills, the land adjacent to the hills, the Pilgan Plant is well positioned adjacent to the Pilgangoora hills. Ngungaju. Ngungaju. Slightly different spelling, but Ngungaju is the name of the Altura plant, and that's because it's adjacent to abundant water. There is natural springs right adjacent to the old Altura plant. And as a result, Nyamal said you could not think of a better name, and we're agreed, of course. It's fantastic, Ngungaju, the Ngungaju Plant, and a key part of our consolidated facilities at the Pilgangoora Project. And by the way, I remember, when we first started drilling out at Pilgangoora and everyone said we'd never find water, I can assure you, there is plenty of water at Pilgangoora. And of course, our traditional owners, the Nyamal people, they knew that all too well. So we've got plenty of water. Don't you worry about that. It's been a wild ride. A lot's happened. There's been a few ups and a few downs. But mostly, it's been a lot of fun. Fun because we all work amongst a great team, and that's allowed us to do things quickly. There's not many mines that you'd find that have gone from first exploration drill hole to exports in less than 4 years, but that's exactly what our team did. And that's because there are a bunch of capable, grounded people working as a really, really strong team. The Altura acquisition, it goes without saying it was a fantastic addition to our portfolio. And as much as we're sorry for shareholders and unsecured creditors that have lost money, it represented a fantastic opportunity for Pilbara Minerals. Having bolted on the former Altura assets, now the Ngungaju Plant, we've given ourselves an incredible amount of flexibility as it relates to the next generation of growth at Pilgangoora. But there's also a very, very important link to the offtake position. That's something I'm going to discuss in a bit more detail later in the presentation. But in short, we've got incredible flexibility as to what we do with that product, and it now represents significant value. So huge critical mass, lots more to be done through the integration of the assets, and Dale will explain a little bit of that in more detail. And on that segue, I'll hand over to Dale. Thanks, bud. Appreciate it.

Thanks, Ken, and good morning, everyone, for those in the room and for those online. And in particular, a very special thank you to those shareholders, who really did have gone the journey with us, who backed the thematic, but backed us as a team because, yes, it's been an ups and downs is the way Ken described it, but it's been a hell of a challenge, but we've worked through that. So for those shareholders, thank you. Your support meant a lot, and we're now on the other side of it and looking forward to enjoying the upswing. What I'll be speaking to is a bit about the operations and looking back and then looking forward and looking at our value-add initiatives in the form of a midstream product and downstream product. So I'll take you through that. But to kick off with, we might jump into a video just to give you guys a bit of a feeling for what it looks like at the site. So we've got a bit of a flyover here. And what you can see here is our central pit adjacent to the Pilgan Plant. It's our widest ore load, which we've been developing the last 2 years. You can see MACA, our mining services contractor, loading out some of the spodumene ore there, which is the white gray ore, off to the ROM, the run-of-mine, to be fed there into a crushing contracted partner's plant, CSI. A pan-around of the Pilgan Plant, the comminution circuit and the foreground. Float circuit out to the top right and sheds, which hold the final con top-left. Big integrated plant, 900 meters end-to-end, float concentration in the course. This year is our new haul road connecting through to Altura, the Ngungaju Plant, affectionally known as Ramsay Street, which is a bit of a shout-out to Neighbours TV show. Thanks, Macquarie, for that one. That was a good idea. And here you have the Ngungaju Plant being the former Altura asset sitting ready to go, albeit needing a little bit of love. A bit of a pan-around there of the plant. And then lastly, to finish, white gold coming out of the end of our Pilgan Plant. Coarse product to the left and our fine products -- sorry, fine product to the left and coarse product on the right-hand side there. Loading out to queue, our haulage contractor, and there you have it. So we are 25 months into operation. So 1st of April 2019 was when we kicked off. We've done 33 vessels comprising some 40-plus cargoes. So we're well into the thick of it, having produced over 500,000 tonnes of concentrate. And yes, here we are looking forward to taking a step-wise fashion into expansion. But to start with that story, I just want to recap on the resource, which Ken touched on. We do have one of the largest hardrock pigment type systems globally, and that was before the Altura acquisition, which, of course, adds to that. So then sort of stretches -- well and truly positions us in that top quartile category as a Tier 1 asset owner and developer. And we can reasonably expect to find more. And case in point is the drilling program we've had progressing down the boundary of what's formally the Altura to Pilbara Minerals tenement boundary. We're 2/3 through that drilling program, and it's been coming up with some great results. Albeit early, but we've got some really healthy intercepts, thick loads, near-surface, and the grade is looking good. So looking forward to drilling that out further, and we will report that reserve increase as part of our annual reserve reporting, which will be September quarter this year. So given this massive Tier 1 asset and our base operation, how are we thinking about our expansion strategy? Well, it's all about value creation. And the way we think about value creation is really through 3 driving forces: It's about expanding and getting larger and, in fact, getting much larger, up to 3x the size of our current operation. Secondly, it's about increased margin, value adding. So looking for ways to evaluate our lithium product into more valuable refined lithium products. And then the third driver really relates to ESG and specifically to carbon reduction and carbon out. That's a thematic, of course, globally, particularly the heavy industry. But furthermore, for us as a battery materials business, it's a must-have. So those 3 drivers are really shaping our value creation, getting larger, value-added product and the ESG drive with carbon out. What we've displayed here is sort of a pictorial of how we're thinking about our expansion. On the left-hand side is our core business, which is what we do today, producing spodumene concentrate with the stepped expansion path from that point. In the first instance, that's about our debottleneck improvement projects, which are under construction now. Then looking to bringing online the Ngungaju operation being the former Altura plant. And then moving on to the phased expansion for our -- what was our Stage 1 operation at the Pilgan Plant. Moving to the right-hand side, we've got what we call our midstream product. Now this is an R&D focus for us as a business. And this is about the creation of an intermediate product, which does some of the processing of the spodumene product to get it into a more valuable, straightforward form, a better product for carrying lithium units. And lastly, to the right-hand side, downstream in the form of either lithium hydroxide or lithium carbonate. Our ongoing work with -- on the POSCO joint venture has been our first foray. But in the picture, this is the pathway. And as we think about the future, over time, although our business is positioned on the left, ultimately, we want to move to the right, which is around higher value add, higher levels of integration and separating ourselves away from the pack. So starting with the left-hand side and a bit of a talk about our core business around spodumene concentrate. What you have here is a bit of a schematic of the Pilgan Plant. In the background, we have the ore body sort of going left to right on the screen. 10 kilometers in strike length, 6 sub-ore bodies. In the foreground, of course, you've got the plant, crushed ore stockpile to the right and power station to the left. From a safety performance perspective, it's been pretty good. It's been steady. Not perfect but steady, as a low-hour site as in small staffing, very sensitive to -- our TRIFR rates are very sensitive to injury. But we've been going not too bad, and the trend continues in the right direction. LTI-free for coming up to 2 years, which is in good stead. So not too bad. But as always, a continued focus on safety. It's foundational for our culture and for our operation. Moving from safety performance to production performance. This picture really does paint a thousand words in terms of the journey we've had. And really 3 chapters we have moved through as a business. We had sort of Chapter 1, which was around construction and commissioning back in 2017, 2018. A period of elation, white gold, the new oil. It was a bright future we had ahead. And just as we almost got to nameplate, that pricing started rolling downhill, and we entered sort of second chapter being one of challenge and frankly, survival for the industry and many of our peers. Moderated production is what we called that phase, and it was exactly that. It was about managing our operating asset and lockstep with sales and cost down, balance sheet preservation and maintaining a war footing to survive that part of the cycle such that we could be here today and stepping into Chapter 3, which is around capitalizing but capitalizing with discernment and leveraging off the position we have, this massive asset, and scaling up and a timing which makes sense for the business. Now as part of this period through the moderated production, it was a hard-fought period, not only around being on the other side of that period. But during that period, it was a key phase for the business to really get better, frankly. And for us, that was about becoming a leaner, more performance-driven organization, driving down cost and improving operations, performance, namely lithia recovery. And to that end, that's been our journey with lithia recovery. I love the trend. That's a linear line going straight there. Ken wants it to keep continuing. I'm telling him no, it's got to taper off at this point. But where we find ourselves today is 70% is the new normal for our lithia recovery, and we see ourselves, frankly, head and shoulders above many of our competitors, and we see this as a key differentiator. But as I said, it was hard-fought, and it's come through the dedication of our team in all aspects of business-wide effort of teamwork, a relentless focus on improvement and a first principles approach to test work, test work, engineering, implementation, followed with operational discipline in the field. And that's played through starting in the ore body. Our ore body understanding, where we did ore petrology studies with the gentlemen starting with the defects period following RCR when they went into administration, which that happened, too, by the way. Just to remind everyone, we had that plus plant improvements itself. You name it, we've done it, plus the operating discipline aspect. All of that sums through to what you see today. And we have a first-rate team who is incredibly capable. And it's through this technical backbone that gives us so much confidence about where we want to take the Ngungaju Plant, the Altura operation. Sorry, Ngungaju-Altura plant into operation and then bringing the expansion focus back to our Pilgan base operation. I think the thing to emphasize here is we've got flexibility. We can time this expansion when it makes sense. This is not greenfields expansion. This is brownfields expansion off a base which contemplated expansion. So we're in an incredibly solid position to step into expansion when that makes sense. And as you can see from the blue sort of stream, that is the step-up from the Ngungaju Plant care of Altura's operation. And would just like to give you guys a bit of insight into what that looks for your asset. The tails facility at the top in the background, the pit output, I should say, out to the right. And where we're at with the acquisition is it transferred in January. And subsequent to the transfer, our focus has been really around getting ready. It's been around the evaluation work, mine plans, understanding the maintenance requirements through the asset, studying the engineering fixes we'll look to deploy, assessing the contracts, et cetera, et cetera. Now all of this is summing through to a decision point, an FID decision point, which we're timing for late June next month. So coming up upon us, and we'll be taking that forward to the Board. And so subject to market conditions and those approvals, we will look to get it back into life. We're thinking most likely it would be a recommissioning in the December quarter this year, initially using some of our transitional ore, which we've stockpiled. So we think that's a really smart way to undertake a rolling start to bring the operation back to life. And then as we step into next calendar year, January onwards, we'd look to ramp it up to a full rate of knot. [ Showing ] the future business we're building. And starting with -- we've got a series of projects which are starting to take us in that direction. And these are related to emissions reduction and carbon displacement. And the noteworthy mentions here are, firstly, we're underway to deploy a 6-megawatt solar farm. The team is busy working on that. And we're looking to award that in the second half of this calendar year. We're doing some work on ore sorting. In fact, we have done for the last 2 years. We see that as a really important capital investment, not only to reduce energy intensity in our processing operation, but also it's about maximizing our reserve and extracting every ounce of lithia we can out of that incredible asset that we have. The last key initiative to touch on is our midstream product, which I'll go into further detail in a second. This is a really key initiative. Very early days, but it absolutely is about -- I'll get into the detail about the drivers. So from an industry perspective, the industry needs to change, frankly. The hardrock lithium processing industry, like all heavy industries, is carbon intensive. Firstly, it's high energy intensive and it's a carbon-based energy. There are smarter always -- we think there are smarter ways to move to and certainly lower carbon solutions to move towards. And yes, we're up for the challenge. Now the lithium industry, different from many of the other industrial industries, has got a special position and that it's growing. It's growing rapidly. That's probably point number one. So it's got a chance to pick better solutions from the outset and grow into a better format from the outset really around -- sorry, the 2 drivers, shaping the industry, firstly, around the demand drivers, being EV, a growth industry; and secondly, this carbon necessity, carbon-out necessity, which, for many of you, you would have seen is well and truly end-to-end through the battery material supply chain. So frankly, we don't have a choice, and it makes sense to step down this direction. So in terms of the solutions we've been looking at here, in a nutshell, what we've been pursuing is the creation of a superior lithia concentrate product, one which is greener and one which is simply better. Higher in lithium concentration, more pure and easier to receive by the customer. And we think we're onto it. We think we're onto a good thing here. And to describe that in a bit more detail, what we've displayed here is a compare and contrast of the existing industry as it stands today versus where we think we can take things. So the existing industry, as I mentioned, the hardrock lithium processing, incredibly energy intensive. We mine, so it's blast. Drill and blast, mine haulage. We crush, mill, grind, then we float. And what flows from the back of that is a 6% lithia product, which you can see the picture of there. That goes on to a vessel, 6% lithia, 90-plus percent other stuff being aluminosilicate. We sell that to our chemical conversion customers, who then take that product. The first step of their process is heat treatment in the form of calcination, which takes the spodumene concentrate through a phase change like popcorn, alpha to beta, an expanded phase through these big kilns, fuel by fuel gas. And this expanded product, which comes out at the other end, is then in a state that can then be digested and [ assessed ]. And from that point, it goes through a series of precipitation and concentration steps, ultimately, to crystallization to produce a lithium hydroxide, a lithium carbonate product. And that's what we do today and what we have done to date. The below the line is a view of where we think the industry can migrate to over time. And the big difference here is taking the front of the chemical conversion process and bringing that to the mine side. That's part one. Part of the job that they do would be powered by renewable energy. So this is essentially what we've been working at through on a lab scale. The picture down the bottom is an example of a lithium salt we have produced. And the benefit, it achieves all those aims that I mentioned. And that moving from spodumene concentrate to a lithium salt, lithium chemicals offers the advantage of a material step-up in lithia concentration. On a metals unit basis, you can see it goes from sort of 2% well up to 15% and above. From a waste perspective, you -- that aluminosilicate I mentioned, that 90% waste hitting off on the boat, that doesn't go on the boat. It stays at the mine site, another key advantage. And from a purity perspective, we think much higher levels of purification can be achieved through the right lithium salt concentration process. So many, many advantages. Plus, of course, is the deployment of a renewable energy process solution in the form of -- in particular, the form of the calciner. In the calciner space, we've been working with Calix. Calix is another great Aussie company living on the other side of the island, who's been working in this area for some time. Now their electric calciner unit has been deployed at industrial scale, being deployed in cement plants in Europe. And we've been working with Calix over the past year for the application of their technology in this space, in spodumene calcination. And the good news is those results are looking really encouraging. So we're partnered with Calix, and that's what we've announced this morning to help -- to work together as a team to create this new midstream product. So their expertise in the calcination, our expertise in the chemical conversion and concentration process and those 2 things combined. And so we're at and developing that pathway. And I guess, you'd say, there's plenty more to go here. We've moved beyond the concept phase, and we're now really into the scoping study phase, of which we're planning to have that done and dusted by the end of the calendar year. And from that point, we'll look to take it hopefully straight to a demonstration scale. We'd love to do it at our site at a demonstration scale to [ hopefully ] to a commercial solution. And that commercial solution, how would we deploy it, yet to be decided, but there's multiple avenues. But this type of solution makes a lot of sense, not only for Pilbara but, of course, for the industry. So we will -- the intention is to work with Calix to deploy that more broadly. So incredibly exciting in concept. The [ cons are ] grounded, and we are grounded in our base operation, our base business, and our expansion path. So we have not taken our eye off the ball in that regard. And we see this for what it is, a very, very important value-add R&D piece of work, which we'll continue to move that forward. But 90% of the business focus remains on our core business. I also mentioned that we're absolutely aware we're not the first ones to product and to finish on downstream, downstream being the further refinement of the lithia products into either hydroxide or carbonate. Our focus here, of course, has been POSCO, who we've been working with the last couple of years. And of late, many of you may have read that POSCO has really, really stepped up the pace there and looking to proceed vigorously forward, which is fantastic. And for Pilbara, we've been knee-deep in technical and commercial discussions of late these past few weeks. So there's more to be done. And ultimately, a major decision to go towards the Board here on where we take our engagement with POSCO. But we are absolutely positively disposed to that engagement and moving forward. This has been a strategic objective from the outset of Pilbara, and we've done a lot of work together working with POSCO to get to this point. So -- and considering other opportunities, we are absolutely keen and open to new downstream opportunities. Given the massive resource, the step-wise scale and production we can move towards, it makes lots and lots of sense for us to continue to do further downstream, further value-adding either on our own or in partnership with others. So we're absolutely keen to explore that. And Ken will speak a bit later about our offtake position and what potentially could unfold in the coming years. So lastly, to finish, I just wanted to summarize and say I hope that I gave you good insight to where we've come from and where we're heading. As I said at the start, our upstream business, our spodumene concentrate is the key focus, and we've got what we think is a very smart, flexible plan around scaling up that side of the business. We then have our midstream R&D project, very, very sensible. It looks great. We should continue to pursue that, and we will. And we've, of course, got our downstream initiatives, further increasing that value-add on a per lithia unit basis. More to come in that space as we move from an outright spodumene concentrate provider further to the right in that value-add chain. So incredible asset, incredible team. And we do have a fantastic future ahead of us. So thanks for listening to me, and that's a wrap for me. And at this point, I'll hand over to Brian Lynn, our CFO.

Thanks very much, Dale, and good morning, everyone. We've probably all heard the adage that a year in football is a very, very long time. But what I can tell you is the last 18 months in the lithium game has been incredibly a long, long period. We've gone through incredibly difficult market conditions. We've all had to work. We've come out the other end feeling like we're in a very strong financial position and ready to take on what we believe is a growing market and an improving market. There's probably 3 key messages I'd like to leave with everyone today as part of my presentation. The first is the financial additions, and we now look to the future, and we see that there's actually some really good signs that we've seen the worst and the best is ahead of us. And we feel like we've got a balance sheet, which will actually allow us to take those opportunities in our stride. And the third point is around funding options. So we think we've got a number of -- to fund those options as long as they are sensible for our business. Sometimes it's worth looking back where you've come from to understand where you're going. So I thought it would be worth just reflecting on, I guess, the cash flows that we've experienced over the last 18-or-so months. So this is a waterfall that we've put out in the marketplace before for the financial year 2020. And if I think about the FY '20 year for us, I think about it as a year of financial discipline. So if you think about it, we were faced with an incredibly rapid deterioration in the market from about June of '19. Demand suddenly evaporated. Pricing reacted and came down, and we were faced with some fairly difficult business conditions. At the same time, we were trying to -- or we're still spending money on our plant. We are still working on the plan to improve it and to get it to the nameplate capacity and achieve the recoveries that we believe the plant was capable of, and we felt we needed to continue to invest in our plant, even though the market had taken a turn. And we also had looming debt repayments under our Nordic Bond [Audio Gap] cash flow as much as we possibly could. And we did that in 2 ways. One was you matched your production to the demand that you're getting from customers. So we made sure we didn't produce tonnes that we didn't think we could sell. And secondly, and most importantly, I thought, was that we drew down all of our inventory that we had built up in anticipation of customers taking product. We made sure that we drew that product down first. The result of all that is that we -- whilst we didn't make a lot of cash flow from operations, we actually came pretty close to breakeven. So I think in those trying market conditions, I think that was a reasonably good outcome. We're also really -- having got some feedback from our customer, we just got the sense that those soft market conditions weren't just a flash in a pan. They were going to be actually something, which is going to be with us for a while. So we undertook a preemptive equity raise. We raised about $111 million back in September 2019. And that was largely around protecting our -- that we wanted to. And it also allowed -- or gave us confidence that we weren't going to be strangled by the Nordic Bond facility that we had in place at that particular point in time. So then we move on to the last 9 months of the year, still with very tough market conditions. We're still in a moderated production strategy. But what we did see is that we had actually made large inroads into how the plant was operating. We were able to get much more clarity on the cost of our production. And the combination of all that meant that we could actually generate a positive cash flow from operations and interestingly, if you take into account the provisional pricing adjustment outcome. Importantly, though, with us having confidence in the plant's ability to operate and having reengineered the balance sheet through the equity raise that we did, we felt now we could actually go to market and try and refinance that Nordic Bond. The Nordic Bond had some looming repayments, which were going to start in June 2020. It was clear to us that the business wasn't generating cash flows, which could actually -- and we were able to replace what was a very expensive debt facility with one that is much better aligned to our business. We're able to get a cheaper form of debt -- and I'll talk a bit more about this in a couple of slides. But it's a cheaper form of debt. But most importantly, we're able to resculpture the repayment of the debt so that we gave ourselves another 2 years of runway as we waited for the market to improve. And I think that was very, very important for us. That was a key step in terms of the financial discipline that we demonstrated. So having -- how our operations are starting to turn, and we saw the price starting to at least start turning north, having done that equity raise, having replaced that debt with a more sensible debt structure, we felt we're in a position where, in fact, we could look for opportunities now. And almost straight after completing the refinance of the debt, the opportunity to acquire Altura came up. And we felt we had the balance sheet where we could actually go ahead and do that knowing the market in the very near term. This is really just a pictorial of trying to show the actual quarterly margins that we've actually achieved during -- since September quarter of 2020 to March. And what you can see is, as we were, I guess, working on our plants and moderating production, we were actually losing margin. But as we got the plant performing better, you can see the gray line, which is our operating cost, that started to flatten out. And then we have seen -- we started to see a small improvement in pricing in the last couple of quarters. But if you look to the future and you actually look at what some of the independent forecasters are expecting for pricing in the very near term, what you can see is that we should be in a world where the pricing dynamics are going to be much more positive for our business. Now if we can be disciplined about our cost and try and maintain our [ cost ] cash flow, we'll just return to shareholders. So we're pretty excited about the next sort of 1 to 2 years because we do think that the prices are going to be incredibly healthy. We do think that we have got a very good business. We've got a disciplined business, and we think we can actually generate some very good cash flows as a result of that. So again, we think that the financial discipline that we've demonstrated has positioned us well to take advantage of an improving market. So I mentioned the refinance of the Nordic Bond before. And I thought I just wanted to spend a bit more time on that because I think it was a real key to -- or a key step for us as a business to take to make sure that we actually could take advantage of the market when it did turn. So I spoke before about the challenges that our business was being faced with looming debt repayments. But we felt that having done the plan improvement work and the equity raise, we could go to market and just understand how much appetite there was in the market to replace that debt. And we were quite surprised with the level of interest. We had an interest from a number of different areas. But in the end, we felt the most compelling was the offer from BNP and the Clean Energy Finance Corporation. The reason that was compelling for us was not only was it cheaper debt, but these guys were prepared to, as they termed it, to bank the recovery in the lithium sector. So they were quite happy to give us a runway of 2 years to wait for pricing dynamics to change and to improve, which would therefore support cash flows, which would be available to pay back the debt. So for us, it was quite an easy decision in the end to go after what is quite a conventional finance facility with these 2 banks. We've got a cheaper interest rate. But most importantly, we actually got to resculpture our debt repayments so that more -- it matched more closely the period when we expect it to actually generate cash flows. So that's obviously provided balance sheet strength for us. And what that allows us to do is think about the funding options for the growth opportunities. So Dale, obviously, spoke to a number of opportunities we believe our business has in the next little while. And obviously, to take advantage of those, we need to find funding sources. So if I just step through the 3 or 4 key ones in my view. The first is the Pilgan Plant improvement. So this is where we're spending money to take the Pilgan Plant from about 330,000 tonnes of concentrate to about 380,000 tonnes. So we've already put in place a prepayment with Yibin Tianyi, one of our customers, for USD 15 million. And that basically will fund the works that are required to complete those plant improvements. Clearly, the Ngungaju Plant restart improvements is front and center for us at the moment. That's, I think, the most important piece of work that we're doing in our business right now, and there will be some money that will need to be spent as part of that. We're obviously going through a fairly detailed analysis of that at the moment, and there will be more to say on that in the very short term. But if we think about how we're going to fund that, well, we've got $100 million in the bank. So clearly, that's going to be a source of funding that work. We've also got the opportunity to increase the debt facility we have now. So we obviously acquired the Ngungaju assets through an equity raise. They're unencumbered. Those assets can form part of a security pool if needed. And on the back of that, we should be able to access more debt as long as it's sensible. POSCO downstream joint venture is also another important piece of work that we're currently running off on. People may recall when we did the original deal with POSCO, we put in place a convertible bond, which they would provide. So on the assumption that we do proceed with an investment in that joint venture, then that will be the source of funding to allow us to do that. So we've always spoken about expansion opportunities. We've always spoken about doing that in a disciplined way when we think that the market is actually going to be there. And so when the market is there, we think we've got the opportunities to either use customer prepayments, existing cash flow from -- that will generate our operations. And again, the ability to upsize the existing debt facility and the working capital facility to actually be able to fund those. So in summary, again, I just really wanted to go back to the 3 points I started with. One is around the demonstration of financial discipline in what has been a difficult market. I think as an organization, we've done a good job there. The other is around where we pop out at the other end in terms of balance sheet strength. We've got a strong cash balance. We've got a sensible debt facility in place, and that really puts us in a strong position to actually grow our business from here. And then thirdly is around the growth opportunities that might come. We think we've got credible sources of funding to actually take advantage of those growth opportunities. So that's a wrap for me, everyone, and I'll hand back over to Ken.

Okay. Thank you, Dale. Thank you, Brian. Because they're grounded humble guys, you won't hear them singing their praises, but I'm going to do it on their behalf. Dale and his team have done an amazing job with our Pilgan Plant, and we expect that we can overlay our expertise to the Ngungaju Plant in exactly the same light. How good are they? Well, Independence Group disclosed. You don't hear much about the Greenbushes [indiscernible], but they disclosed that recoveries at Greenbushes were between 65% and 75%. We achieved [ 70% ] when you consider that we are producing the combination of an SC6 product and they are processing at 1 point -- or 2% head grade as compared to our, say, roughly 1.4% head grade. So Dale and his team have deployed a fantastic layer of skill and hard work to achieve industry-leading recoveries, as I said, at a 6% product spec because there are others producing a lesser grade. In the case of Brian, Brian and Alex, the sleepless nights that they deployed to achieve the financing with the CEFC and the BNP facility was extraordinary. Let me remind you, in the period June to September last year, that was the lowest of the lows in chemical pricing and spodumene pricing. And we took our headline interest rate from 12% to less than 5%. Absolutely unbelievable and a credit to Brian, Alex and their teams and a credit to Dale and his team. Brilliant. Absolutely brilliant. All right. So moving on. What else are we doing? I'm going to go through and partly summarize and partly flesh out our strategic intent. Here we have our sustainability pillars. We've been a lot more fulsome in our disclosure as of the FY '20 financial reporting period, and our intention is to do more of that. We're taking this aspect of our business very, very seriously because, of course, it's the right thing to do. But it's also a big part of your value-add to the industry. It's critical. So we're giving it due attention. And of course, you will see more about it from us over time. In FY '21, we've continued to get on with it. So some of the sort of key packages of work are already underway that will become part of our reporting for the FY '21 year. And we've listed a few of the sustainability initiatives that are underway. Let me call out a couple. We love going to the Yandeyarra community. We've got a Books in Schools program running there. The bottom right, Soa, the Hulk. Soa, the Hulk, is a champion MMA fighter and he runs healthy mind, healthy mines. Fantastic guy and a really good program to get our team into. And we also took the opportunity to take Soa to Yandeyarra, and we also took him to Port Hedland High school. And it was fantastic to see the interaction underway, particularly focused on mental health initiatives. The bottom-left photo there, key initiatives around indigenous enterprise. And this particular one was, again, another important one because it represented the highest value contract that we've awarded to Nyamal aligned business. Here you have sticks in the middle there, Ian Taylor. Ian is a great guy. He's been very, very entrepreneurial. He's teamed up with SIMPEC for the development of the IronMerge JV. And what they're doing is they're going around winning work in the Pilbara, including at Pilbara Minerals, for structural, mechanical and piping works. Really good effort. So the SIMPEC JV is doing our Stage 1 or Pilgan improvement works, traveling really well. We're deep into our climate change strategy as a subset of our sustainability initiatives. You heard Dale talk about the big solar farm that's going in. Of course, our midstream product strategy is also another key initiative there. Let me be a bit more explicit about the benefit in the midstream scheme, particularly as it relates to carbon reduction. Old school is just not going to cut it. Just because we've been shipping spodumene concentrate from Greenbushes to China for the last 25 years doesn't mean it's the right solution for the industry. This industry in its current phase is ripe for innovation, new ideas and better ways of doing things. And what Dale and his team have flushed out through the work that's been underway for the best part of about 15 or 16 months now is, of course, the Calix calcination technique, which is a beautiful match to our fines flotation concentrate. Absolutely perfect. Means that we can structurally change the carbon footprint of the spodumene supply chain. Those that called spodumene as high carbon called it way too early. There is heaps more innovation that's going to be deployed to make for a low-carbon footprint, and Pilbara Minerals is determined to be at the leading edge of that change. Such real growth that's going on in the industry. I'm sure many of you have heard me talk about this infant item so I'm not going to dwell on it too much. Apologies if I skip through it quickly, but the key theme is there is -- well, but fundamentally, Pilbara Minerals and the lithium raw materials industry has been a net beneficiary of the COVID experience because demand has been brought forward. Why is it being brought forward? It's being brought forward because the global picture around new energy investment has been brought forward. As people look to stimulate their economies, they're targeting new energy industries. And of course, batteries are a co-commitment to those new energy initiatives, electrification of the transport industry and energy storage. They're kind of the 2 big stories. And that's what's brought forward demand. That's why we've experienced a spike in demand. And of course, that's now playing out in respect of pricing. Just to ram the sort of issue home, have a look at what CATL is up to. They're a fantastic partner in our business. We really enjoy working with them. Very, very innovative company and very, very aggressive in their investment strategy. Already the world's largest lithium-ion battery manufacturer and continuing to invest at an incredibly rapid pace. Do you know, by their estimate, by about the mid-2020s, they will have consumed on their own the global equivalent of production last year. Pretty amazing what's happening in their business. That's why they're happy to work with partners like Pilbara Minerals who can continue to support their growth. Another thing that's often lost, and I'd reflect on it often, is just how quickly China has built out the middle section of the lithium-ion supply chain, the value-added products, the chemical pieces. When we first started in the industry back in 2015, you could literally count on one hand the buyers of spodumene. Now these days, there's over 25, most of them being primary end users. There is a few traders that have come to the market, but most of them being primary new users. And that's important because it links to our strategy as it relates to the battery materials exchange. And I'm going to explain that in more detail. There is more buyers now than there was even just a couple of years ago, and they are not supported by offtake agreements. The opportunity in the battery materials exchange is the creation of a spot market, and I'll explain why that's important in a minute. The statistics here relate to the obvious, I guess, the headlines every other day, growth in EV sales. That's happening in Europe. It's happening in China. And there's been a second wave of growth, as I alluded to, principally as a function of the whole COVID experience. That's motivating in the data here from UBS. That's motivating now. Growth in both lithium hydroxide production, which has a healthy link to this quality in the spodumene supply chain, and growth in lithium-ion phosphate, cathode materials or carbonate supporting cathode materials, LFP has become a bit of a phenomenon in China because those sales are now so cheap. In China, the LFP sales are about 30%, maybe 1/3 of the cost of a high nickel cell. So that's grown the scale in the market that they can address. So that's what quite creating this kind of next wave of lithium raw materials demand, obviously supported by growth in hydroxide demand. On the right-hand side, it's a reflection of a bit of a longer-dated future. And the key behind that particular -- all those data points is to reflect on how much growth is yet to come in lithium raw materials. So it's huge. By the independent economic agencies assessment a 10x growth over roughly just decade, but did 25x growth by 2050. So not many commodities go through that sort of growth. That's basically what we're faced with. And that's why Pilgangoora is ultimately going to be such an important project to the industry. And finally, that started to reflect in pricing. The graph on the left is a representation of chemicals price and then spodumene prices, at least in this case, via Asian metals. But each of the price reporting agencies is obviously reporting, I guess, what we're experiencing, and that's -- there is price appreciation going on. Been a pretty hectic first 4 or 5 months of the year. We would argue on the spodumene front, more to come because what spodumene markets would typically lag the chemicals by at least a month or 2. So a bit more to come, Brian has reflected on that in the way our provisional pricing models work as well. Again, we don't talk about tantalite much, but I thought I'd include a little bit of data in that regard. And that's to say it's also been on a bit of a run. And we think that's a function of underlying capacitor demand. During the COVID period, a lot more mobile phones, tablets and also the 5G rollout, the heavy users of tantalite capacitors. So a bit of that is starting to be reflected in price appreciation in tantalite, which is great news. So hit a low of about $55 a pound, currently 70 plus. So some healthy appreciation going on there. We love to reflect on the great partners in our business. They are both strategic and they're both offtakers. We provided a little bit more detail about what each of our partners is up to. And the interplay or the connection to our business, often, they're shareholders, often they're offtakers or both. But in any case, as much as it's been a tough period, we have been able to maintain all of those key relationships. It hasn't been easy. I'd certainly make that point during the period where the demand has been well off. It's been hard. But I'm pleased to say that each of our partners in their own way and Pilbara has come through the other side with a healthy relationship intact and a wave of growth in front of us so that we can be mutual beneficial -- mutually beneficial outcomes to be derived. All right, uncommitted offtake. Again, an important representation of the optionality in our business. I know people have thought of us as being sold out, but that's not the right way to think about Pilbara Minerals. In the short term, we have 200,000 to 230,000 spodumene concentrate tonnes unallocated. It's not an offtake. That's principally driven by the recent Altura acquisition, but it constitutes one of the key opportunities in the acquisition because we have flexibility to deal on that product. And as I said, it has important links to our online or sales trading platform. And then at the end of 2024, another big step-up in unallocated spodumene moving to 400,000 tonnes plus. The combination of available offtake through the Ngungaju facility, but also the first round of offtake starting to roll-off from our Pilgangoora project. That -- those tonnes, 400,000 plus tonnes is larger than most mines being proposed. So we have a lot of flexibility and ultimately, a lot of optionality and value in that available offtake. The Pilgan Plant expansion, Dale has referenced the stepwise approach with which we hope to be able to expand that facility. There is offtake associated with that. But it's all conditional on the completion of a final investment decision as we launch into those subsequent expansions. So that's outside the unallocated offtake that I've already explained is available. All right. Battery material exchange. This is worth a bit more explanation, a key point of value that we are hoping to unlock. So what we're doing is we're basically opening up the pool of unallocated product to a broader buying group than was available historically. In essence, the creation of a spot sales trading platform. It's really sleek infrastructure. Believe it or not developed here in Perth, we've scaled the world looking for something like this, and we ended up in our own backyard, which is just fantastic here. GLX Digital has done the work here on our behalf, and it's very, very cool. The benefit that we get out of it is being able to create buying tension by opening up the pool of available buyers in a convenient and single trading platform. It's very, very cool and valuable. Why? Okay, here's the why? What I'm going to do is I'm going to paint a picture for you about a couple of key points in time in the market. And explain the dynamic between -- or the link between the headline chemicals price and typically the way that offtake works because there hasn't really been spot trading historically in spodumene. It's typically all being done by offtake, and the offtake has a predetermined price outcome, where you share the benefit, if there's any, in the headline price in chemicals versus the contributing cost of mining and a margin and processing and a margin to create the cost base compared to the headline price. So let's talk in the first instance to the lowest of the lows. Here we are, September 2020. If you looked up -- in September 2020, if you looked up Platts, if you looked up fast markets, you'd see a headline chemicals price of about USD 5,500 a tonne in China. You'd see, based on what we know of the industry, chemical conversion costs for the sake of round numbers, let's say, that's USD 2,500 a tonne, in which case, you're left with the cost of raw material supply. There was no margin. In September 2020, basically, everyone's margins being compressed to, in essence, 0. There is no addressable margin. That's the way the market works. I hope I've got everyone with me so far. Let's step forward to today. Now we're hearing in May 2021, roughly speaking, the headline price in China for lithium chemicals at a battery-grade level is USD 12,500 a tonne. The cost of chemical conversion hasn't really changed. It's $2,500 a tonne for the sake of for round numbers, which means you're left with USD 10,000 a tonne to pay for mining, miners margin and the chemical converters margin. I can tell you that Platts markets, let's say, roughly, today's price for the spodumene landed in China is USD 675 a tonne, roughly. What that means is the contributing cost of the miner with our margin is USD 5,000 a tonne, implying that there's a gap. This thing I've called the addressable margin is USD 5,000 a tonne. The headline price, less the cost of chemical conversion, less the price paid to the miner and his margin. The gap is USD 5,000 a tonne. In bidding for our product, our thesis is that when spodumene is short, there will be more margin applicable to a spodumene tonne on the sales trading platform, i.e., the price can be higher than $675 a tonne and possibly a lot higher, depending on how much tension there is in securing that supply. Now I'm not saying this is going to happen. But if we were to win all of that addressable margin, that pushes spodumene well beyond $1,000 a tonne today. I'm not saying that's going to happen. But there is an opportunity there that is well worth exploring. Let me show you one more extreme. In November 2017, the market was close to the highest of its highs. If you went to Platts, if you went to fast markets at that time, it's roughly USD 24,000 a tonne, peak of the market back then or the last peak in the market. Cost of chemical conversion hasn't changed, still $2,500 a tonne. At the time, Platts fast markets, your spodumene was worth $950 a tonne. There is still this enormous gap in addressable margin. In this case, I think it was close to USD 18,000 a tonne, implying can spodumene would be worth a lot more if there's enough tension in the market to secure the spodumene, and of course, chemical pricing is high. The answer is categorically, yes, it can. It can be higher. I'm not saying that we're going to get it. I'm just saying there's an opportunity there that absolutely has to be explored, and we've created the platform to try and make that happen. Okay. I'm hoping that, that's all made sense to you in the room and everyone online. I'm going to close with a -- we'll call it the strategic plan on a page, right? This is ultimately where we think the value is added for Pilbara Minerals and our Pilgangoora project. The way to think about this plan on a page is to think about our core business on the left-hand side, it's preexisting, it's the spodumene concentrate, 6%. And we're feeding our offtake customers today under agreed pricing mechanisms. And as we step to the right, we're starting to participate in new parts of the business where we're pretty confident we can add more value. The first of those is to feed product down to the battery materials exchange, the BMX platform. And in so doing, we can unlock the opportunity that I described about winning more of the addressable margin. That's an important initiative to us. And I think going to be of value over time, and especially for the phase in the market that we appear to be heading into. So what goes on to the battery material exchange? Well, in the first instance, it's the 6% product. And actually, pretty much, it's all about the Ngungaju Plant production, with rats and mice from our Pilgan Plant or the combined effect of Pilgan and Ngungaju. But over time, we can feed low-grade products, and that's a facility that we're building into the first round of plant improvement projects. We've called it SC5.X. It's going to be 5-point something. It's lower grade. Why do you do it? Well, of course, in today's market, everybody is chasing lithium units. The benefit that we get out of that is to be able to recover more lithium product. And if so, win more cash flow as a function of selling that lower-grade product on the BMX platform. It just so happens that, that SC5.X is perfect feed for the midstream product and the Calix technology. The pilot-scale test work that we've done at the back of smart facility was tested at these lower grades, and it performs. It's fantastic, really, really good opportunity because of the smart that Calix has developed in the technique, the dealing with the fines spodumene and, in particular, being electric fired, which ultimately lowers the carbon footprint through renewables. That same product goes down on to the battery materials exchange or it goes into further partnerships downstream, where we're working with other key partners globally. Europe, the U.S. doesn't matter. That product can penetrate the global markets, not just about China. And ultimately, we create fines chemicals. So battery-grade hydroxide or battery-grade carbonate. It just so happens that in some of those raw materials that we're exploring in the midstream, that might yet be a good fit for the cathode materials market as well. So more work to be done there. Lastly, bottom right, not meant to be bottom right as in last, not at all. That's the first of the deals that we think about as it relates to linking spodumene production directly to lithium hydroxide. And that's via an example, good example the POSCO relationship, which we're looking to deal with in the current quarter. So very detailed discussions underway with them. We're dealing with the last with the due diligence there, and our expectation is that we'll get this quarter. I hope all of that makes sense and ultimately translates to what we think is a much more valuable Pilgangoora project and therefore, Pilbara Minerals. Okay. That's it for the formal presentation materials. A couple of key things to share. We have Phil Hodgson, Managing Director and CEO of Calix on standby, so I encourage you to think about questions that you'd like to fire at him. Great guy, fantastic team. I'm sure he can help you with some of his queries today. He's in the studio in Sydney. And I'm going to hand over to Nicolas and Kate, and I'll facilitate the combination of Q&A that we're going to deal with. Firstly, online, via the Chorus line and then back to the room here. So I hope that all makes sense. Thanks, everyone, for your attention. Really appreciate your valuable time, given it's a long session. But equally, looking forward to all those very clever questions, I'm sure. Thank you. Nick, I'll hand it over to you.

Thanks very much, Ken. Good morning, everyone. Welcome to question time. It's my pleasure to facilitate this session. As Ken said, we're going to do this in 3 phases. So we're going to deal with the online component first. We have had a lot of questions come firing in, in the course of the morning. So we'll do our best to get through them, but we probably won't get through all of them, unfortunately. So we will make a note of those that we don't get to. And David and myself will reach out to you later in the day to address anything that we don't cover. [Operator Instructions] We'll start with the online first so that we give you guys on the phone a chance to form a queue. And then once we've done the telephone questions, we'll move to everyone in the room. We've got 2 roving mics. So there's going to be no shortage of questions coming thick and fast to the Pilbara team here. And we will try and keep the responses as sort of quick as possible so we get through stuff. So Ken, I'll start with a question. Given you finished on a strategy night there, I've got a question here from Howard Klein from RK Equity. And he says, as the largest independent spodumene producer in a market that looks to be structurally short of independent spodumene for some time to come. Can you explain to us why it's a better move for Pilbara to move downstream or midstream rather than JV and/or acquire more WA or international spodumene mines and solidify its dominant spodumene status? Following, for example, Fortescue, a new force in spodumene. So in essence, why is spodumene to China or elsewhere different to iron ore to China?

Well done, Howard, that's a really good question and trust all is well in the U.S. Okay. The way to think about your line of inquiry is to say, in part, I agree. I agree that our position as a merchant seller of spodumene is really good as it relates to today's market and for the foreseeable future because we agree. There is likely to be a structural deficit. Our response is somewhat nuanced, and I'll give you sort of 2 reasons why we think about the production base at Pilgangoora as being a portfolio available to the market. We very much like the idea, as you've described, that you can be a merchant seller and maximize the leverage in a short market. And that's why we've created the BMX sales trading platform basically at the start or the inception of a genuine spot trading position, for which we can maximize the value in the product while the market's short. But it's also fair to say that we are here for the long haul. Our asset is going to be live for argument's sake, 20, 30, who knows, 50 years. And with that as a backdrop, it makes perfect sense to consider the long -- the medium and the long term, in which case, creating a portfolio that opens up alternate markets, i.e., a global footprint, that is sales beyond China is important and participation downstream is important as a function of maximizing margin for every tonne in the ground at Pilgangoora. So agree with the principle you've described, albeit somewhat balanced via our portfolio approach. I hope that makes sense.

Thanks very much, Ken. The next question is from Christopher Rob from Rob Commodity Consulting. I think this is possibly for Dale, but I'll leave that up to Ken. Management has been very clear about the timing and restart of the Altura assets. Could management also, please give some color about the timing and decision-making for the Pilgan Plant Phase 2 expansion?

Thanks for the question. Yes, the order -- and the way we're thinking about the expansion, as we've outlined, is fairly concrete. As it relates to the expansion for our main plant, our Pilgan Plant, we're purposely been nonspecific on that because that's really -- it's a question of when does it make sense in terms of the market outlook and partnering those tonnes with the right partner, if we choose to do so. So essentially, it's in a bit of a holding pattern, but we're ready to go when that makes sense, and we will trigger that when that makes sense.

Yes, partly of our customers, what their objectives are. And the time frame within which they think about the chemical conversion facilities, and we can respond pretty quickly as required.

Great. Thank you. Next question is from Mitchell Chan from LyGH Capital. Cash costs and pricing strategy of the new SC6 product and could Ken also please elaborate more on the digital platform and Pilbara's ability to realize improved SC6 pricing amidst to currently flat Chinese carbonate pricing environment?

Yes. Okay. Well, on the midstream, it's very difficult to be definitive because we still have a lot more study work to be done. We very much like the initial test work, and we'll obviously throw to Phil to get in to explain a bit more about how he views his technology. But that has been done at a reasonably significant scale. So the facility at is basically industrial in scale. It's already been producing product for the magnesite industry. So it's a pretty serious piece of kit. We very much like the test work that's been derived there. That gives us confidence to step down the path now towards commercialization. But very difficult to be definitive around price and margin. Of course, our expectation is you can make more money and lower your carbon footprint by pursuing the midstream strategy, but very difficult to be definitive about it at this stage. The BMX sales trading platform. I'm not sure there's too much more to add other than to say there is the potential to address the value in the spodumene versus the value in the chemical conversion depending on the tension in people trying to access product. And what we're looking for in the sales trading platform is to discover that price by making product available in a way that it hasn't been made available historically. So a new initiative, one that we're confident in. And of course, it represents quite a big step forward to the industry, but we're not being shy about it. We're basically saying we can make that product available, too. We know that there's people that are going to be hungry for it, in which case, put your best foot forward. And we're very pleased with the engagement we've had with the customer group so far, lots and lots of interest in participation in that platform.

Thanks, Ken. Lots of questions about the midstream strategy. And this one might be an opportunity to bring Phil Hodgson in from Sydney. The question is from a shareholder, what are the steps to require to commercialize the Calix technology?

Yes, Phil, fantastic of you to join, mate. Please have a crack at answering that question.

Thank you very much, and thanks for the question. The steps to commercialize the technology. Well, actually, the technology is already commercialized, as Ken mentioned for magnesite and also dynamites. We run dynamites and that gets sold commercially as well. Now the -- there are other various streams that we are commercializing, lime and cement manufacturing are being commercialized now. And of course, now spodumene which we've been working on, as you've seen for 9 months now with Pilbara. The steps to commercialize, the scoping study as outlined, we'll be about building -- looking at building a commercial-scale electric calcine. So that will be a bit of a scale-up from our current electric calcine. And so that 1 scale or that 1 step-up will be enough to have a commercial demonstration module. From there to scale to larger volume throughput, for example, will just be multiples of that one module. So really, the step is one step. And that one step, we're looking to do with Pilbara Minerals for the spodumene processing.

Yes. Thanks, Phil. That's well described. It actually raises another good point there that the solution that Calix have come up with is very modular in nature. And in that respect, it's quite different to conventional calcining technology, where you build one massive device to suit one train. In our case or in the case of the Calix technology, it's incrementally additive and the benefit that I see in that is that we can continue to add capacity in a way that's very capital versus market effective as compared to having to build one big 20,000 LCE equivalent calcining device. Yes. So I see that as being one of the benefits in accessing the technology as well.

Thanks very much, both. Next question, I've got here from Andrew Beck. This is for Dale. He says, "Hey, Dale, any plan to expand the Ngungaju Plant in the near future? And also what do you see total PLS SC6 production being in 2030?"

Thanks, Andrew. Good question. In terms of the Ngungaju Plant, it's unlikely that we would look to expand that off that existing base. It's fairly well-designed at its limits that Altura previously been running at it. So we don't think it would be money well spent to look to augment that plant too much more in terms of increased expansion. However, in contrast, Pilgan Plant was purpose-built with expansion in mind. So that's where we'll divert any capital for more tonnage expansion. As to where we're at in 2030 for total production, well, you'd have to hazard a guess, we will be at full scale. I think given the demand and the trajectories that we all see, the world needs plenty of lithium and Pilbara is in the box seat to be a major supplier. And that I think the only nuance will be how much have we stepped down that path in terms of increased value-add, whether that's midstream or the downstream, but you'd have to think that by 2030 would be converted well down that path and be at scale.

Thank you, Dale. The next question comes from Andrew Chirnside from Canaccord Genuity. "Would the aim be to eventually produce all midstream product?" He asks.

Yes, that is a good question. I didn't really address it directly in our presentation materials, but I can give you a bit of a shape of our thinking. I mentioned that creating a portfolio of offtake positions is really important to us, including those that might serve our own purpose, so in particular, midstream strategy and/or participation with further downstream facilities. Given the current offtake position and time, my expectation is that if we were producing at 1 million tonnes plus in spodumene concentrate, approximately 50% would be serving our own supply chain. So it would be part of our vertically integrated business as compared to the other 50% being for the purpose of merchant sales, including, obviously, looking after our offtake customers who will be there for the medium and the longer term.

Excellent. I've got another question this time, I think, probably for Brian, from a shareholder. What's your current debt position? Is your strategy to accelerate debt repayment or consider paying a dividend?

No. So the current debt position is USD 110 million. That's the facility we have in place with BNP and CFC. Look, I think the way to think about the debt is that we'll want to try and use that as much as possible -- that facility as much as possible to help with any expansion. So I don't think we'd want to necessarily accelerate the repayment of the debt. What we probably want to try and do is build up some cash flow, try and use some of that cash flow to expand the business and then really just expand the debt position as required, depending on what opportunities we're chasing and really just have the debt roll off in a timely manner, but certainly not to accelerate the repayment.

Thanks very much. Also, we'll do a couple more online questions. [Operator Instructions] We'll be getting to those with China and whether that will impact or has impacted Pilbara Minerals in any shape or form. Ken?

Yes. We've seen no evidence in our relationships with customers to indicate that there's been any impact as a result of the current diplomatic tension that exists amongst the key reps in government. Fortunately, the lithium industry, and in particular, actually, our customer group, they're all typically private interests, i.e., genuinely private or otherwise listed both Hong Kong and within China. In which case, they're typically taking a very sort of wealthy view about their market and their engagement with key suppliers, and that gives me some comfort. The other key thing to keep in mind is that China's investment in new energy is both extraordinary in its scale and quite deliberate with a view to minimizing their reliance on international energy sources, obviously, in particular, fossil fuels, and therefore, creating some energy self-sufficiency. And to do that, they need key raw materials, of which clearly spodumene is one in support of the new energy industry. So that also gives us some comfort.

Thanks very much. I'll -- a couple of quick ones. Sean Shiver says, "Ken, great presentation, what's the estimated mine life as of today?"

Okay. Well, if it was just the combined effect of today's Pilgan Plant and the Ngungaju Plant, it would be approximately 35 to 40 years. Obviously, it's our intention to continue to keep expanding the operation. For most foreseeable outcomes, that would translate to a mine life of 20-plus years. But my sense is that there is still plenty of opportunity in the mineral endowment at Pilgangoora. It is huge. It's a huge pegmatite system. And the recent drilling that Dale pointed out, adjacent to the old Altura tenement boundary, is a really good example. It's been underexplored historically. It doesn't take too much effort to go in there, drill a few holes and low and behold, you turn up a whole of more spodumene. So our expectation is that the combination of both the resource base and the pit inventory will continue to grow over time. That affords us the opportunity to then either extend the mine life or alternatively look to more capacity in spodumene concentrate production and value-added products.

Fantastic. One final online question from Mark Bugden from ANZ. This is a question for Ken and/or Dale. If recoveries are at approximately 72% today, assuming the Calix development works as designed, and you can utilize the SC5 finds to feed this process, what are you expecting overall plant recoveries to be?

Dale?

Great question. And we haven't really tested our grade recovery relationship of late with the current mineral feed. So a bit of a technical answer, but it was hazard, I guess, there would be another 5% at least in terms of increased lithia recovery stepping down that grade curve. And that -- frankly, that's been quite conservative. So the ability to bring in a Calix-type technology, such that you can stream off and purify a valuable product and effectively increase your outright recovery from lithium ore body, it's a massive value-add, but more work to come until we can be more definitive about the quantum of that value add.

Nick, before you step on, this is another good one to Phil. Phil, I wonder whether you couldn't just offer a brief explanation about why or how it is that the Calix technology deals with that lower grade? I think technically, that's also worth explaining because it's a really important value-add to the technique that Calix has developed.

Yes, sure. Thanks, Ken. The technology for those who are unfamiliar with it is just a new way to heat stuff up. Traditionally, that's done in a rotary kiln when you're processing spodumene, and you're trying to convert what's called sort of output to be just spodumene. And what that means is you're taking what's effectively a crystal structure inside that ore. And when you heat that up, that sort of blows up like it of popcorn. And that is then what allows the extraction of the lithium out of the ore and blowing it up like a bit of popcorn takes heat. The problem is with finer grades. Typically, there's more contaminants. And they sort of when you heat it up, move to the outside of the article, and what then happens is it makes it very hard to extract that lithium or much harder. With our technology, we have a vertical kiln. And basically, you take a fine powder and you drop that down that vertical kiln. And it's basically just flops down through the kiln. That kiln we heat to 1,000 degrees centigrade. And as covered off, we can heat that electrically, so we can have renewable energy power in that kiln but what we can do is get the temperature profile right on that kiln, so that the spodumene ore as it floats down is cooked perfectly. You don't overcook the popcorn and burn it. So as it exits the base of the kiln, you get the maximum conversion without all those contaminants coming to the outside and blocking what will then be or downstream lithium extraction. So that's a brief, hopefully, explanation of how the technology works in spodumene processing.

Great. Thank you very much, Phil. While we're in Sydney, I might just throw the line open now to Ashley from Chorus Call. Ashley, you there?

Yes. We are showing no questions on the phone at this time.

Okay. Well, we'll come back and check with you at the end if anyone has popped up, but we're off the hook on the phone questions at least. So we might go straight into the room here in Perth. Ladies and gentlemen, we've got 2 roving mics, and they'll come to you for COVID-safe reasons. So we might start over here.