PLS Group Limited (PLS) Earnings Call Transcript & Summary

Good day, and thank you for standing by, and welcome to the Pilbara Minerals Fiscal Year 2023 Results Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded. Now I'd like to hand the conference over to your speaker today, Pilbara Minerals' Managing Director and CEO, Dale Henderson. Please go ahead.

Thank you very much, and a warm welcome, and thank you to everyone who has joined the call today on our FY '23 full year results. To start with, I'd just like to acknowledge the traditional custodians of the land on which our businesses operate, Whadjuk, Noongar people in Perth where our head office is, and the Nyamal and the Kariyarra people [ up ] north where our operations are [ built ]. We pay our respects to their elders, past and present. As to the introductions today, you will be hearing from, obviously, myself and also Luke Bortoli, our CFO. And I have many of the team in the room, including the [Technical Difficulty] executives. As to the call outline, we're conscious we've only got an hour today, so we'll endeavor to keep the presentation to approximately 30 minutes and have 25 minutes of Q&A from the analysts and then 5 minutes for the webcast. And as I said, we'll do our bit to keep that within the hour. Now moving to our full year results. We have had an absolutely incredible year, a breakthrough year, where it's all come together. It's about 5 years of operating expertise combined with production capacity here up at Pilgan Plant and Ngungaju Plant [ which ] [indiscernible] operation. And thirdly it's about market timing. Those 3 things have come together and delivered a magnificent set of results, which we're all very proud of. And I'll get to those specifics. But to start with, moving to Slide 2. Just a quick reminder for those who are not familiar with Pilbara, we're located southeast of Port Hedland. The 2 plants, Tier 1 location being the Southeast of Port Hedland, being the largest bulk export globally. And we're developing a Tier 1 asset. And that's been further confirmed this morning with our reserve update, increasing our reserves by 35%, which is an increase in mine life for 34 years, which absolutely reinforces the asset we're developing is one of the best globally. And we're getting on with making the most of that asset with a forecast to bring up outright production by a further 70% in the years to come. So a great spot to be in this burgeoning market. Moving now to Slide 3, the highlights for FY '23. It's an incredible set of numbers. We've got triple-digit percentage increases across the Board, revenue, EBITDA, profit and cash. And because of those strong financial performance metrics, that flowthroughs enable us to pay a fully franked dividend at the top of the allowance, are contemplated in our Capital Management Framework. So we're, of course, delighted to be doing that and rewarding the many shareholders who have supported Pilbara and watched the journey over the years which has unfolded. So thank you very much to those shareholders for -- and particularly those ones who supported us from the start. Thank you for backing the asset, backing the industry, and most importantly, backing the team, which we weren't always delivering our results like this. Now moving to Slide 4. These strong results are only possible through strong operational and project performance. What you see here is the headline percentage increases, a massive step up across the Board. 64% of production increased from the year prior, a 68% increase in sales, and this was all [ up here in ] a strong pricing market and 87% increase on realized pricing. Separate to the operating performance, we're getting on with lengths of growth as it relates to the next length of expansion. P680 during the year is well into construction during this quarter. Commissioning has commenced, and we're looking to ramp up P680 in the December quarter. Also, during the course of year, we had the P1000 approved, and that project is now in [ train ] and being progressed to come online mid '25. In the chemicals category, our joint venture with POSCO for 43,000 tonne lithium hydroxide plant, [ its ] foot down, been constructed in Gwangyang, South Korea, and we're looking forward to getting over there in the next couple of months to see progress, and that project [ too ] is on track. Moving to mid-stream, working with our joint venture partner, Calix, we approved the demonstration plant for industry project and approach to that next step down the path on the R&D journey for that project. Mid-stream, of course, is the concept of onshoring, more value-adding of our spodumene concentrate into a high-grade lithium salt and more sustainable lithium salt, given that we're targeting a drop in carbon energy intensity and drop out for waste. So looking forward to seeing that project progress. And lastly, as it relates to expansion, as I mentioned a moment ago, this morning we released to market our reserve update up to the June, and as I say, 35%, bringing total ore reserves of 214 million tonnes. And I'll offer a couple more comments around that later in the pack. Before we'll move forward, I just wanted to say a big thank you to the team at Pilbara Minerals and our contracting partners. This was a huge step up in activity across our business during the last year, and it was not easy. There's been all sorts of growing pains, whether it's ramping up mining, ramping up [ camps ], procurement. In the finance space, we've had all sort of growth. HR, all sorts of growth, you name it. It is not one part of the business which hasn't had to go through a transformational change during the course of the year. And the team has taken that on -- head on and worked through all those challenges. And because of that, here we are today, looking back [Technical Difficulty] results here of the fantastic teamwork and that [ full ] spirit which is [ the culture ] we have. So thank you to the team. Moving to Slide 5. Just to highlight a couple of milestones, which I haven't mentioned thus far. Quarter 2, we reinforced the balance sheet with some Australian government back debt, fantastic reinforcement and balance sheet there. Capital Management Framework, hard to believe that it was only in quarter 2, and obviously subsequently from first dividend and now we've just flagged our second dividend. A couple of great milestones. Also during the course of the year, we built out the executive team. So we've got 5 new execs [indiscernible], lots of [ bright eye ] right now, following this week of releases, and of course, they've joined, Alex and I, the 2 [indiscernible] executive. Moving now to Slide 6. As it relates to sustainability, the year which was one where we've started to get on with giving back more. We're committed to 4 multiyear partnerships, which is fantastic as it relates to indigenous engagement. We've continued our engagement programs as part of that with investors and commission with Australian community, solar battery project which is indigenous [ school ] and [ Altura ] operation. We did that in partnership [indiscernible] provider, specific energy. So, great to see that commission and -- supporting that community. And then as it relates to climate change, we've commissioned our 6 megawatt of solar farm which is now [ full ][Technical Difficulty] display some of our carbon energy. Moving now to Slide 7. Yes, I mentioned a moment ago, our HR team is -- our full team is busy because it's been a huge year of growth. 78% increase in employee count. As it relates to TRIFR, we did regress from the prior year slightly, [ straight ] moving up to 4.7. So unfortunately, the [ progression ], as I mentioned, and just a reminder of the necessity for us to keep a burning focus around our safety culture and all of the systems which support the safety such that the team goes home safe and [indiscernible]. As it relates to our lead indicator interactions, we've exceeded the target there at 2.9. Safety interactions is a proactive measure around safety conversations and assessments in the field and talk about driving safety culture. So I'm really pleased with the outcome of the team there at 2.9, above 2. Now, that completes the highlights. And with that, I'll hand over now to Luke, our CFO, to take you through the financial results.

Thanks, Dale, and good morning to those on the call. Please turn to Slide 9 of the presentation. FY '23 was a period of strong performance across all key metrics, driven by production expansion, and number of mine site, productivity improvements and strong pricing. The group successfully ramped up production at Ngungaju. We completed several processing improvements across the operation. We further refined our sales strategy, and we commenced our 2 key expansion projects, P680 and P1000. These efforts gave rise to an increase in production of 64% on FY '22 to 620,000 tonnes in FY '23 and total sales of 608,000 tonnes. We also saw a record year of customer demand, increasing the average realized sales price over the period to USD 4,447 per tonne, up 87% on the prior year at USD 2,382 per tonne. The aggregate of sales and pricing increases resulted in revenue for FY '23 of $4.1 billion for the group, a 242% increase from the prior period. In addition to strong revenue performance, EBITDA for FY '23 was $3.3 billion, up 307% on the prior year. Moving further down the P&L, statutory profit after tax was $2.4 billion for the financial year, an increase of 326% on the prior period. Turning now to Slide 10. Slide 10 sets out further detail on our profit and loss, including key metrics used by management to assess the performance of the business. Total operating costs were $776.3 million, up 104% on the prior year. This increase in total operating costs is reflective of higher production and also sales. On a unit cost basis, operating costs were $613 per tonne, an increase of 11% on the prior period. As mentioned in previous announcements, during FY '23, the business pre-invested mine site personnel and activities in preparation for P680. There was targeted investment in spares and maintenance to improve availability and productivity and ongoing enhancements to our facilities on site to cater for the growing operation. Operating costs, CIF were $1,091 per tonne, up 29% on the prior period. The key driver of this increase was the additional cost associated with higher royalties due to the significant uplift in revenue. As with many businesses across our sector, costs were also impacted by inflationary pressure in the period, and this is something we'll continue to manage closely. Revenue and pricing growth in the period significantly exceeded the total growth in costs and unit costs, giving rise to a lifting profitability. As mentioned earlier, EBITDA for FY '23 was $3.3 billion compared to $814.5 million in the prior year, an increase of 307%. Turning now to Slide 11. On this page, we've shown a step up in revenue, EBITDA and EBITDA margin in FY '23 versus FY '22 on a quarterly basis. As shown in the chart, the profitability of the business has increased rapidly over the past 2 years. EBITDA margin has expanded to 82% in FY '23 from a low of approximately 35% in the September quarter of FY '22. This very strong growth in margins has been driven by the group's strong revenue growth and also the benefit of operating leverage. It's also given rise to the strong balance sheet position that we have today. Turning now to Slide 12. On this slide, we've set out our summary cash flow statement. FY '23 was a year of significant growth in cash. Cash increased by $2.7 billion to $3.3 billion, up 464% on the prior year. Moving down the cash flow statement, cash margin from operations as measured by receipts from customers less payments for operational costs was $3.7 billion in FY '23. In FY '23, the business has shown strong growth in cash, but also very high cash conversion when compared to revenue of $4.1 billion. In addition to the strong cash margin from operations performance, the group had several items which were first for the business in the year. This included $209.5 million of income tax payments and $329.8 million for our inaugural interim dividend payment of $0.11 per share. FY '23 also saw a step up in capital investment for expansion and operational efficiency of $385.5 million in FY '23. This included P680 expansion project spend of approximately $138 million, capitalized waste mine development of approximately $163 million, mine site infrastructure improvements of approximately $34 million and sustaining capital spend of approximately $56 million. Pleasingly, the ending cash balance in FY '23 shows that the group has managed continued investment in business expansion while also ending the year with a cash balance that offers significant flexibility for future investment in growth and dividends to shareholders. Turning now to Slide 13. Slide 13 provides a graphical representation of the FY '23 cash flow statement and step up in cash in the period, which I discussed earlier. Turning now to Slide 14. Slide 14 shows the group's quarterly growth in cash generated by a recently very stable cash margin for operations across recent periods, finishing as of 30 June 2023 with cash of $3.3 billion, generating cash from operations of $3.7 billion. Turning now to Slide 15. Quite obviously, the group has a very strong balance sheet position. The group has net cash as at 30 June 2023 of $3.1 billion and cash and available liquidity of close to $3.5 billion. In FY '23, the group expanded its loan funding facilities and improved the [ turns ] on its existing commercial facility. While we're in a strong funding position today, we'll continue to expand and diversify our access to debt capital funding over the coming year. Turning now to Slide 16. On this slide, we set our summarized balance sheet. At 30 June 2023, net assets were $3.4 billion, an increase of [ $2.1 billion ] or 162% on the prior year. This increase was driven by a material uplift to cash as already discussed. Investment in Property, plant, equipment and mine properties, which rose to $1.4 billion, up 48% on the back of our continued investment in our mine site and an offset for a tax liability at year-end of $894.7 million, the result of a significant increase in statutory profit in the year. Approximately $773 million of the tax payable at 30 June will be due for payment in the first half of FY '24 and relates to income tax for the FY '23 period. Other balances such as inventories, leases and payables have also increased, the result of growth in headcount and a material expansion of our operations. Turning now to Slide 17. Today, we're pleased to announce that Pilbara Minerals will be paying a final FY '23 fully franked dividend of $0.14 per share. This payment is in line with our capital management framework as mentioned earlier by Dale, and equates to a dividend payout ratio of 30% second half FY '23 free cash flow. This is at the top end of the group's dividend payout ratio range. In dollar terms, the total dividend payment to shareholders will be approximately $420 million. After this payment, it will bring our total dividend payments to shareholders in respect of FY '23 to approximately $750 million or $0.25 per share. As mentioned earlier, the strong cash position of the business provides opportunity for us to consider a variety of options in addition to our organic investments, such as inorganic growth opportunities or a return of capital to shareholders. Any capital management initiative would likely be in the form of a buyback, special dividend or some combination of those 2. We'll continue to monitor these opportunities and provide an update over the next several months. I'll now hand it back to Dale.

Thank you, Luke. Just a comment on the dividends. Yes, it's just the most incredible year we've had and to be able to [ vision ] this full year dividend of $0.25. It's just remarkable where we find ourselves in this short 5-year history, and a little anecdote, which I think really captures how rapidly the business changes relates to our -- actually, our shipping manager mentioned to me that, during the course of the year, buy me a calculator because of the larger volumes, we're shipping tonnes of -- the strong pricing, the [ calculator ]. You can't put the numbers on the screen anymore. So they had to upgrade the calculator. The same shipping manager only 2.5 years ago, was the one who was run [indiscernible] about when we've got a sale for a cargo at $400 a tonne. So we really have more -- amorphous as a company, as a function of being early to the party and being out on the water, ready to capitalize on this incredible burgeoning market. So I shout out to [indiscernible] [ calculator ], it's been a fantastic year. And as I've mentioned in my opening comments, we're delighted to be paying back and rewarding many of those shareholders who, as I said, back the asset, back the industry, and most important back the team. So thank you, and thank you, Luke for that run through. Now turning our mind to the future, our outlook. Moving to Slide 19. FY '24 is a ramp-up year. We are, of course, bringing on P680, primary rejection component, which will bring more tonnes on, and shortly thereafter, we'll have the second component of the P680 be crushing and ore sorting, which won't be turned on within the year, but that project is in full flight. So we'll be ramping up production. Ramp-up years always present a few little challenges. We've factored in an allowance that's part of both the production volume range being 660,000 to 690,000 and the cost range of [ $600 million ] to [ $670 million ] per dry metric tonne. So that's built into that and noting that the midpoint of that cost range will be about [ $635 million ]. As it relates to capital expenditure and stepping through each of these one by one, for the project capital for the P680 and P1000, is on track and consistent with previous guidance. I'll highlight that the crushing and ore sorting component we faced in the 6 months and updating on that as part of the June quarter results. Mine development is as per plan, and that's really around more mining effectively setting out for P1000 sales and volumes. Sustaining capital is in alignment and projects and enhancements around additional investment to set up the building operation for the long term. And of course, given our reserve upgrade today, increasing our mine life to 3-plus decades, it makes good sense that we invest in some of the peripheral elements to set up for the long term. So within that includes tails facility with [indiscernible], expenditure around the new camp, some warehouse, and of course, we've got the midstream project which was FID approved. So that completes a guidance across production costs and capital. And I'll now move to the strategy and market. So moving to 21. Just a quick recap on our strategy. Our aim is to be a leader in provision of sustainable battery materials products. We've got full plans to that strategy. So we've covered much of this actually in the call thus far. The operating platform is priority 1, showing that shoot the lights out, shipped up to ship quarter after quarter, year after year, then expanding that operational platform, the reserve upgrade case in point and matching that with commensurate processing capacity subs that we can make the most of this incredible tailing asset developing West Australia. Chemicals, this is all about adding more margin for lithium unit flying from the [indiscernible] of the POSCO joint venture, is one of the initiatives. The midstream joint venture with our friends Calix is another, and there's more to come in the space. Playing forward diversification beyond the base asset, there's more to come on this down in the years to come. But within this category includes our partnering process. We were considering partnering with potential downstream partners or other partners for joint development of further downstream facilities. You'll note in our update that we have added [ one ] quarter to that, taking that through the March quarter. What that's all about is we've got to take this process really seriously. We've got a great [ problem ] of some strong interest and excitement around what can be done here. We've got to give the process due course to really consider this. These commitments around tonnage [ multi-decade ] as was the case in what we've done with POSCO. So we have added a little extra time, so we work through that process. We look forward to reporting in due course. Moving now to 22. This is the resource upgrade that we announced some weeks ago. You can see the Pilbara resources move from the light green to dark green out to the right. And you can see we -- the asset is comfortably positioned as one of the largest in the hard-rock lithium universe. Moving now to 23. The reserve increased 35%, increased 55 million tonnes additional, taking us to 214 million tonnes. That's a 9-year increase taking [ that ] to 34 year mine life. And of course, because of that, we are underway with the studies to explore that trade-off of more production capacity and a shorter mine life. So we will -- the numbers have been crunched. The studies are underway, and we will report in due course on where we take things. Will we do more? Yes, absolutely. It's one of the best ways we can continue to drive and create more value for our shareholders. We've got the amazing privilege of [ drilling ], one of the best assets globally, one of the best locations. So we'll continue to make the most of the credible assets, more programs of drilling to come. Now moving lastly to market. It's the best market to be, the lithium market, although it's volatile. What's pleasing here is we continue to see strong signs, which support the long-term prospects for the industry. We've highlighted a couple of more recent analyst facts here, benchmark a detailed -- recent update around EV increases. 27% growth to '26 and 76% to 2040 as well as the vast markets -- in the last week, in fact, that released some information related to mass energy storage. And what the noted is that the lithium-ion subset -- battery subset '23 is a large proportion. It's been attended to the mass energy storage subsets. So that's an exciting emergence. And it's a difficult space to get visibility, but it's exciting to think about if that starts to grow at post as well as easy adoption. We watch that with interest. As it relates to pricing, the lithium market has been volatile throughout its short history. Of course, we've had this run-up in pricing through the September quarter and December quarter, reaching all new highs. March quarter saw a strong drop and a rebound in stability. Moving through to June and through to now, we've seen a tapering off but more stability. So as we think about that, our expectation is probably more volatile in the future. That's what we've had today. What gives us [ confident ] is really in 2 parts. Firstly, we have our eyes trained on the long game. The stage is set for more growth [ was ] lifting. Supply, we think will [ languish ] and we know that, that view is shared by many of the analysts who study this year. We have some points to the graph to the right, which shows the forecast demand versus the forecast supply and the clear area at 2040 between the top of the column and the demand line is the equivalent [indiscernible] as you would have seen just a moment ago on that [indiscernible] chart. There's not many assets the size of Pilgangoora. So, there's a shortfall in those expectation in the long-term, plus, it also assumes the other projects come online. What does that mean to Pilbara? That means we think we've got this incredible market and moment in time to capitalize for our shareholders. So that's part 1. But part 2, which gives us confidence is we've got scale, we're a low-cost operator. So inevitably, there will be cycles and the defense against those cycles is ensuring that you're positioned down the cost curve, and that will continue to be our own. And as we continue to build out the operation and invest in some of those enabling factors for the long term, we will see gradual decreases in cost, which makes [Technical Difficulty] long term. So it's an exciting time to -- Pilbara remains excited. We have conviction on the outlook, and we are full force delivering as rapidly as we can. And to finish on the market, a couple of the more recent business news, which [ bear our ] interest. The Canadian government's commitments of USD 11 billion just to [ land ] us an [ LT ] [Technical Difficulty] 6th of July, and to [ earlier ] [ invest in May ], investing another $2.1 billion in battery plant as well. We, of course, had the China policy, I think I mentioned this in the last call. The tax exemption for EVs through '27 further support. It seems every few days or a every few weeks there are other elements you -- reinforce that long-term outlook, it's exciting. So as I said, Pilbara continues [ full force ] to make most of this market and capitalize on the position that we have. And with that, that's a wrap for our presentation, and I'll hand back to the moderator to move to questions.

[Operator Instructions] And our first question comes on line of Rahul Anand from Morgan Stanley.

Luke, my one question. I wanted to perhaps focus on the cost guidance for next year. So, $600 million to $670 million unit operating costs, I just wanted to confirm -- perhaps a question for Luke here. Yes, these costs are benefiting from the pre-strip CapEx. Is that the right way to look at them, i.e., that 150-odd mine development CapEx that's being spent is probably benefiting the unit cost by about $200 a tonne roughly. So would it be fair to say that the underlying cash cost at the mine site at this point in time would be about [ 200 ] higher than the guided number? Is that the right way to think about it?

That is the right way to think about it. So the capitalized waste of mine development for the period of $163 million. We could add that back to have an approximate cash cost.

And then just as my follow-up then on the cost piece, Luke. Stepping into next year, which is going to probably have much less in terms of that pre-stripping CapEx that's benefiting the cost guidance. How should we think about the underlying run rate? Because you obviously have 2 impacts. One would be that your pre-stripping tapers off. But then secondly, operations would be larger and benefit from volumes. So how do we think about those 2 opposing forces, please?

Sure. So we're actually guiding to capitalize mine waste development of between $140 million to $160 million for FY '24. So that's broadly in line with FY '23. Does that answer your question?

And our next question comes from the line of Levi Spry from UBS.

I don't think we've quite answered that question. So mine development, so stripping for the production growth into '25 and '26, I guess, is what we're asking here?

Yes, we're not providing any guidance, obviously, FY '25 and FY '26. But at least in FY '24, capitalized waste mine development will be broadly the same as FY '23.

I can probably add to Rahul's question and [ get ] to Levi. We should get some stronger head rates the next year, subject to the next round of mine plan optimization. So if that eventuates, so we'll get some strong volumes, which, of course, will play through to a good [ net ] cost. But we'll, of course, disclose all that in due course.

And so, just thinking about the expansion beyond -- potential expansion beyond P1000, how should we think about the scope? What are the [ limitating ] factors? Can we think about which we're adding another plant like you've just done? Is there any limitations in the pit of mining rates or anything like that?

Yes, sure, Levi. So there are limitating factors and that's the job we need to work through with the studies. But the -- sort of the top priorities are, firstly, in the mine, understanding what run rate can be practically achieved as a function of the spatial distribution of the ore because there are physical limitations as to how much plant and equipment you can get into certain areas. So there's a mine planning component to be worked through. Similar to that then is matching that with commensurate process capacity. Broadly speaking, the limitations here are less. And then we've got plenty of [indiscernible] out there, we -- in which case we can build out our capacity. But then adjacent to that, you've got all the normal constraints, which need to be worked through. That could include perennials, water, logistics, et cetera. But within all that, we're not anticipating any issues, but we need to go through the process of the studies to validate that. But yes, bringing back to the start, the mine optimization is really the priority here.

And our next question comes from the line of Hugo Nicolaci from Goldman Sachs.

Just wanted to ask one around the CapEx guidance into FY '24. Just noting that obviously the P1000 guidance you gave us back in March didn't include tailings expansion and things like that. So I was hoping that you might be able to give us a bit more detail around what the breakdown of that $170 million to $190 million in project enhancements might be? And then how much is left for those items in FY '25 for things like tailings expansion still?

I can let you go. I was looking at Luke to answer that one. We don't -- I don't have the breakdown on that one primarily but let us take that on notice and we can look at providing that in the future. And certainly, FY '25, we'll provide guidance down the track.

I might follow that one up afterwards then. But I guess maybe just following up around the expansion works and life of mine support. Are you able to give us a guide as to what you've sized that to in terms of tailings expansion and other life of mine support work? Have you essentially sized it to the kind of reserve life and P1000 size back in March? Or have you given yourselves some optionality there to maybe go larger on some of that life of mine support work?

Yes, the way we think about it, if you got -- it's all around the -- understanding the economic reserve. So that's on the -- so there's room to move as it relates to the enabling infrastructure tails et cetera, and not just [ failing ] any constraints in that regard, as I mentioned earlier, to Levi's question. But we do need to go through the studies to confirm that. Does that answer your question?

And our next question comes from the line of Kaan Peker from RBC.

Yes, 2 questions. Just on the exit run rate, given the exit run rate for '23, and you look at FY '24 guidance, it does appear conservative. Are there any major shutdowns or times planned for this year? And can you maybe give an indication of which quarters they are expecting? And I'll follow up with a second, please.

There will be some times, that's correct. And then there's the commissioning process and sort of which -- so the assumptions around how rapidly does the P680 bolt-on a ramp up. We have taken a pragmatic approach to that estimate and the knowledge that domestic price always presents some challenges. And broadly speaking, with guidance, we're wanting to obviously ensure that we deliver well. And so, we have taken, I wouldn't say conservative, but leaning on the side of conservative approach here. Ramp-up years are challenging and hard-rock processing is incredibly challenging. We know that well given the years of experience. So that's folded into the estimate we have here.

And I know with -- the line is fine with the FID of the P1000 that was incorporated into the mine plan, but there's limited resources that are being delineated there. Is this sort of the next area of upside that thing?

There is some [indiscernible] [ as far as you go ] to the north. There is some infill drilling coming further south. And the last round of drilling has demonstrated some new lows, which we're looking to explore, which is seeing some of the cross sections in the reserve release, deserves more attention. So it's not just [ LIMS ], but there is area around [ LIMS ] pits and certainly other areas of the ore body. We were positively surprised by the results of this last round of drilling this year. That's exciting. It's inspired us to do more, and we'll see where we go.

And our next question comes from the line of Kate McCutcheon from Citi.

Congrats on the results, and thanks for your new revenue disclosures, that makes our jobs easier. I'm interested in some more color on CapEx for the year. The $200 million almost for projects, is there any breakdown you can give there? And then the mine development stands, I think that's just stripping, as you mentioned. And then the last part, that $490 to $540 million on P680, P1000, does that imply that you've accelerated the P1000 CapEx there? Or to ask it another way, is the bulk of that $560 million that you've guided for P1000 done this FY?

And Hugo asked a similar question. We got cut off. So in respect of mine development, yes, that is just stripping, to answer that component. On projects enhancements, these are new items that we haven't yet disclosed to the market, and they are explained in some detail below the range provided there. But just to provide some more color, we're commencing work on permanent [indiscernible] side. We're obviously building some tailed infrastructure. There's some work on access roads, has been done as well. And there's a whole bunch of other mine site infrastructure, smaller items that are really focused around improving the environment on the mine site to enhance productivity. As it relates to growth capital expenditure, that really is the rollover of P680 and P1000 CapEx spend that we previously announced to the market. So nothing really new there. And in fact, we actually found some savings in respect of P1000 spend.

So is the bulk of P1000 spent this year or there's still a lot to come in '25 as well?

There will still be a follow-through to '25, that's right. And same on the projects enhancement spend.

And our next question comes from the line of Glyn Lawcock from Barrenjoey.

I guess we're all going to get down the same path a little bit. So it just sounds -- like Luke said, there'll be some follow-through enhancement spend into '25. I guess that all comes back to what you said, you're setting the business up for the long term. Where does that leave us on sustaining capital then as well, $75 million to $85 million? Should you see that continue to step up? Because I mean, it sounds like some of the spend that we're doing is perhaps more sustaining rather than enhancement as well. But any thoughts you can give on where that goes as well?

So sustaining CapEx has stepped up in run rate in FY '23, and we expect it to step up to this range in '24 from around about $56 million in '23. I think that that's a reasonable assumption carrying forward, if that answers your question.