PLS Group Limited (PLS) Earnings Call Transcript & Summary

Kaya, which is indigenous for hello. Thank you. Kaya. Welcome, everyone, to the 2022 Annual General Meeting of Pilbara Minerals. It's lovely to see so many people here, a lot of old friends -- or sorry, a lot of friends. And there's older people, of course, and that sort of stuff, but thank you for that. And I know many people here have been on the journey for Pilbara for quite a while, so thank you for that. My name is Tony Kiernan. I'm Chairman of the company. Before I get underway, I would like to welcome Robyn Collard, Whadjuk yorga and traditional owner of the land on which we meet today, to provide a welcome to country. Robyn, thank you.

I bring the message stick of peace. For aboriginal people, when we travel between one country to another, we normally carry this message stick. And each message stick is unique to the person who carries it. So I come in peace. Good afternoon. My name is Robyn Collard Rioli, and I'm a Whadjuk yorga of the Noongar nation. I'm one of many traditional owners and custodians of this land, and I'm truly honored to perform this welcome to country for you this afternoon at your AGM. [Foreign Language] Hello, our men and brothers. [Foreign Language] Hello to our women and sisters. And of course, we mustn't forget our [ boordiers ]. So [ boordiers ] in Noongar is leaders. Kaya. In our gathering, we must acknowledge our ancestors who for many years have walked this land before us. We stand on their shoulders. Our knowledge, our language, our stories still continue on even with challenges. [Foreign Language] There are 3 things that are really important to Noongar people: our connection to land, our connection to family and our knowledge [Foreign Language]. Welcome to the sacred ground and home of the rainbow serpent. Here in Noongar country, the Wagyl is a part of [ our ] Noongar creation story, just as there are creation stories across other lands and across the world. For those people who are connected to that land, I bring the message stick of peace. [Foreign Language] We listen to the many stories of the land. They guide us. We listen. We see. [Foreign Language] Kambarang is the time of year here in Noongar country that is transformational. We've come out of winter; and we are now in the season of birth, a new beginning, which is what you will be talking about today. [Foreign Language] And you will also be listening. And I'm sure there'll be plenty of respect for robust discussion in the presentations this afternoon. One of the plants that you will be seeing whilst down here in Noongar country -- because we are coming into the seasons of Birak and then Bunuru, our first summer and then our second summer, you will see the moojar [indiscernible]. This is the Christmas tree, the bright yellow flowers that tell us that Christmas is coming. It's also a very special tree for Noongars here, particularly when our loved ones pass on, because [ on the ] Noongar story, our soul rests underneath the leaves and the flowers of the Christmas tree or the moojar tree before going on to [ kuruna ], the place of forever. [Foreign Language] All of these birds tell us that this too is Kambarang. And of course, Kulbardi the magpie is cheeky at this time of year because it's protecting its young in the nest, but don't forget that little cheeky Djidi Djidi, that willy wagtail. When you see all of these birds and Wardong the crow interacting, you say, "Djidi Djidi." That is the one that leads and is the boss or the [ boordier ]. [Foreign Language] Strong heart, strong spirits as you all bring your life-giving skills to this land. Today and in the future, there will be times when we will be humbled just as we have been through COVID [Foreign Language], but we are strong and solid. And if not for the mining industry to get us through in terms of our economy, where would we be? But there you go. We are resilient, and you are strong and solid. So we ask that the good spirits be here today. And we ask that you also travel safely. Now safely, the word in Noongar is [Foreign Language]. I never had to really think about that before until just recently for our children. [Foreign Language] We should all be wanting to travel safely, our families, our children, in this space that we call home. And I would also like to give a special welcome to Nyamal people and also Kariyarra because this is where your projects are. And hello from Whadjuk yorga boodja. [Foreign Language] Thank you.

Thank you very much, Robyn. Thank you very much for the message of peace. And we note that this is the season of birth. And your comment on the mining industry was greatly appreciated, so thank you very much. Thank you very much. I also would like to acknowledge the traditional custodians of the land on which we stand, the Whadjuk Noongar people; and pay my respects to their elders past, present and emerging. I'd also like to pay my respects to the Nyamal people that Robyn referred to and the Kariyarra people that she also referred to, the traditional owners of Pilbara region in which the Pilgangoora Project is located and with whom we enjoy a strong and enduring partnership. I note that a quorum is present. [ We've been advised ]. And I declare the meeting open. I will just introduce some of the leaders, as Robyn called them: on the table here immediately closer to me, Alex Eastwood, our company Secretary, General Counsel and Commercial Manager and general dogsbody; next to him, Dale Henderson, who was our Chief Operating Officer until July this year. Dale is now the Chief Executive and Managing Director, following on from Ken Brinsden. Next to him is Steve Scudamore, who's been a director for a number of years; Sally-Anne Layman, who've been a director for a number of years. I think [ that is ] Nick Cernotta, who is -- I've sat on a number of boards with Nick over the years; and at the end, Miriam Stanborough, who was appointed a director in November, I think, last year or certainly towards the end of last year. Also in attendance, I would like to acknowledge Brian Lynn, down in the front. [ He's the man waving ]. And Brian -- as you would have been aware, Brian announced that he would be retiring in the not-too-distant months. And Brian has been with the company for a long time. So I certainly appreciate your contribution, Brian. Unfortunately, our newly appointed Chief Operating Officer, Vince De Carolis, was unable to attend today, as he is doing what chief operating is -- do. That is being up on site. And I also acknowledge the Computershare, represented by Rod, down in the back there. Those of you who go to AGMs will see this bloke many, many a times. And I've probably seen him over the last 10 to 15 years. There's obviously some formalities to go through, and that will include an address from me as well as the items of business, but this morning, I couldn't help but reflect on the journey of this company. We start in a very small office in Fremantle probably 7 or 8 years ago. Brian was in that very small office in Fremantle. Alex was in that very small office in Fremantle. I think [ then ] we're down to John Holmes, who's not with us today, but John is our longest-serving employee; and Jason Cross; and Ken Brinsden. And I think that was about it. We had our first Board meeting -- my first Board meeting down there. And it was Steve Scudamore's first Board meeting down there and to which he said, "What in the hell have I got into?" It was a very little office. We look like we didn't have too much money and that sort of stuff, but if you reflect on the journey of this company -- and many people in this room have been with the company for a long time. You'll be aware of some of the trials and tribulations we faced. And you [ will be painfully ] aware of the very strong market we -- at the moment, but if I look back on the journey, I mean, I can remember. When we made the positive decision to put Pilgangoora into operation, we needed to go and raise money. And Brian and Alex will be well aware of that. And of course, that was a time in which the conventional banks wouldn't talk to you. They wouldn't even know what lithium was. They didn't even know we were on the periodic table. So we raised some equity, but we had to -- as Brian would know, we had to go and raise money through debt. We raised it through what we call Nordic bonds. And we paid the outrageous interest price of 12%, but at that time, where were we going to get the money from? And I can remember having a discussion with -- one of the directors [indiscernible] was Neil Biddle, who started this company. He said, "Tony, why are we going to pay 12% debt interest?" And I said, well, we're going to raise some equity. I think the stock was about $0.33 or $0.34 at the time, Brian. I said [ to Brian ], "What is the NPV stock?" And he worked it out, and it was going to be substantially in excess of the $0.30-odd that we were, so we made a decision. As a lot of people know, sometimes debt is cheaper than equity, so we've made the decision to go the equity route with these horrendous Nordic bonds but lucky we were able to get rid of those a couple of years later. But that certainly allowed us to get into operation. From an operating point of view, you'll be aware that we've had our challenges. Obviously the processing of lithium is not particularly easy in the early days. And we had recovery issues. It was very much Dale Henderson's focus there for a number of years. When you talk about recovery, what you're doing is you're talking about the value of the mineral you're extracting from the ore. I think our recovery levels in our feasibility studies were around about 70%, 73%. For a while, we struggled around that 50%. Luckily now -- not luckily now. Through a lot of hard work, we certainly got it up. You might remember when we -- when the market was pretty tough -- sorry [ if I rabbit on ], but these things do come to my mind. Steve, yes, I do rabbit on. I saw that. He said, "Don't do that, Tony." As you know, the market got pretty flat there for a while. And a number of the lithium companies were struggling. We made a conscious decision to remain in operation. And we went under what we call a moderated production, and unfortunately, that required us to moderate some of the staffing levels, but the reason we did that is we had a belief in the market. We also wanted to be able to concentrate on our processing facilities and that sort of stuff. [ It was ] Dale and Ken Brinsden at the time who said, "Tony, if we close down, we're going to lose all those learnings that we've made," so we stuck it out. And we had faith in the market, and luckily, it did return. And you may recall, a couple of years ago, we bought the neighboring property. We bought Altura, which went into administration. And one of the benefits of that is not only we've given access to another processing plant, but it removed the boundary which existed between our property and the Altura property, which certainly allowed us to be able to increase our exploration. And at the moment, we've got quite an aggressive exploration program going on which should see a substantial increase in our resources and in our reserve. That Altura acquisition has proven to be very, very fortunate for the company. I certainly got pilloried a little bit by people when it took place, suggesting that we paid too much for it, but I think -- from memory, I think we probably paid $240 million, that sort of stuff, Brian. If you look at the market capitalization of the company today, you will see that there's a lot more put on the Altura acquisition than the $240 million, but that was a fairly -- that was an aggressive step to take and it was difficult. We had to negotiate with the administrator and we had to be in a position to make an unconditional offer. We had to have the financial capacity to meet the price. And we got terrific support from AustralianSuper, RCF and Macquarie, who were prepared to -- as we say, to put it on the line to underwrite a capital raising for us, which enabled us to be able to raise the money, in conjunction with some debt we took on, to be able to proceed with the Altura acquisition. Now here where we are today and we're in a very fortunate position. The market is very strong, but as I said to the staff this morning, you need to be at the game on game day, with the ball in your hand, to get the benefit of good operating conditions and good market conditions. So yes, certainly we're getting tremendous prices for our product. And you'll be appreciate -- you'll appreciate the very substantial cash generation in the company, but I think, over the years, we've had terrific leadership, very strong management. We believed in the project. And when I get around to my formal address -- I'm sorry about that. The tea won't go cold. I can assure you of that, and the biscuits will remain -- where's the biscuit? Over there. That's still going to be there for you. [ I will make comment ]. I can remember we had an AGM in -- I think it was [ the Duxton ] in town a couple of years ago and which the market was pretty [ crooked ]. And I think there were a lot of long faces in the room. And I can remember standing there. Thank goodness -- I said, "Don't lose faith. Don't lose faith." This market was going -- and luckily enough, a lot of shareholders kept the faith. We kept the faith and we are where we are today. So anyway, that's just me reflecting a little bit on life. Certainly a lot of our senior management have been with us over the journey, and Brian particularly and Alex and Dale and Ken Brinsden, but also the Board, which is up on the table there, have been with us as a unit, a very close-knit unit and a very functioning unit, and a Board that makes terrific contributions. Just had to make some hard decisions, but I think, in hindsight, most of the decisions we've made have been correct and to the advantage of the company. That's a bit of a -- a bit of me running from -- or running off at the mouth. I apologize for that. Okay, getting back to the formalities, I will now deliver a formal address, which will be filed at the stock exchange. The past year has been a remarkable period for Pilbara Minerals characterized by growing demand and pricing for lithium raw materials and strong production at the Pilgangoora operation in Western Australia. This combination of factors saw the company post a significant increase in revenue to $1.2 billion, underpinning a maiden net profit after-tax of $561.8 million for the 12 months to 30 June 2022. Shipments of spodumene -- which is a product we sell. Shipments of spodumene concentrate increased by 28% year-on-year, supported by strong performance from the Pilgan Plant and the successful commissioning and ramping up of the Ngungaju Plant. The Ngungaju Plant is the old Altura plant. And this is what I just said about the 2020 AGM. I recall, at our 2020 AGM, urging shareholders to keep the faith when the lithium industry was experiencing a very difficult period. And at the time, I said with promises that better times lay ahead. It's gratifying to see that those who stayed the course and heeded the advice have been rewarded with the company's market capitalization surging to over AUD 15 billion and a share price of over $5. Today, it's a tad below that, but it's still a very, very healthy price. It has also been pleasing to see Pilbara Minerals' strong performance continue in 2023 financial year, with production and sales in the September quarter generating $783 million increase in the company's cash position to $1.375 billion at quarter's end, which is a substantial amount of money. The lithium demand has been driven by the growing use of lithium-ion batteries and clean energy technologies, in particular electric vehicles. This is a trend that is continuing to gather pace, supported by strong investment and decarbonization targets set by governments across the world and also many industrial companies setting carbon -- decarbonization targets. Pilbara Minerals is exceptionally well placed to capitalize on this thematic, with key investments made over the past 12 months aligned to production growth and diversification such as the company's downstream participation with POSCO, a Korean company, and the demonstration plant being developed in joint venture with Calix to produce a midstream product. The P680 expansion project, as we call it, is well underway, which is expected to increase annual production at the Pilgan Plant by 100,000 dry metric tons to deliver total production capacity of between 640,000 and 680,000 dry metric tons per annum across the combined Pilgangoora Project. The company is also working towards making a final investment decision on what we call the P1000 Project, which if approved will increase production capacity to up to 1 million tonnes per annum, all the while continuing to make progress to diversify the business and revenue stream by moving up the value curve of the battery supply chain. That's something that Dale will talk about when he delivers his address at the conclusion of the proceedings. During the year, the company formalized its joint venture with a long-standing partner, POSCO; and construction commenced of the 43,000 tonne per annum lithium hydroxide chemical facility in South Korea. And Dale and myself were guests of POSCO about 1.5 weeks ago. Not only at their green technologies conference, we also went down to Gwangyang, where this plant is being built. And it was very heartening to see the progress which has been made and our joint venture partner. Study work with project partner Calix continued, with Pilbara Minerals and Calix well advanced and expecting to formally enter a joint venture to progress the exciting project. A final investment decision for the development of the demonstration-scale lithium salt facility at the Pilgangoora Project using Calix' calcination technology is expected by January quarter of 2023. That is what we refer to as that midstream product. Once again, Dale will refer to that when he gets on to his bit. Both of these projects provide the opportunity for Pilbara Minerals to produce or to participate in value-added lithium materials, thereby diversifying Pilbara Minerals' product offering and enabling further participation in the supply chain. At this point in the process, we are simply a mining company, but as you will pick up, the theme is we want to be able to move further down the supply chain. The positive cash generation puts Pilbara Minerals in a strong position and provides optionality in terms of growth and diversification, capital management and, importantly, shareholder return. It was pleasing this week to present Pilbara Minerals' capital management framework and dividend policy to the market. Applying a prudent approach to capital management, operating cash flow will first be utilized to sustain safe and reliable operations; invest in sustainability commitments; and subject always to prevailing market conditions, pay a sustainable dividend to shareholders. In the near term and in line with the company's strategy of growth and diversification, capital will be considered for deployment towards organic and inorganic growth opportunities that are expected to deliver the greatest long-term value for shareholders. It won't surprise you that one of the most common questions Dale and myself get with the cash buildup in this company is, "What are you going to do with the money?" Hence, Brian and his team are working very heavily on what we call the capital management and dividend policy, which was released -- yesterday, I think, okay. With Pilbara Minerals about to commence paying tax, you got it, the company is expecting to apply its dividend policy for the first time, in the 2023 financial year, in the form of a fully franked dividend. It will be a great source of pride for the Board and management to be able to return value to Pilbara Minerals shareholders, some of whom have stuck by the company during the recent highs and lows. On other fronts, strong progress in respect of sustainability initiatives, including towards the company's goal of targeting net zero carbon emissions in the decade commencing 2040, with the construction of the 6-megawatt solar farm at the Pilgangoora Project now complete, with commissioning underway and a life cycle assessment to identify scope 3 emissions undertaken. At Pilbara, we have -- one of our Board subcommittees is a sustainability subcommittee which is chaired by Sally-Anne Layman. And I'd like to thank Sally-Anne for the great contribution that she makes in relation to that. The company continued to improve safety performance as measured by both leading and lagging indicators, with a strong focus on building a positive safety culture and a safe and respectful workplace; as well as fostering close and collaborative relationship with the area's traditional owners, the Nyamal people, and other stakeholders. Obviously the spodumene market has been good to Pilbara Minerals. However, the strength of the company's position is also clearly due to the efforts of Pilbara Minerals' employees and leadership team. The company has seen some significant change to that team over the past year with the departure of Ken Brinsden as Managing Director and the formal appointment of Dale Henderson as his successor in July this year. Many in the room would know Ken. I know that he was with the company for a period of 7 years, and his contribution over those 7 years has been absolutely outstanding. He remains a very good friend of the company and a good friend of mine. As I said at the time -- at his farewell dinner, I said, between Chairman and Managing Director, the Managing Director is never your friend, but when he leaves, he then becomes your friend. So remember that, Dale. We are friends sometimes. As I said, I would like to acknowledge the contribution and efforts of Brian Lynn, Pilbara Minerals' Chief Financial Officer, who as I said, said that he was stepping down after -- and Brian has had a pretty tough gig. I mean, one of the problems with Chief Financial Officers, they have to rely upon what production staff tell them about targets and that sort of stuff. And it gets a little bit tough when you have difficulties up on site; and the assumptions that the production staff are using are not materializing into cash flows; and the cranky, old Chairman wants to know why. And Brian -- well, "I just did what the guys told me to," but Brian, thanks very much. We certainly wish you well in all your endeavors. As I mentioned, we've recently appointed Vince De Carolis as the Chief Operating Officer, assuming the role previously held by Dale. And as I said, Vince is now on site. Coming to Dale. I would like to acknowledge Dale, who stepped up assuredly in his new role as Managing Director, delivering a seamless transition, leadership transition, and a steady hand to continue to drive forward. A number of people have talked to me about the process that -- just to make it clear: A number of people have spoken to me about the process we went through when Ken advised he was stepping down. Being a public company, we went through a process. We went through a formal external process. Dale put his hand up. And I can tell you, on his own merits, he got there at the end of the day. He was clearly the unanimous choice of the Board. And to be able to promote from within is a wonderful thing. It's a testament to Dale, but I think it's a testament to the quality of a lot of our individuals. We do where we can endeavor to promote from within. And in closing, I would like to sincerely thank the broader Pilbara Minerals team for their efforts, recognizing that many of these people stuck with us through thick and thin, including the travails of the market downturn. We are fortunate indeed to have such a dedicated and loyal group of people, and we greatly appreciate the exceptional efforts. And I would like to thank shareholders for their -- and partners for ongoing support. I took the liberty this morning of having -- sending a bulletin to all members of staff advising and just reminding them that today was our Annual General Meeting but pointing out that this company has got to where it is because of its dedicated, mature and -- staff. And that includes those who were with us and those that are currently with us. Because one of the things we try to do at Pilbara, and I think we do it successfully, is to build a very strong culture. And as you know, it's not just money that drives [ people to ] want to work for you. It's recognition. It's understanding their level of accountability [ in the way they just do ] their job, so it was important for me just to remind shareholders -- sorry, to remind employees that each and every one of them, whether they're on reception or they're operating the processing plants, are equally important and have a very important role to play within the company. Okay, now getting on to meeting procedures. We've released our notice of meeting, which can be viewed on the ASX and Pilbara's website as well as the company's Computershare meeting platform. The AGM today is being conducted as a hybrid meeting, which is being physically here at The University Club of Western Australia as well as online via the Computershare meeting platform; and we are online at the moment. And we've encouraged shareholders to use either of these platforms to be able to participate in the meeting. And we welcome shareholders, proxy holders and corporate representatives attending in person or online to ask questions. There are 2 ways to ask questions. Obviously, if you're attending, you raise your hand -- and using your microphone in the auditorium. [Operator Instructions] From now, people can start submitting their questions online, particularly those that may not be here for the balance of the meeting, but as to those questions, I will not address them -- or they will not be addressed, I should say, until the relevant time at the meeting. And if we receive questions on -- sorry. If we receive multiple questions on a topic, we'll moderate those and amalgamate them together. [Operator Instructions] We'll get there eventually. Okay, voting by poll. All voting today will be conducted by way of a poll on all resolutions. In order to provide you with enough time and cast -- in case you're not to stay for the full meeting, I'll shortly open voting on all resolutions. So you don't have to wait for the resolution before you can cast your vote. If you're eligible to vote, there are 2 ways you may cast your vote, in person or via the online platform. For those in attendance, you may vote using the voting card which you were handed when you entered the auditorium. When called upon to vote, please do so by marking your slip either for, against or abstain. Your voting slips will be collected prior to the end of the meeting. Any question on voting procedures and that sort of stuff, please raise your right hand. And Rod [ and team from ] Computershare will help you out. I assume everyone has their voting slips and a pen if they need them. For those online, once voting opens, press the vote icon, and all resolution will be activated on the screen with voting options. And to cast your vote, you simply select one of the options. There's no need to hit a submit or [ enter ] button, as the votes are automatically recorded; and you'll receive a vote confirmation notification on your screen. And you can change your vote up until the time I declare voting closed. If you require any assistance during the meeting, please refer to the -- as I mentioned, there's an online meeting guide which you'll find online. With regard to proxies, these numbers will be displayed on the screen for each resolution. Please note that the number of open proxies have been received for the Chairman's discretion. And I advise that I, as Chairman, will be directing those in favor of each resolution. Folks, I now turn to the formal matters to be considered today and declare voting open, so if you're online or are in here, you can fill -- or voting online, you can start that if you want and you can -- you fill in your cards if you'd like to. And I'll give you a warning before I close voting. Rod Somes from Computershare has agreed to be the returning officer today. And following confirmation by Computershare, the final results of the poll will be announced on the ASX platform later today. And as I mentioned, at the conclusion of the meeting, Dale Henderson will make a presentation. And there'll be an opportunity to ask questions of Dale and the Board at the end of that presentation. In relation to the notice of meeting, I will take that as read unless anyone wants to read it. Okay, no objections. I will take that motion as carried and now move to the business of the meeting. The first item of business is to receive and table for consideration the annual report, which includes the financial report, the sustainability report, the directors' report and the auditor's report, for the financial year ended 30 June 2022. Members should note that the reports are tabled for approval -- not for approval, I should say, but simply for discussion and comment. A representative of the company's auditors, Derek Meates and Glenn Diedrich, are down here and are available to answer any questions from members in relation to the conduct of the audit. I'll now pause to allow any shareholder to ask any questions or make any comments in relation to the financial report and reports of the directors and auditors. One day, someone will ask you a question, Derek, one day in your life -- no questions from the floor. Alex, any questions online?

No, Tony, no questions.

Okay, thank you. I'll now proceed to the specific resolution with the notice of meeting -- I thank the auditors for their contribution over the year. Thank you very much, guys. It's a different company than it was a couple of years ago. Resolution 1 relates to the remuneration report, which is included as part of the directors' report that can be found at Page 116 of the company's annual report. Voting on the adoption of the remuneration report is for advisory purposes only. Proxy votes received on this resolution are displayed on the screen, as is the resolution itself. I don't propose to read the resolution in full but give you sufficient time to taking -- obviously it was included in the notice of meeting. And it's there on the screen. I now invite any shareholders, whether in person or online, to ask any questions they may have in relation to resolution 1. Any comments or questions in relation to the rem report? Anything online, Alex?

No questions concerning this resolution, Tony.

Sorry...

None...

Okay, thanks mate, okay. Resolution -- so I now move on to the next item of business and a reminder. There's a poll on each of the resolutions. Resolution 2 relates to my reelection as a director. Obviously I have an interest in this proceeding, so Steve Scudamore will handle it.

Thank you, Tony. Before I go to the resolution, I'd just like to say a few words, if I may [ and get my own back ] perhaps. So as noted in the explanatory statement, the Board is fully supportive of Tony's reappointment. And I have been on the Board with Tony since we were in the shack down in Fremantle in 2016, so I've had an opportunity to work with Tony over a number of years. And it's fair to say, I think, he's an excellent Chairman. He works very hard for your company, spends a lot of time on the company business and supports the team. He went up to POSCO recently, which is quite a time-consuming exercise, to see our joint venture partners. And they really appreciate the involvement of the Chairman in that -- in those sort of events. He's also -- and amongst other things, he has a good working relationship with the past CEO, who's now a friend, but that was a working relationship in those days; and the new CEO; and the executives. So I think you now can see on the screen the proxies that support the reappointment and also the resolution. I don't intend to read the resolution either. It's in the notice of meeting, so I'll let you just have a quick read of that. And I now invite shareholders to comment -- and any questions that they may have on this resolution. Alex, do you have any questions on the resolution?

No, Steve.

And so on that note, I'll leave it for you to vote. Thank you.

Thanks, Steve. [indiscernible]. Thanks, Steve. Okay, now we go to resolution #3, and that relates to the reelection of Nick Cernotta, who retires by rotation and offers himself for reelection. Nick's details are set out in the explanatory memorandum and the annual report. Proxy votes received on this resolution are displayed on the screen, as is the resolution itself, which I don't intend to read. As you know, Nick -- as I mentioned, Nick has been on the Board for a considerable period of time too. Any comments or questions on the resolution or Nick? Thank you. Anything online, Alex?

[ No, Tony ], nothing online.

Okay, thank you. Having no questions or comments in relation to that resolution, it will be included in the poll, and I'll move on to resolution #4. Resolution #4 of the notice of meeting relate to the ratification of the prior issue of what we call convertible bonds to POS-LT Pty Ltd, which is a wholly owned subsidiary. In fact, now -- it's a jointly owned subsidiary now of -- between us and POSCO. We took an -- this is for the lithium hydroxide plant being built in Gwangyang in South Korea, which as I said Dale and myself were at recently. We currently have an 18% interest in that, with an option to go to 30% on our terms and -- not necessarily on our terms and condition but in timing up to -- when we wish to. To finance our initial 18% interest, that came by way of convertible bonds. In other words, that's debt which was given to us by POSCO in the nature of convertible bonds which we can at any time, at our call, convert that into equity and to shares. So what we're seeking here is shareholder approval to the issue of the bonds. And then if they are converted into shares, it comes within the acceptance within the listing rules, as explained in the notice of meeting. So the proxy votes in relation to that are on the screen; a very strong for, as they should be. The resolution itself is on the screen, so I don't intend to read. Are there any questions or comment from the floor in relation to that resolution? Yes.

I guess, what's the premium on the bonds, [ or interest ]...

Pretty low, Brian, isn't it?

Yes, it's not. Very low, it [indiscernible].

Yes, it would just be that, I think. It's the terms are pretty favorable. And us having the right to keep the debt there; or to say, no, we want to get rid of the debt, we can issue shares. It's not at their call, which is quite often in these situations, but it's our option, so they're quite favorable. Any further questions or any comment from the floor? Anything online, Alex?

No, nothing online, Tony.

Okay. Resolution #5, in the notice of meeting, relates to the approval of the issue of employee performance rights to Dale Henderson under the employee award plan. Full details of these are set out in the explanatory memorandum, including the performance hurdles that apply to these performance rights. Approval of this resolution as such does not mean that performance rights will automatically convert to shares. The conversion into shares depends entirely on meeting the performance hurdles and vesting conditions within the 3-year period. The performance vesting conditions of the employee performance rights are weighted 70% to what we call relative total shareholder return [ or what would you compare our ] total shareholder return as to a basket of other companies and 30% towards 2 specified sustainability targets. It's interesting that, these days -- if you went back 4 or 5 years ago, a lot of these long-term incentives, most of the conditions were always financial, but now with things like ESG and that sort of stuff, we're getting nonfinancial metrics coming into these things. And as I said, 30% of those on Dale's relate to 2 specified sustainability targets. And there's also a service condition that Mr. Henderson remains employed within the company for the 3-year period. And as you can see, these are what we call stretched targets, and they're not automatically given for doing his day job. The proxy votes received on this resolution are displayed on the screen, as is the resolution itself. Any questions, comments or clarification from the floor? Anything online, Alex?

No questions, Tony...

Are we online, mate?

Yes, we are. We're getting a few questions on more general business, which I think are related to...

To Dale's presentation. [ That's fine ], okay, all right. Well, they might have a go at this one, resolution 6. I'll refer to resolution 6, in the notice of meeting, which relates to an increase in the aggregate fee pool for nonexecutive directors. I obviously have an interest in this resolution, so I'll get Alex to run that.

Okay, thanks, Tony. The proxy votes received for this resolution are displayed on the screen. Like my colleagues here, I don't propose to read the resolution, but obviously the resolution is about increasing the aggregate director fee pool. And that's not necessarily about increasing fees today, but it's giving the company flexibility for the future to attract new directors or to adjust remuneration over the years as the company grows. I now invite shareholders to comment or ask any questions that they may have on resolution 6, and I'll read any online questions raised. Are there any questions on resolution 6? Okay, I can't read the questions because I'm not in front of the screen, but [ Danny ] can -- there are no questions on resolution 6 online either, so if there are no more questions, I put the resolution to the meeting. And if you haven't already done so, please now cast your vote on resolution 6. And I'll now hand back to the Chair, Tony.

Thanks, Alex. Okay, folks, that concludes all the resolution to be put to the meeting. And I ask all shareholders to complete their voting before I close the poll, which remains open until I close it. [Voting]

Did you get yours in? I'll check it first. Any outstanding green cards or white cards or blue cards or -- there's some over here, Rod. Thanks. Alex, have you got ours on there?

I do, yes.

[indiscernible]. Thank you, Rod. Okay, okay, I declare the poll closed. Thank you very much for -- thank you for your attendance. And thank you for participating in it. We'd also like to thank Robyn Collard. Robyn has left. And I thank Linda for organizing that, the welcome to country. I thought it was very moving. Having finished the formal notice of business, I close the meeting, but I will invite Dale Henderson up on to ask -- to deliver address. And feel free to ask him any questions that you wish. Thank you very much for attending.

Okay, thanks, Tony. Good afternoon, everyone, and good afternoon to those online. What a 12 months it's been. Pilbara is absolutely thriving, and that looks to continue. And a bit like Tony, I was reflecting a little bit this morning on the journey. And just to give you a couple of numbers which I think really paint the picture of what's transpired the last year are the following: Going from September quarter a year ago to the September quarter we've just had, production has increased by 70%. The average realized price over that 12-month period has increased by 450%. And that's translated through to a balance sheet that has increased by over 1,200%. So more than a 13-factor increase to the balance sheet as a function of strong production and strong pricing, so the year we've had has been absolutely transformational. And Pilbara has moved through what I think has been an inflection point and absolutely gone from what's been a survivor to a thriver. And it's hard to believe we're only on third [ gear ]. We've got a multiyear expansion program ahead of us for a multi-decade Tier 1 asset, which is unbelievable, so Pilbara is positioned like no other to capitalize on this market. Now before I get into the presentation, I did also want to reflect a little bit on the people connected to this business, a bit like as Tony has done. We've been stewarding an incredible asset [ and ] an incredible time with the birth of this industry, but it's all been through a huge network of people. First and foremost is our shareholders, of whom -- if it wasn't for supporting the business, we would not be here; and particularly those shareholders who had the fortitude to stay with us during the downturn, who believed in the asset, who believed in the team and believed where the lithium market was heading. So a big thank you to those. And your support during those dark days of the downturn is absolutely remembered, so thank you. As it relates to the community. Nyamal has always been a big supporter of the project, and we continue to build on that relationship. To -- our customers, through their offtake agreements, enabled the original funding that occurred which underwrote the kickoff of the project. And again this is at a time when lithium was not sexy. When the guys were hanging out in the shed in Freo, those customers backed the team and backed the project and gave it life. Then there's our contracting partners through the journey, our builders Primero; DRA; RCR, unfortunately who went by the wayside; our operating contracting partners, [ MACA, Q ] and CSI, to name but a few; our financiers, Clean Energy Finance Corporation, who was the cornerstone who actually helped get that Nordic bond financing abroad kicked off. And then there's the team ourselves. So the team has just been incredible, whether it be our corporate team, our site operating team, our projects team, those who were with us previously, who have since left or those carrying it forward, massive, massive efforts over the last few years. To the execs: Tony mentioned rightly about the great work that Ken had done, absolute champion who steward the business through such a tumultuous period; and of course, Brian, who has been an absolute stalwart and chief architect of what's been a very challenging financial journey. From giving, breathing life into the project and then navigating that downturn, Brian led the charge. And yes, well done, Brian. And if you're looking for Brian later, he's wearing the pink shirt or angry salmon, as he calls it, so feel free to have a chat with him a little bit later. But the sum of these efforts, actually you can appreciate, when you reel off all of these different groups. It's through the people connected to this business who have brought it to life, and the sum of that has played through to those outstanding results I mentioned a moment ago. So for myself transitioning into the role of CEO and having been COO back in 2017 when I started, it's an absolute privilege to be carrying the baton forward for the next few laps. And my tank of -- my fuel tank of determination, I can assure you, is absolutely [ brimming ], fueled by that proud journey that we have and fueled by the excitement about what lies ahead. We are truly building a great Australian company, and it's going to be amazing to see what we can get done in the years [ which unfold ] ahead. So with that, I'll step into the presentation. And what I'll take you through is most of -- I assume most of you will have seen most of this before, so what I'll do is I'll dwell on some of the more recent updates which I think are a bit more pertinent, which are most of what we'd like to hear about. And in particular, I'll offer a couple of comments on the market because I know that's front of mind for many of you, particularly given some of the news this week, which I would say some of it is fake news, just to reference Trump given that he's back. So we would like to give our perspective on the market as one of major participants in the [ lithium-ion ] supply chain. And you can digest that and consider that against some of what you're reading in the paper. So in terms of the high-level numbers, this is where we finished at the end of the financial year, ASX 100, healthy bank balance. And production was going well. The strategy which we've been pursuing as a business has not changed really since the inception. And that's been about, first and foremost, the operating platform, ensuring we're delivering on those production commitments; two, expanding that operating platform and making sure we're getting maximum value-added [ sort of ] incredible asset that we're developing; number three, more value per lithium unit, i.e., adding more value through downstream participation; and then fourth, diversification as the fourth sort of priority. All of those 4 things serving our purpose of being a leader in the sustainable battery mineral products provision. From a production perspective, last quarter was a big step-up, a credit to the Ngungaju operation really starting to hit its straps. It was really, really brilliant to see. And I note that, that 70% production leap that we've had is principally due to bringing on that operation, so delighted to see how the operating team has been going there. It was slightly later than we probably hoped. And the year we had, we definitely had our challenges. We had, unfortunately, missed our guidance, had to rewrite our guidance twice as a function of some delays around Ngungaju. We had our challenges. Of course, it was COVID. That was part of the year we have. But pleased to say we've caught up and that's now behind us. And the operation is performing really, really well. And I think most will know where we're located, southeast of Port Hedland; incredible Tier 1 asset; 26-year mine life, assuming we've expanded to the 1 million tonnes per annum, and currently operating at a 580,000 tonne per annum run rate. And by the way, that 26-year mine life, that assumes we don't drill anymore, which of course we're going to do. And in fact, [ Johnny Holmes ], which Tony mentioned, he's busy mobilizing rigs as we speak to look what we can do to expand that resource further. The journey today, an incredible journey from that shed in Freo to where we are today. Probably the most recent update on that time line is the recent $250 million government funding package which was announced the other day. There's more to come to offer some more detail on that, but that's an absolute [ coup ] for Pilbara. It's significant. And then it's very attractive terms -- will be very attractive terms. It offers more strengths to the balance sheet and more flexibility for the balance sheet such that we can weather any storms in the future, if they're to come, plus enable us to pursue more growth vigorously. And further, having government backing is really, really powerful as we look to do other things. To say that Pilbara is backed by the Australian government with low-cost, very competitive debt, long -- 10-year debt, is very, very powerful endorsement of the project we have; and represents also, from the Australian government's perspective, their prioritization of backing key critical minerals projects, of which of course we're one. So well done to Brian and the finance team for landing that one. And we look forward to offering a bit more detail later once those terms are finalized. Moving to the market. So the market has been good despite what some think about it. What we're seeing is continued strong pricing support around that $70,000 per tonne per chemicals price. We've been seeing that being maintained; and particularly the most recent data points, of which absolutely the most recent was our latest BMX sale last night was a new record. We think that just reflects the strength in the market. We continue to get inquiries around can we provide product. Can we increase the volumes that we're sending, et cetera, et cetera? That continues, so some of the recent rhetoric around market shifted. "It's now changing." We certainly don't see that at this point in time. And I would note the Platts weekly pricing report, which was delivered last Friday, spoke of new record for lithium chemicals pricing. And you might say, "Well, gee. That's at complete odds with some of what I've read recently." And we would agree with you. It is at complete odds, but what guides our focus is, a, what our customers are telling us; and b, those pricing outcomes that we're seeing. And we don't see any cause for concern in the short term. As to the medium and long term, of course, that gets harder. There's many shifting -- it's there's many different macro market pressures, whether that might be inflation, wars, U.S. elections, being flagged. You name it. It's an uncertain macro environment, so you can't be completely certain, but as to our standing, our cost position, I think we're really, really well placed to weather the storm regardless of those market movements. So no cause for concern in the short term from our perspective. As to the supply-demand expectations, you will have seen these curves before or similar curves by others. Everything points to a deficit. In our case and the estimate we have here from benchmark that have predicted that, by 2040, the equivalent of 18 Pilgangooras or 18 of our operations would be required to plug the gap, the deficit gap, by 2040, or 9 of our equivalent-size operation by 2030, that's an enormous volume. And that also assumes that all of the [ Nyamal ] projects are coming online, and yet despite that, you still see that gap. So as an -- one of the very few lithium producers globally, we're very, very well placed for what we think should be a long time ahead. And certainly that's what the forecasts suggest to us. Now in terms of our standing in the current lithium market, we're a big player. We're -- again referencing benchmarks data, we're approximately 10% of the global lithium supply this year. And within hard rock, that's a larger slice again. And of course, as we move forward with our expansion, depending how rapidly we can go relative to the other suppliers, we'll obviously be looking to increase that share of the pie, subject to how quickly we can go. So we are absolutely a material player for lithium raw material supply on the global scene. Moving to the operation. It all green arrows, a big step-up in the cash balance, a CFO's delight. Production volumes are strong. It's been happy days. And by the way, it wasn't always this way. Tony mentioned this. I caused Brian absolute grief when me and the operations team are not hitting our targets, but we got through them. And now Brian smiles all the time. It's, in this environment, there's a lot to smile about. Those production volumes 75% increased on the year which just passed. And I'd just like to make a comment that, that type of volumetric increase is really, really tough, so to the operating team on site, absolutely champion effort which has been completed. That 76% increase equals a huge amount more of mining movement; more [ triples ] heading out the gate, carrying that product; more sales; more people. You name it. It all goes up geometrically. It's a big, big curve; and a very steep curve. And there's been some enormous efforts not only on site but from our functional groups as well who have supported that effort, so I just want to mention a "well done" to the team. It's great to see these results coming through, but it was only made possible from an enormous amount of teamwork and effort, so well done to the team. Moving to pricing. We've updated our BMX sales graph and -- delighted to add that record price which got delivered last night, on the right-hand side. And as I mentioned earlier, that just speaks to the strengths in the market. The price for 5,000 tonnes, you need over USD 30 million to secure that, so that's no small indicator of the strengths of the market, so I'd ask you to consider that when you read some of the articles and drill into the detail when I talk about a price movement. Look at the volumes and times the price. [ Weigh that up ] would be my suggestion as you start to consider some of these alternate points of view that you might be reading out there. Moving to the capital management framework that got announced this week. It's come sooner than we thought we need it to, so it's a good thing. It's a function of that strong balance sheet, strong pricing, strong performance. And what we've deployed here is a very -- what we think is pragmatic, sensible and prudent approach to our capital management, with prioritization about the defense and strength of the business and supporting the operations, sustaining capital and whatnot. Then the [Audio Gap] avenues to support growth, whether that might be inorganic strategy, share buybacks or debt reduction or other sorts of investment. So what we think is a pragmatic approach. We think this is appropriate for where the business is at. And of course, we will revisit this in time as we monitor the macro market and, of course, how we're traveling within that market. And of course, within that framework, we've flagged there was first dividends timed for the end of the financial year. Beyond the capital framework and moving now to the expansion plan, the step-up to 1 million tonnes per annum. Well, we're well on the way, of course. We're at a 580,000 tonne run rate at the moment. The P680 project, as we call it, which bolts on another 100,000 tonnes, is deep into execution by our projects team. And when I say it's deep into execution, the civils are done. Holes are being dug. Long-lead equipment has been procured. And we're aiming for a ramp-up of that in the September quarter next year. Beyond that P680 is the step-up to P1000, delivering 1 million tonnes per annum. The FID for that project is due this quarter. And we're looking to put that to the Board and get that approved and get on with that next leg of expansion, of course with the aim of, as per that original strategy, expanding the operating base and making the most of this fantastic market, this insatiable appetite which is out there from more lithium units. A couple of pictorials here of what those projects look like. This is the P680, which was approved sometime back. On the left-hand side is the processing equipment which is responsible for the 100,000 tonne step-up. And on the right-hand side is the large integrated crushing and ore sorter, which is sized for the P1000 or the 1 million tonnes per annum. So this project here is approved and underway for the projects team, so plenty more expansion runway ahead to increase those tonnes and, hopefully, enjoy that strong pricing for more years to come. Now beyond expanding the base asset and moving into our diversification strategy. Essentially this is all about creating more value through chemicals participation and principally 2 pathways: hydroxide production or lithium carbonate production through fine chemicals and upstream; or midstream, midstream chemicals, which I'll speak about in a second, which is essentially a lower bar in terms of chemicals production and a carrier of lithium units. So starting with our upstream participation with POSCO. Tony mentioned that he and I were in South Korea a couple of weeks back. And we got the dual -- it was a dual visit of participating in POSCO's Green Materials Forum and also going and visiting Gwangyang and observing the progress of the demonstration plant. Well, the Green Materials Forum was an absolutely fantastic event to be part of. Pilbara was invited to present. And in Tony's case, he was invited to be part of a key ceremony, which you actually see a photo there, with Chairman Choi. Pilbara was there center stage with POSCO. And it's just amazing to see the bold steps POSCO is making around their moves into not only green materials but and particularly as it relates to battery materials, of which lithium is just one subset. And we are an absolute key partner, their joint venture partner, of course, for lithium hydroxide participation. So Tony and I went to the -- [ Tony went to the ] conference. And then we went south, to Gwangyang, to look at the progress of the plant. And it's well and truly underway, so holes are being dug, [ steels in the air ]. Pipes are going in the ground. And POSCO have got a burning focus to meet their scheduled target of construction complete for train 1 in October next year. And from that point, there will be a ramp-up and commissioning period. So it was great to see works underway on that site. And the POSCO machine is absolutely well and truly underway to bring that project to life, so delighted that we are part of it; and for our shareholders, get the benefit of that uplift through the sailing -- through the selling of those hydroxide products. So spodumene concentrate, to recap -- spodumene concentrate [Audio Gap] to the joint venture. So that's clip of the ticket #1. And clip of the ticket #2 comes through the economic participation through the sale of the hydroxide products coming from that plant. So this achieves our aim of being further downstream and creating more value and more margin per lithium unit. And we couldn't think of a better partner in POSCO to be a joint venture with for a lithium hydroxide plant. South Korea is already an existing hub for battery materials production. You've got all of the key brands established there, LG, Samsung. POSCO CHEMICAL itself is a subsidiary of POSCO creating cathode materials, which by the way, Tony and I got to visit that plant the other week. And then you've got a number of major Korean car companies who are, of course, undertaking EV manufacturing, so we think this is an absolute [ coup ] for Pilbara and our shareholders, to be involved with POSCO. They are taking giant strides. And where this facility is being built is a very smart, strategic location, established industry; established know-how; free trade agreements with the U.S., by the way which, for those who are familiar with the Inflation Reduction Act, should provide benefit. And for Pilbara it's also a diversification. We're starting to split out our allocation of products such that it's not all channeled via China. We've got now, in time, some hitting via South Korea, so great to see that progress. And we look to -- look forward to updating on the build as that progresses. The midstream project. And for those who are not familiar with this: This is about producing a essentially chemicals product at the mine site and taking the front of what would be our customer's [ plant ], bringing it to the mine site. They're using some different processing technology to produce a superior product, superior to spodumene concentrate and superior on 3 metrics: one, lower carbon intensity; two, lower waste, in fact leaving all of the aluminosilicate at the mine site, so not shipping that anymore; and lastly, materially lowering the impurities and instead delivering what would be a very high-grade lithium product in the form of lithium salt, potentially lithium phosphate or lithium sulfate, and then delivering that out the gate to our fines chemicals customers like POSCO who would take that product and then further upgrade it to lithium hydroxide or lithium carbonate or other battery materials products. Now where we're at with this project is it's still very much R&D. We're busy progressing the final terms of the joint venture. And we're busy undertaking the next levels of study, heading towards an investment decision for a demonstration plant. And all going well, we will be approving that investment decision in the first half of next year, hopefully, in quarter 1 next year. And that will be to build a demonstration plant at the mine site and be testing the process steps at scale and demonstrating unit cost producing volume -- at a decent-sized volume that we can test for pricing in the market. And if that all goes well, well, we'll look to go to scale, but I would stress it is R&D. But we feel very, very positive and optimistic. And it could have a great future for the company and, in fact, for the industry. Moving to sustainability and the last section of my presentation and starting with culture. The way we think about culture, it's our foundation. And you heard me talk about people at the start of the session. Everything which has been achieved to date has been through our people, and culture is the foundation of our people. In this category, we've been busy on a couple of fronts, safe and respectful behaviors, training. It's been progressively rolled out. Our Unmute Yourself campaign is essentially a speak-up campaign encouraging empowerment across the workforce; and making sure that, if anyone is feeling that there's antisocial behaviors, they feel supported to speak up such that it gets addressed. And we've been rolling that out. And then lastly, in terms of cultural survey. Mining leaders, who are a consultant in this space, have been guiding us in this front. We have completed a cultural survey. And in fact, as recent as last week, we had 87% participation, which is a very strong participation for a first survey. Having done that survey, what that is going to enable us to do is to work on the things we need to improve; and double down on the things which are really, really working well. So great to get that survey kicked off. And as we look to expand the operation and recruit more people, we are really, really conscious that we want to continue to build on the great culture that we have at Pilbara and make sure we don't in any way dilute that or come off the rails, so to speak, as we look to employ and recruit more people. From a safety perspective. TRIFR slightly increased up from where we finished last year but still at a modest level of 4.2. The safety interaction rate, what that is, is the lead indicator which essentially measures in-field safety conversations. So we've got both lag and lead indicators. And that safety interaction rate is well above our target of 2, so we're happy with that. And this is all feeding through to building on and reinforcing our safety culture. From a community perspective, quite a few things have been happening on this front. We had cross-cultural awareness training with our Nyamal traditional landowners. Also with Nyamal, we've been running some cultural overnight camps. There's been 2 female-only cultural camps. This is going out on country, spending the night and spending time with the Nyamal elders. So 2 of those have been run, so far, of which Miriam Stanborough, one of our directors, joined 1 of those. So feel free to ask Miriam about what she thought, after the break, but from all reports, it has been really, really well received from our staff and those Nyamal elders. The community school battery project. What that's about is putting a battery solar solution to a remote school not far from our mine site, being Strelley school. Terry Butler, who is the main guy out there, approached us some time back and said, "Gee. We spend a lot on diesel fuel running the power for the school. It would be great if you could provide some solar," so we said, "Well, let's do one better. And why don't we get some batteries and see if we can get rid of the gensets outright?" So we've done that. We've partnered with power provider Contract Power to deliver a solar battery solution for that school. And that should save the school a lot of money, which of course, those funds can go back to the kids and other support for the school, so that's pretty neat. And we're looking forward to seeing how that goes. And potentially this might be a model that Pilbara will take forward elsewhere. Also on the sustainability front, our 6-megawatt solar farm. It's really our first step to decarbonize the operation in a material fashion, displacing over 9,900 tonnes of CO2 per annum. It's built. It's ready to be commissioned and tied in as a function of when the shutdowns are. And yes, really happy to see that in place, and we will look to expand that in time. So to conclude. Yes, what an amazing journey Pilbara has had. And we have absolutely moved through an inflection point and find ourselves now in an -- just an incredible position; an operating platform which is shooting the lights out, with an expansion pathway, frankly, second to none, which is going to be doubling our production output in the 12 to 18 months from here. We've got mature solutions to create more value per lithium unit through downstream participation. And we're looking forward to doing more of that, with at least 40% of our available production profile is unallocated, of the future 1 million tonnes. And we're also forging a path around sustainability initiatives, that midstream project being a key one, decarbonization of our mine site with solar. It's a very, very exciting time ahead for Pilbara. So thank you all for your time. And looking forward to taking questions.

Any questions from the floor? [ I want to just ] get a mic so that...

[indiscernible].

Okay...

Last week, we announced that we get $250 million government financial support, so I don't know why. It's like we have enough cash on hand. We still borrow some money. Is that a -- the government's $250 million is interest free? Or...

Sure. No, it won't be interest free, but it will be very competitive terms. And the -- a little bit of gearing of the balance sheet is seen as prudent and it does strengthen our balance sheet. And that certainly provides more flexibility such that more of the available cash can be used for other things. And those other things will be as per the capital framework, so that could be growth. It could be dividends. It could be other things. And further, the government debt offers what we think is an endorsement, which is very valuable in that, as we look to do other things, potentially globally, to be able to say the Australian government has backed our project, we think, is powerful and a really strong endorsement which we think could be valuable in the future. So there's both commercial and strategic reasons for pursuing the debt financing with the government.

Okay. Another question is that I noticed that, last third quarter, our grade is 5.4 -- 5.3. And as of June quarter, it's [indiscernible]. [ We have dropped off ].

Yes.

Is that any relation to our production and the grade? That means -- is -- we produce a low-grade product. We can produce more. Is that a -- right?

That's correct. So broadly, with mineral concentration, as you drop product grade, the volume produced, the yield, increases. And we've made a decision to tweak down our product grade in order to increase the total produced tonnes. So we've been doing that incrementally, and we're down to approximately 5.3 or thereabouts, or to increase our tonnage output from the mine site, which therefore enables more sales and more returns, so a more improved economic outcome for our shareholders.

So like our capacity is like we are at 580,000 of P680. Is that a -- grade is at -- is SC6 or...

SC6, yes. Great question, yes, yes. So the extension of that would be we will -- it can move beyond that.

Sorry. Another question. It's about our royalty. I know that royalties are 5% of the -- our sale price, but I also hear that it's -- Western Australia government, they have set a price. Is that not -- you know the Greenbushes mines. They sell at a very cheap price, but their royalty is [ not adding 5% ] of their sale price. So -- because I was [indiscernible] is that offtake is about [ $4,000, $4,700 ] and auction is, well, [ nearly ] $8,000. Is that...

So do I take from it, "Do you think we're getting a bad deal because others are selling their product for cheaper?"

No. Is that -- [ is all ] 5% for the sale price.

Yes, it's on sales price. That's correct. Brian?

Sales price [indiscernible].

Yes.

[indiscernible].

Yes. So okay...

I have 2 questions, 1 technical. How much lithium hydroxide does 1 tonne of spodumene make?

It's approximately 7 parts of spodumene concentrate to 1 part hydroxide.

Okay. So it takes 7 tonnes of spodumene to make 1 tonne of Korean chemical, okay. That's the first one. The second question is -- this is isn't working, isn't it...

No, it doesn't.

The second question is the company is obviously awash with cash at the moment, very good NPAT. How do you control expenditure to ensure that you get the best value for money when it's so tempting and easy to spend money?

Well, it's a great question.

[indiscernible].

[indiscernible].

We have the benefit of a Board who keeps a very close eye on exactly that question. And within resources and the commodity cycle, it's well known that -- when times are good, that I can come off the ball in terms of cost base. And sometimes that's justified by higher returns, but inevitably when down cycles come, the [ sea ] goes out and the high-cost operators get called out. We are absolutely sensitive to that factor and we monitor it very closely. And...

[indiscernible] to be able to contribute [indiscernible]...

Sure, yes, no. The -- yes. The monthly reporting to the Board is very detailed. I'd also add that the short-term incentives are tied to cost outcomes and production outcomes, so it's seen as absolutely integral to keep costs controlled, so...