PLS Group Limited (PLS) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to Pilbara Minerals September Quarterly Activities Report. [Operator Instructions] After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Pilbara Minerals Managing Director and CEO, Dale Henderson. Please go ahead.

Thank you, Kandy, for the introduction, and thank you all for joining our September quarterly update this morning. I'd like to begin by acknowledging the traditional owners on the land on which our businesses operate. The Whadjuk people of the Noongar Nation in Perth where are undertaking a call from today, and the Nyamal and Kariyarra people where our operations are located in the Pilbara. We pay our respects to the elders past and present. For the call today, I'm joined by Luke Bortoli, our CFO; and Brett McFadgen, our Executive General Manager of Operations; who is calling in from site. Also have in the room, the wider team, who is also supporting the call. For the call today, we have an hour and we'll step through a presentation, followed by a Q&A. Now turning to Slide 2. The pillars of our strategy are prioritized to generate the most rapid value creation for our shareholders in service with our vision, which is to be a leader in the provision of sustainable battery materials products. The September quarter made steady progress against each of the pillars of the strategy. Turning to Slide 3. The September quarter was one of solid operating performance and on track project delivery and what remains a challenging point in the market cycle. For the September quarter highlights, we are pleased to be able to report another strong operational quarter with production of 220,000 tonnes achieved through strong throughput, run time and very good lithium recoveries averaging at 75%. Sales were in line with production at 215,000 tonnes. Unit operating costs FOB was $606 per tonne from the combination of volume uplift and ongoing focus on operational efficiencies to reduce cost. We made progress across our growth portfolio with the P680 Crushing and ore sorting commissioning completed and in ramp-up and P1000 construction progressing on time and on budget and with the transaction to acquire Latin Resources, so it's been a busy quarter as it relates to projects and growth. Revenue, $210 million, reflecting the lower price environment and Pilbara Minerals has continued its ongoing focus on prudent cost reduction initiatives in response to lower prices. Now because of these lower prices, we have decided to optimize the operations further to the high-performing, lower-cost Pilgan plant while temporarily pausing production of the Ngungaju plant to reduce costs and further strengthen our financial position. We will provide more detail on this later in the presentation. At this point, I'd like to hand over to Brett to take us through operations segment.

Hank you, Dale. Moving to Slide 4. Starting with safety. As you can see, our safety performance has been steady with a modest increase in TRIFR from 3.73 in the prior quarter to 4.03 for the September quarter. Our safety program initiatives continue to gain traction, empowering employees to actively participate in creating a safe work environment. Moving to Slide 5. We had a solid operational quarter with production and costs ahead of expectations. In the mining area, mining performance exceeded planned volumes, achieving total material movements of 9.4 million tonnes for the September quarter, which was slightly up on the June quarter of 9.2 million tonnes as well as being a 3.4% lift in volumetric movement from the same quarter in FY '24 of 9.1 million tonnes. In the processing, lithium recoveries for the quarter of 75.3% were above target as well as the previous quarter at 72.2%. As mentioned in the previous quarter results, the resolution of ore feed mineralogy in the later stages of previous quarter, in conjunction with improved and consistent plan performances, including the primary rejection facility and ore sorting technology are key contributors to the continuous improvement in recoveries over this quarter. Production exceeded 220,000 tonnes, which is broadly in line with the prior quarter of 226,000 tonnes. The slight reduction in production compared to the previous quarter was to allow for the final commissioning of P680 crushing and ore sorting, which was completed in July. The consistent performance demonstrates the P680 expanded production capacity, higher ore lithium head grade and higher lithium recoveries due to operational improvements, including the mobile ore sorters. Thank you. I will now hand back to Dale.

Thanks very much, Brett. Moving to Slide 6. The P1000 project remains on schedule and on budget and is now 80% complete as at the end of September quarter. The P2000 feasibility study is underway and remains on schedule for completion in the December quarter 2025. And just a reminder that any progress and further FID will be further down the track as a function of market conditions. With regards to the midstream project, in light of the current market conditions, the joint venture partners being Calix and Pilbara Minerals have agreed to defer the project until market conditions improve or further government support is secured. I'd like to thank both the operations team and projects team for the ongoing success with integrating the expansions and run the operations. It's fantastic to see the operation continuing to perform care of on track projects and the successful commissioning and ramp-up. Thank you, team. Now moving to Slide 7 for a quick update on the downstream joint venture with POSCO that is progressing well. In fact, the ramp-up of Train 1 continued producing 1,965 tonnes of lithium hydroxide during the September quarter and Train 2 is on schedule to complete commissioning in early '25. Just a reminder, we currently sit at an 18% equity interest and Pilbara Minerals has the option to step up to 30% at our election. Moving to Slide 10, Latin Resources. The transaction to acquire Latin Resources was a major highlight for the quarter. This is an on-strategy, counter-cyclic transaction to diversify revenue beyond Pilgangoora, which will deliver a second 100% owned hard rock lithium asset. The process to complete the transaction is progressing well. We anticipate the scheme meeting to approve the Scheme Implementation Agreement to be held in January '25 and that the transaction will complete either late January or early February. Now with that, I'll now hand to Luke.

Thanks, Dale, and good morning to those on the call. Please turn to Slide 10 of the presentation for a summary of the group's key financial metrics for the September quarter. Group revenue in the September quarter was $210 million, a 31% decrease from the June quarter. This was driven by a 19% decline in the average realized price combined with 9% lower sales volume. The average realized price declined from USD 840 per tonne in the June quarter to USD 682 per tonne in the September quarter. While declining prices impacted our financial performance in the period, the group's operational performance was strong, as mentioned by Dale. As flagged in the June quarter presentation, lower volume and higher costs were expected this quarter due to reduced plant time resulting from the integration and ramp-up of the P680 crushing and ore sorting facility. Pleasingly, actual results exceeded our internal plans. Production volume of 220,000 tonnes in the September quarter was 3% lower than the prior quarter, but higher than we had planned. Looking at unit costs -- unit operating costs on an FOB basis increased by 3% in the September quarter compared with the June quarter to $606 per ton. This increase was driven by lower sales volume, offsetting a decline in mining and processing costs but was also better than expectations. On a CIF basis, unit operating cost was $717 per tonne in the September quarter, 2% lower than the prior period. This reduction in cost was driven by lower royalty and shipping expenses due to lower prices and shipment volumes. Finally, the group's cash balance at 30 September was $1.4 billion and remained strong. I'll speak more about this on the next slide in the presentation. Turning to Slide 11. Despite lower prices, the group continues to maintain a strong cash position with a closing cash balance of $1.4 billion as at 30 September 2024. The September ending cash balance was $274 million lower than the prior quarter, primarily due to capital expenditure of $214 million. Focusing on cash margin. Our cash margin from operations defined as receipts from customers, plus payments for operating costs was positive $49 million in the quarter. However, cash margin from operations less ongoing CapEx being capitalized by development costs and sustaining CapEx was negative at $2 million for the quarter. As mentioned earlier, lower prices are now impacting our financial performance and also cash flows. Looking further into CapEx spend. CapEx spend was $214 million on a cash basis and $209 million on an accrual basis in the period. This included growth CapEx of approximately $103 million related to the completion of the P680 project and continuation of the P1000 project. It also included new projects and enhancements capital spend of approximately $55 million, mine development costs of approximately $44 million and sustaining CapEx of approximately $7 million. In light of continued lower prices and lower cash margin from operations in this period, the group has responded by continuing its focus on prudent balance sheet management and cost reduction initiatives, which Dale will speak to in the next section of the presentation. I'll now hand it back to Dale.

Thanks very much, Luke. And moving to our market commentary. We've put together an outline of the historic market dynamics, observations of the current market and our response to the current market. So it'll be slightly more expanded in the section given there's plenty of interest and people are keen to hear our insights as a major player in the lithium sector. So moving to Slide 13. The lithium industry continues to grow rapidly from a small base. The structural drivers for this growth include the renewable energy shift, technology adoption and government policy support. These driving forces have translated to a significant growth rate. Pricing for lithium products have seen periods of significantly elevated highs and lows, sometimes occurring very rapidly and surprising all. This volatility is in part driven through the combination of short-dated pricing mechanisms and efficient trading mechanisms and periods of momentum buying in some markets in short and immature market. At times, pricing responses appear outsized compared to the expected supply and demand. We have highlighted, by example, the modest supply shortfall that occurred during calendar year '21 and '22 that precipitated the strong escalation in pricing for this period, so I reference the green square on the graph. Now moving to Slide 14. Although supply curtailments have continued, particularly during the course of the past 12 months, the market continues to have a level of excess supply as shown in the graph here with data of your Benchmark. I draw your attention to the green vertical line, which represents benchmarks estimates of demand for the year. The area to the right, those stacked columns represents effectively excess supply in accordance with Benchmark's data. Now this data also shows that a large proportion of the supply is currently operating at a unit cost much higher than the prevailing spot market. So draw your attention to the horizontal red line. So the bars which are above that red line are effectively operating at a higher cost and the sales price based on Benchmark's data. So spodumene pricing is approximately USD 750 per ton. Well, that's approximately half the consensus of long-term price for the market of USD 1,400 per dry metric tonne. So we're expecting price movement upwards over time because this is simply not sustainable. However, to find the market in this position, there's no surprise given that what we're witnessing is a rebalance occurring following the very strong pricing period that occurred through calendar year '21 and '22. There is just more to go in our view around this rebalance and ultimately, price appreciation, which could happen very rapidly as we've seen historically. Now on the demand side, strong signs continue to support growth. And moving to Slide 15. What we have highlighted here as some of these strong signs. The graph on the left-hand side details global cell production, growth curve and the average cell costs, which you can see continues to fall. Now it used to be $100 per kilowatt hour was historically viewed as the key threshold to attain to facilitate adoption. However, this has now been surpassed with the global average moving below $80 per kilowatt hour and with China LFP cells around about $60 per kilowatt hour. The pricing -- unit cost pricing continues to fall, which, of course, helps further adoption of this energy storage product. Now moving to the graph on the right-hand side. This compares to the relative cost of internal combustion engines against EVs within the China market. Now you can see EVs have moved through an inflection point for China over the past year. These EVs are offering a more competitive alternative to their internal combustion engine counterparts. Commensurate with this shift, there's a steep increase in EV penetration rate, reference the green line there. So China continues to lead the way in technology adoption and technology development in this area. China represented approximately 62% of global sales year-to-date and has accounted for approximately 70% of global sales across both August and September periods. This is a significant contribution to the strong global numbers being 30% year-on-year growth rate through to September. To put EV sales and perspective, in China. It would take roughly 6 weeks for China to match the year-to-date EV sales from the U.S. and roughly 3.2 days to match Australia's EV sales. Markets such as China and Norway, are a window into the future. They are the early movers. And what we're bearing witness to is how these markets may evolve over time. This is a broad global transition, which is only getting started. So it's exciting to see this take flight in front of us all. Now moving to Slide 16. The lithium market is emerging. Several strong drivers being the energy transition, technology adoption and government policy. The emergence of new supply chain serving this new market has been tumultuous as companies compete for position, allured by the market potential and periods of strong pricing that have occurred to date as discussed a moment ago. This volatility is further exacerbated by government influence through both stimulus and industry protective measures. For Pilbara Minerals, we remain focused on looking through these periods of volatility to capitalize on the long-term opportunities this market presents for our shareholders. Navigating this market has always been a case of continuing to drive down costs and manage capacity timing carefully. Pilbara Minerals has been disciplined at managing capacity, and we have timed each capacity step with care. By way of example, when we acquired the Altura option, now named Ngungaju in 2020, we placed the asset immediately into care and maintenance, given the higher operating cost of this asset and the value is exercise of selling additional tonnes in that prevailing market. Today, given the supply profile outlook shared a moment ago and the prevailing price, we've made the decision to place this asset back into care and maintenance from December this year. Moving to Slide 17. As a Board and management team, we have kept focused on controlling the factors we can control. Investing prudently in our competitive position through lowering our cost base and building capacity in line with the market, all in service of maximizing value for our stakeholders on service of our mission. The decision to place the Ngungaju operation, formerly owned by Altura on temporary care and maintenance, optimizes the operating platform for the prevailing market conditions. This further reinforces the balance sheet reserves ore reserves for higher-priced environments and positions this capacity ready for recommencement when higher priced environments return. This shift adjusts the expanded operating capacity to approximately 850,000 dry metric tonnes at a 5.2% product growth. Now just to expand on this, so we have absolutely named this new operating platform, the P850 because we are creative. And the rationale here is that 850 ties to the current mine plan. And for the avoidance of doubt, as it relates to nameplate production capacity, there is no change. The actual production capacity is a function of mine head grade and product grade. The 850 that we mentioned there relates to 5.2% product grade, the current mine plan. If anyone would like to refresh on the outlook for produced volumes. If you reference back to the P1000 FID, we provided some detail there on the total production capacity as a function of 5.2% head grade, which all equals numbers well above 1 million tonnes per annum in the order of 10% to 20% higher as a function of product grade and head grade. So please feel free to reacquaint yourself with that. P850 is the number for the year itself, and I'll get to this in a moment, but it's slightly less. This is a ramp-up year much like last year. But as we move into FY '26 850 is what we're expecting subject to head grade and subject to being fully ramped up in steady state. Now moving to Slide 18 for a little bit more detail on the operating model. The operational optimization is in combination with capital expenditure reductions. This will enhance the company's balance sheet through a significant FY '25 cash flow improvement of over $200 million compared to the previous model. Others will be achieved primarily by reduction in TMM, mine movements, a reduction in operating costs by using the lower-cost Pilgan plant and a reduction in CapEx. These changes, of course, translate to an impact to the team, particularly at site. This is a heavy step for us to take that has a real impact on our team. However, we have the opportunity to redeploy a number of the staff to this expanded Pilgan facility here of the P1000 expansion that will be ramping up. And of course, we'll be looking to deploy as many of those staff as possible into that new expanded facility. The Ngungaju plant will remain in care and maintenance ready to be fully ramped up within approximately 4 months when market conditions improve, allowing the company to quickly capitalize and capture value in a rising price environment as we've done historically. Now moving to the next slide, Slide 19, guidance. So the change in the operating model has led to a revised guidance for the financial year we're in, as displayed here. Guidance for FY '25 is broadly in line with FY '24 production volumes despite placing the Ngungaju plant in care and maintenance. It also gives rise to a lower unit cost relative to FY '24 for approximately the same volume. This reflects the increased production volume capacity and operational efficiency at Pilgan plant resulting from the P680 and P1000 expansion projects and ongoing operational efficiencies. So for a rather modest step down in production volumes, we are achieving an improved unit cost position. And bear in mind, as I mentioned a moment ago, this is a ramp-up year as we step into FY '26, we'll ramp up. Pilgan will be completed. We'll be at nameplate and we'll enjoy the benefits of this larger facility with all of the recovery tools that Brett and team have at its disposal. So looking forward to further reductions in unit cost and time. I should also add that this revised operational plan does satisfy all of our long-term offtake agreements. There is no concerns in that regard and we're in good standing there. The guidance range for capital expenditure is also noted here, which entails a reduction. And as a reminder, we have not yet completed the Latin transaction. So this is not been included in the numbers that we see. Moving to some final comments and before we go to questions, I'd like to finish with a couple of key remarks here. The lithium market is an emerging industry that is growing rapidly and remains volatile. We have been successfully navigating these choppy waters for a number of years. The group remains resolute in our mission and strategy, building our position as a leader in lithium achieved through ongoing improvement in our long-term cost performance, maintaining a strong balance sheet and discerningly growing capacity over time lockstep with the market. The September quarter is a demonstration of delivery against this plan with solid operating performance and on track project delivery and what remains a challenging point in the market cycle for lithium. The decision to transition to the P850 operating model was -- has not been taken lightly, but it is the right move for the company in response to this part of the market cycle. Reinforcing the balance sheet, preserving ore reserves for a higher price environment and having the flexibility to step up production volumes quickly when higher pricing conditions return. Although the lithium market water remains choppy, we remain focused on navigating these cycles as we have done before, positioning the business to maximize value for shareholders and deliver on our mission. Now with that, I'll hand back to the moderator to go to questions.

[Operator Instructions] Our first question comes from the line of Levi Spry from UBS.

Maybe can you just help us with the physicals, I guess, through? I know you reversed the study, but operationally is going very well, recoveries, grades, things like that. Can you just step us through, I guess, the next few quarters and how we think about the P850 into next year, in that context? Is that at 75% recoveries, for instance? Are the grades still close to 1.5%? Can we just get a bit more detail on that?

Yes, I'll offer a comment and then Brett weigh in on this. Being a ramp-up year, really the bulk of the integration works occurs in the next half of the year, so March quarter and June quarter. As it relates to recoveries impacts, they are built into the plan. This shift in operating strategy doesn't really change at all. The strategy around that Pilgan ramp-up. The change is more around turning off the Ngungaju plant and reoptimizing the mine plan for the Pilgan plant. So same plan for Pilgan as it relates to recoveries and feed grade, but I'll hand to Brett to offer a comment there.

Yes. Thanks, Dale. Yes. Completely agree. The -- no change to the physicals really for Pilgan and we'll still be leveraging the P680 upgrades, which is the ore sorting. So not a lot of the recoveries are built in, but we will be taking some of the commissioning impacts that we've already built in as we know, when we stop -- start these plans for commissioning, we do see a recovery loss, but we've built those into the plan.

Okay. Yes. And I guess, the $200 million of savings. So what price is that based on?

Levi, it's Luke here. That's based on a price of approximately USD 700 a tonne. .

Okay. And so, I guess, tying that back into more specifically, what you're seeing that's changed in mind here and what might see it change back the other way? How do we think about that? Is there something you've seen on the supply side? Or is this price driven? And therefore, what you really think about in terms of a price to turn it back on?

Yes, Levi, good question. And of course, we get some pretty good insight into the market. But even for Pilbara, it's incredibly hard to see the moves and the shifts, both supply side and demand side. What we see is the need for a little bit more supply curtailment as sort of referenced in the earlier commentary. According to that graph from Benchmark, there's not a lot more to come out, but still more is required. And subject to that change, we'd expect positive price movement. All that being said, the market has a tendency to surprise all. And we know that we're in a relatively very strong financial position. There's a number of suppliers who, frankly, were a little bit surprised haven't bowed out at this point, but good on them, but we expect pricing persists, they will have to depart at this price level. It's just a question of when. So for us, it's more around taking a conservative approach with the balance sheet, making sure that we're reinforcing the foundations such that we are absolutely beyond doubt going to be able to manage this period. And if there's to be a silver lining, as you know, with these cycles, ultimately, this probably sets up another price front. This has been stifling investment and groups like Pilbara who have built out their operating base, well, we should be well positioned to enjoy that when that comes.

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

Thanks for the update. Just first one I wanted to ask around some of the implications of putting Ngungaju into care and maintenance. You're nearly fully contracted for FY '25 if we include all of the options in some of those offtakes you'd signed earlier in the year. Can you provide a bit of commentary? Has the customer actually pushed back on taking some of the physical volume? Or do you expect to just not use those options in offtake and this volume cut comes out of unallocated volume?

Hugo. Good question. On the first part, as it relates to push back from customers, yes, I confirm there's no pushback. We're contracted with what we think are the best in the business. They're all complying. They all want the product. No issues. No issue there. And in some cases, looking for more products. So -- and obviously, bear in mind, we're dealing with, as I said, some of the best, strongest, lowest cost operators who, in our view, are partnered into the supply chains to matter. So that's as it relates to customer response currently. To your question on the offtake management, yes, unlikely we would initiate those options that we've got built into the offtakes that you mentioned. We built them in preemptively as part of the offtake extensions earlier in the year. And we did that because we like options and as a function of this volatile market. We wanted the ability to contract out additional components of tonnage, if that was the best thing for Pilgan. But in this operating model, no, we won't be initiating those options. We'll be sticking with the base offtake levels.

And then just a second one around the cost performance elaborating on Levi's question. I mean if I kind of work through your guidance, it implies that the Ngungaju unit costs for the next 7 months of the year were either going to be slightly below the 15% above spodumene pricing. Are you able to elaborate on how much of the care and maintenance decision is on the cash generation out of the plant itself versus broader cost mitigations for broader operation where you don't -- you can't turn down the mining fleet without reducing utilization at Pilgan and so it's more around Ngungaju has to come out to be able to make those cost optimizations. And -- then just as an aside, can you confirm that without Ngungaju when you do the P1000 tie-in, production effectively drops to 0 for that duration?

I might offer a touch of color on the physicals and then Luke can offer a comment as well. So as -- and let me give you the high level and then talk about the year we're in. So the Pilgan operation comes with all the tech and scale to achieve a very low-cost operation. That's why we invest in the ore sorters, why we've invested online analyzers. And the team has integrated into that facility and optimized it for the ore body. So it has scale, has a new tech and the early signs look great. Contrasting that with the Ngungaju facility, it was a cheaper build care of Altura. The team has done a sterling job doing upgrades, but there are some physical limits in terms of the performance of what that structure can achieve. And that's certainly what we have witnessed as we've been operating this over the last 2 years. So one versus the other. It's an obvious choice as it relates to processing capacity. So that would be the first point. Second point relates to ore feed strategy. The Pilgan operation can cater for different ore feed, care of the ore sorters and care of the additional processing capacity. That also factors into this optimized model and equation. And then, of course, is the physical step down as well, and we are at in the mine plan. So it's the sum of those factors coming together at this point in the mine plan is contributing back to the $200 million cash flow. So that's really what's guided a lot of why the numbers make sense over this decision.

Yes. Just to add to that, Hugo, the business saw in this period or in this quarter negative cash flow from the perspective of cash margin from operations less ongoing CapEx. We wanted to respond to that quickly and effectively with 2 key objectives. One was to reduce that cash burn; and two, was to reduce our all-in sustaining cost to a level which is closer to market prices. The operation has a number of levers to reduce costs and we did a whole bunch of work around examining what are our different options to reduce cost and reduce cash burn and improve our financial position beyond the very strong position that it's in today and one lever that we could pull, which reduced cash bar quite materially was putting Ngungaju into care and maintenance. There are various other options considered, but that was the one that had the least impact on the operation that could give rise to the highest cash flow improvement.

Our next question comes from Rob Stein from Macquarie.

Just on the mechanics of shutting down Ngungaju. Are you -- so are the people that are based, are they PLS employees, so it's quite easy to move them? Is it -- are there any significant [indiscernible] Costs associated with contractors? How should we think about that element?

Yes. Thanks, Rob. In terms of the people changes, it's effectively Pilbara people either through staff or contractors, or not contract or entities. So in the main, albeit be a disruptive -- very disruptive for the team on site for the individuals to step through this change. It's relatively simple. And that we're not [indiscernible] a separate contracting entity, et cetera, et cetera.

And then in terms of, I guess, the longer-term implications for P2000, obviously, you're showing that you are very responsive to the market here, which is pleasing. But in terms of what this means for the long-term sort of P2000 mine plan, if you were to reoptimize now on the basis that this thing was out of action for a few years and there's a sort of a make good cost to bring it back online. Would you, I guess, relook at the mine plan and the production rates that you would bring in P2000 in light of this move?

Yes. Thanks, Rob. So yes, to offer a little more color here. As it relates to the way the mine plan progresses, broadly speaking, no change with this change or as we think about setting up for ultimately P2000. It's more a case of progressing that rate of mine movement at a more faster rate. So having -- orchestrating this shift for the operation, we're not accruing some sort of deficit or burden that we need to address later on. As to the broader question of P2000 timing, et cetera, et cetera. Well, as we've done historically, we will ready ourselves for the right next steps of expansion which, of course, includes P2000. It includes the Salinas asset by the Latin Resources acquisition. But any progression and certainly any FID will be down the track and time with the market as we've done historically and very successfully.

Next question comes from the line of Rahul Anand from Morgan Stanley.

Two from me. Firstly, I guess, a bit into the operationals for the P850. Obviously, Ngungaju was a lower recovery plant and you are running grades at around [ 1.5% ] when reserve sits at about [ 1.15% ]. So I just wanted to check, I mean, with Ngungaju offline and with you expecting to be at P850 now, what's your recovery target now once you're into, I guess, the reserve grade for the asset? Just trying to sort of think about what type of impact there might be from a positive standpoint there? That's the first one.

Sure. Thanks, Rahul. So the long run recovery target for the operation has been 75% at approximately 1.2% head grade. We've held that sort of target in mind actually for quite a few years. As to considering a re-rate of that, we certainly like the idea of doing that, and we are optimistic of ultimately being able to do that. The reason for that is we're in a phase where we are now deploying a bunch of the tools, which could help us reconsider that, specifically the ore sorters, which are busy being ramped up and optimized. We've got online analyzers to come. And as it relates to the ore body understanding, we've continued to mature knowledge around ore discrimination and so on and so forth. Now some of those things ultimately play through to enabling the team to improve recoveries further. However, we've yet to prove that in action in the field. And -- but over the next year to probably 2 years, we'll have a chance to really see where we can stretch things. And, yes, I certainly like the idea off the back of that proven demonstration being able to reassess and reset those long-term assumptions.

No, that's indeed very interesting and look forward to that update. The second one is more around the market, Dale. You've talked about this a few times today in the presentation around how lithium prices can move quickly and that will allow you the opportunity to perhaps extract some of that economic [ rents ] when that comes about through Ngungaju. I guess, my question is more around how you sort of form that view just given that every cycle is different, and it seems like this cycle we've had now capacity coming off-line slowly across high-cost operators. Ngungaju was one for you where you've taken that off-line. Don't you think that when demand does come back on that, that price spike would then be held back by the fact that you'd have capacity available to be restarted very quickly? In your case, that sits at about 4 months, which would cap the upside that you're sort of talking about?

Yes. Thanks, Rahul. Yes. So obviously, this is the crystal ball gazing category. But to the concept of -- this time of the market is different from what we've seen historically, absolutely agree and to the concept around some swing capacity being able to come back on and effectively range-bound pricing. I think that dynamic is possible for sure. So, yes, we might see that for a period. I think we will all find out ultimately beyond that, additional capacity is not being invested. Explorers are unable to move forward. There's very few developers and of those they're pretty challenged. And meanwhile, the broader demand story continues to grow in leaps and bounds. So yes, there may be a period of maybe some range-bound pricing, we will see. But ultimately, I think beyond that, there will be a shortage. But we'll all find out in time.