PLS Group Limited (PLS) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the PLS FY '26 Results Conference Call. [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, Dale Henderson, Managing Director and CEO. Sir, please go ahead.

Thank you, Michelle. Good morning and good evening, and thank you all for joining us today. I'll begin by acknowledging the traditional owners on the land on which PLS operates, the Whadjuk people of the Noongar Nation in Perth and the Nyamal and Kariyarr peoples and the Pilbara. We pay our respects to elders past and present. I'm joined today by Alex Wilcox, our Chief Financial Officer; and Sandra McInnes, our Chief People and Sustainability Officer. FY '26 was a record year for PLS and a strong demonstration of our through-the-cycle strategy in action. Today, we will take you through the operational, financial and sustainability performance for the year, our strategic progress and the outlook for PLS before we open the line for questions. Turning now to Slide 2. At Pilgangoora, we delivered record production and sales, both up 17% on the prior year, and we achieved our FY '26 guidance, and we lifted this year to a new record of 36.5%. As market conditions strengthens, we're also able to respond quickly, approving and preparing for the restart of the Ngungaju facility and accelerating 10,000, including the approval of approximately $175 million of pre-FID investment 2000. We continue to progress Colina as our principal geographic diversification opportunity whilst maintaining a disciplined approach to chemicals. Commencing commissioning of our midstream demonstration plant and operating our PPLS JV and batch mode to preserve capital. That strong operating performance, together with improved market conditions, translated into a significant improvement in our financial results. Turning now to Slide 3. Revenue increased by 152% to $1.9 billion driven by stronger realized pricing and record sales volumes. Underlying EBITDA increased to $1.1 billion at a 59% margin, reflecting the operating leverage in the business and delivering net profit after tax of $526 million. We finished the year with $2.3 billion in cash, providing the capacity to invest selectively in growth whilst maintaining our balance sheet strength. And in accordance with our capital management framework, as a Board, we have determined a fully franked final dividend of $0.05 per share. Turning now to Slide 4. Alongside our operational and financial performance, we continue to make progress across our sustainability priorities. Safety remains our most important priority. Our group titer improved by 11% from the prior year to 2.77, but we remain focused on continuing to make improvements in this area. We also reduced absolute Scope 1 and 2 emissions by 5% and we recorded 0 major environmental or water or waste incidents. Sandra will cover our sustainability performance in more detail later in the presentation. Turning now to Slide 5, which shows our true-cycle strategy and how this played out during FY '26. During the weaker market, we positioned the business defensively, particularly the balance sheet reducing costs and preserving operating flexibility. As market conditions improved, we were able to respond quickly, approving the restart of the Ngungaju facility and moving back towards the P1000 operating model and accelerating our growth options. Our strategy was not dependent on predicting the market turn. It was about ensuring the business was positioned to act when the opportunity emerged. As I've said historically, we've been using the sickles leverage model limitation. And as Slide 6 shows, our operational flexibility has translated very quickly into cash generation. Turning to Slide 6 now. As pricing strengthened through FY '26, the operating leverage in our low-cost platform became increasingly evident. Quarterly cash margin from operations increased from $8 million in the September quarter through to $579 million in the June quarter and with 100% ownership of Pilgangoora, our shareholders received the full benefit of the scale, the cost position and the operating leverage we have built. The strong debt-to-cash generation with our balance sheet strength gives us capacity to invest selectively whilst maintaining financial strength. And one more callout from the slide, I draw your attention to horizontal line, and it's $2,465 per tonne. This is Benchmark Minerals long-run expectations for pricing for the industry. Now that return that we see in the June quarter, $579 million that was at a value less than the $2,465. So second quarter really does demonstrate the cash generating potential of the platform. And it's exciting to think about the future. depending on what price you want to pick. It's an incredible platform. We've got the scale, we've got the low-cost position. And here are the results, as you can see in these results we've announced to now. Now with that, I'd now like to hand over to Alex to take us through the financials.

Thank you, Dale. Good morning, and good evening, everyone. Turning now to Slide 8. FY '26 delivered strong financial performance. Underlying EBITDA of $1.1 billion, NPAT of $526 million and a closing cash balance of $2.3 billion. These results reflect disciplined execution, capitalizing our market recovery. Revenue of $1.9 billion was up 152% driven by 121% increase in realized price to USD 1,488 per tonne, combined with 17% volume growth partially offset by some FX headwinds. Unit operating cost on an FOB basis improved 9% to $569 per tonne, reflecting volume leverage, ongoing operational agreements and our customer future ready program in action. Underlying EBITDA of $1.1 billion reflects that revenue growth and operational efficiency. Net profit after tax of $526 million captures our strong earnings, partially offset by higher depreciation from an expanded asset base and tax expense as we return to profitability. Capital expenditure of $328 million was in line with guidance and comprised mine development CapEx of $146 million and infrastructure projects and sustaining CapEx of $182 million. These strong operational and financial results translated directly into substantial cash generation, as shown in our cash flow bridge. Now turning to Slide 9. Cash margin from operations of $1.36 billion underpins the 135% increase in cash to $2.2 billion, supported by volume growth cost discipline and strong pricing. The year-end cash included the USD 100 million prepayment associated with Canmax offtake agreement announced earlier in the year. We received a prior period tax refund of $74 million, which will normalize now that we have returned to profitability. Net financing cash flows of $353 million reflects net proceeds from the USD 600 million in overall U.S. bond partly offset by a $442 million RCF repayment as well as lease costs and interest expenses. The combination of these factors resulted in a further strengthening of our cash position to $2.29 billion, and we finished the year with $2.79 billion of liquidity. Turning to the balance sheet on Slide 10. We have maintained a strong balance sheet while deploying capital for growth and retain capacity to fund future investments. Property, plant and equipment increased 6% to $2.86 billion, with $44 million in mine properties and development additions, partly offset by $275 million in depreciation. Payables increased to $436 million, reflecting in part the contract liability for the remaining unutilized portion of the Canmax prepayment. Borrowings increased to $853 million following the USD 600 million bond issuance, net of the RCF repayment, with the remaining $500 million RCF facility undrawn. Lease liabilities increased 24% to $281 million, reflecting approximately $90 million invested in heavy mobile equipment. We expect to complete the last phase of the owner operator transition as we progress through FY '27. The strength of our balance sheet positions us well as we consider future investments supporting long-term value creation for our shareholders. Turning now to Slide 11. On the back of this strong financial position, the Board has determined a fully franked final dividend of $0.05 per share, representing the distribution of approximately $160 million to shareholders. This implies a payout ratio of 22% of FY '26 adjusted free cash flow which is within our payout ratio range of 20% to 30%. I'll now hand over to Sandra for an overview of sustainability performance.

Thanks, Alex. Good morning, and good evening, everyone. Turning now to Slide 13. Our 3 sustainability focus areas on value amounting communities, sustainable operations and responsible and ethical actions, guide how manager impacts, engage with our people, communities and partners, and make disciplined decisions that support responsible long-term value creation. Turning now to Slide 14. Safety remains our first priority, and we're pleased to report our total recordable injury frequency rate improved by 11% from last year to 2.77. We also continue to invest in our people and culture. Our latest culture and engagement survey achieved a participation rate of 86% and an overall engagement score of 75%, which are above the Australian benchmark. These results show our workforce fill valued and connected to our vision. Female employment increased to 21.9%, demonstrating our continued progress towards our diversity and inclusion objectives. Turning now to Slide 15. Through sustainable operations, we aim to reduce our impacts while identifying better ways to make a positive contribution and that -- and create all. Across our Australian operations, we achieved a 5% reduction on our Fort 1 and 2 emissions. We surveyed more than 45,000 hectares of flora and fauna, supporting responsible management of our environmental footprint. We also recorded no major incidents, with 0 major environmental, water-related or waste-related intents during the year. Turning now to Slide 16. We believe that long-term success is built on genuine partnerships with our communities and stakeholders. During FY '26, we directed 93% of our procurement spend to Australian businesses, supporting local economic value. We also invested $38 million in 20 First Nations businesses, strengthening indigenous economic participation. Our financial contribution extends across our stakeholder base. We paid $65 million in royalties to government, and we also increased our investment in communities, contributing $2.9 million across Australia and Brazil. Turning now to Slide 17. We published a comprehensive report covering our operations and sustainability performance for FY '26, which reflects our ongoing commitment to transparent disclosures. These reports are available in the sustainability section of our PLS website. I'll now hand back to Dale to discuss strategy and capital allocation.

Thanks, Sandra. It's great to see the strong progress in the area of sustainability. And although sustainability is a full organizational focus want to thank you Sandra, for your leadership and your team, for the great progress we've made over this past year. Now I'd like to spend a few minutes on the strategy behind our overall results. and why we believe it positions PLS well through the cycle. Pilgangoora is the foundation of PLS, it's a Tier 1 asset with an over 30-year mine line, of which we own 100%. That ownership gives us control over operating decisions and capital allocation, whilst our shareholders retain the full benefit of the upstream economics. We have significant growth opportunities ahead of us at both Pilgangoora in Australia and Colina and Brazil as well as selective opportunities downstream. Our financial strength means we can progress these opportunities selectively and on our terms. This gives us resilience through weaker markets and the capacity to act when opportunities emerge. The next few slides show how that strategy has translated into operating performance, lower costs and balance sheet strength. Turning to Slide 20. Over the past 3 years, lithia recovery has steadily improved, moving from 67% to just under 77%. In line with that improvement has been a consistent focus over a number of years, test work, process improvements and plant enhancements, including the application of [ whole resort in ] technology, the result is that all process has remained broadly stable, whilst production has increased to a record 880,000 tonnes in the year that we're speaking to today. That is a strong demonstration of the improvement we continue to make and the operating performance of Pilgangoora. Slide 21 shows how these improvements have translated into higher production and lower unit costs over time. So turning to Slide 21 now. So over the same period, we've continued to build the scale and improve the cost position of Pilgangoora. P68 and P1000 upgrades increased the capability of the operation, whilst the P850 operating model allowed us to face production and protect the business when market conditions weakened. That is supporting an 11% compound annual increase in production over the past 5 years whilst maintaining a strong focus on lowering our unit costs, operational changes, including our move to our owner-operated mining model and our Cost Smart Future Ready program have also improved the underlying cost base. Those operating outcomes have generated returns have allowed us to continue to invest through the cycle, which we'll turn to you now on Slide 22. So lithium is a volatile market. and our strategy is designed to use that cycle to advantage rather than as a limitation. Over the past 4 years, we have allocated $4.8 billion across the business, reinvesting $2.4 billion, returning $80 million to shareholders through dividends, excluding what we've announced today and increasing our cash balance by approximately $1.7 billion over the period. That has positioned us to continue to invest through the cycle without compromising the strength of the core business. Turning now to Slide 23 to talk about what our next chapter looks like. P2000 is the most significant growth option at Pilgangoora, with the potential to increase production capacity to around 2 million tonnes per annum. The feasibility study is progressing with outcomes expected in the December quarter this year. We have approved $175 million of pre-FID investment to shorten the pathway to first ore if the Board elects to pursue. That investment is about readiness, not pre-committing FID. Any decision to proceed remains subject to the study outcomes and board approval, as I mentioned. Turning now to Colina, which is our principal geographic diversification opportunity. Moving to Slide 24. Colina is 100% owned project in Brazil and provides us with a significant long-term diversification options outside Australia. The feasibility study is progressing with outcomes expected in the December quarter next year, and we continue to assess enabling infrastructure that could support future development. The approach remains staged with development timing dependent on the study outcomes, funding and support of market conditions. Following year-end, we also acquired neighboring tenements to expand our position in the district. Turning now to our selective chemicals exposure on Slide 25. Our approach to chemicals remain selective and stage. We are maintaining exposure to downstream value creation through our PPLS joint venture midday demonstration plant and our work together with Ganfeng, whilst limiting capital commitment until the economics have proven. That gives us the opportunity to build capability and preserve future pathways without compromising capital discipline. Turning now to Slide 28 for our FY '27 priorities. So looking ahead to the year, we're in FY '27, the priority is execution. Firstly, it's about safely ramping up the nuggety facility and maximizing production cash generation from the Pilgangoora asset. Beyond that, we will continue to progress P2000, Colina and our selective chemicals pathways with capital deployed in a staged and disciplined way. The aim in simple: deliver from the core while continuing to advance highly accretive growth opportunities. Turning now to Slide 28, our FY '27 guidance. That execution focus is reflected in our guidance for the year. Production is expected to increase between 1.3 million and 1.1 million tonnes as we do ramps up. FOB unit operating costs are guided in the range of $575 to $625 per tonne, modestly above FY '26 is the higher cost out tonnes returned to the production mix. Capital expenditure is guided in the range of $620 million to $685 million, reflecting increased mine development, sustaining and infrastructure investment, together with the approved $165 million, P2000 pre-FID. Any additional growth capital outside its guidance are subject to further decisions. Turning now to Slide 29, which details how we prioritize our capital. Our first priority is the capital required to safely sustain the operation and maintain the long-term performance of Pilgangoora. Beyond that, we are evaluating infrastructure investments that can enhance the capability of the operation position for further growth. Growth remains selective. The P2000 pre-FID program is approved, whilst P2000 FID and the Colina pre-FID remains subject to successful studies market conditions and board approval. The appendix in the back of the pack provides a detailed breakdown of what is included in the FY '27 CapEx guidance and what remains outside of guidance and subject to future approval. This approach to capital deployment is prioritized protecting the core, improving the platform and capturing growth opportunities without committed capital ahead of returns. Now turning to Slide 31 for the market outlook. The long-term fundamentals underpinning electrification remain compelling. Battery costs have fallen by around 90% since 2010, making electrification, increasingly competitive on economics rather than incentives alone. We are seeing that in electric vehicles in June, more than 1 in 4 vehicles sold globally with electric with penetration reaching 27%. Energy storage is growing rapidly as well. Global battery energy storage investment was around $80 billion in 2025, and the IEA expects it to exceed USD 100 million in '26. Behind both of this sits a rapidly changing electricity system. Under the IEA stated policy scenario, global electrification generation increases by more than 50% to 2040 we sold on and wind alone, reaching 46% of generation. As that share of intermittent generation increases, so does the need for energy storage. Those demand drivers are translating directly into lithium consumption. Moving now to Slide 32. The growth in lithium demand is well established and has been built with for years. What is changing now is the scale and breadth of that demand. Chinese battery production is up 66% year-to-date, while lithium chemical inventories have been -- have fallen 57% over the past 12 months and now represent around 2.5 weeks of demand. Looking further ahead, Benchmark Minerals base case for lithium demand growth was around 8% per annum to 2040, reaching 5.1 million tons of LCE, roughly 3x the size of the market today. China remains the largest demand center but growth is broadening materially across other geographies. In June, Europe accounted from around 1 and 4 EVs sold globally. And in battery storage, year-to-date, year-on-year growth outside of China is even stronger. Europe up 96% and Asia, excluding China, is up a whopping 258%, and the rest of the world, up 93% and incredible stats from the prior year. Demand is also broadening by avocation. Electric vehicles remain the largest end use of the stationary storage is growing rapidly, supported by a strong front of grid deployment and rising demand from data centers. The demand base is getting larger, more diversified and increasingly global. The question is whether supply can keep pace and increasingly, whether that supply can be delivered reliably. Turning now to Slide 33. Meeting that demand is becoming harder. Development time lines have lengthened materially with new projects increasingly complex, capital intensive and slower to deliver. Benchmark estimate a potential supply gap of around 1.6 million tonnes of LCE by 2040. And to put that in perspective, that's equivalent of approximately 12 -- in fact, more than 12 Pilgangooras of that gap, which is incredible scale as you think about the 10-year delivery time frame has taken us to bring the Pilgangoora asset where we are today, which takes us to the point that mine development cycles have continued to expand to around 18 years, which you can see on the right hand of the graph on the slide. So in this environment, reliable, long-life supply becomes increasingly scarce and increasingly valuable. That is particularly relevant for PLS. Our platform provides customers with scale, consistent product quality and reliable supply from a long life operation. We have seen that value reflected directly in our commercial arrangements. Earlier this year, we executed an offtake agreement with a USD 1,000 per tonne floor price, no price ceiling, no discounts, volume flexibility and supported by a USD 100 million prepayment. Post year-end, we have executed a further agreement on similar terms, same floor price, no price ceiling, no discounts, volume flexibility of PLS selection and an USD 80 million band guarantee for security. That structure provides downstream protection whilst preserving uncapped upside and flexibility over volumes and terms. Those terms are not offered lightly. They demonstrate the emerging premium that supply chain partners have appeared to provide more reliable supply and the value of PLS' ability to deliver. So with this, just a quick shout out to the PLS sales and marketing team led by Aaron and Mal, a fantastic set of outcomes and yields are paying a credit to the team, your leadership but most importantly, the strong trusted partnerships you've continued to build on in the years working with PLS. Now turning to Slide 34 from my closing remarks. FY '26 was a record year for PLS and a strong demonstration of our through-the-cycle strategy in action. We improved the performance of Pilgangoora. We responded quickly market conditions strengthened and we converted that operating leverage into significant cash erection. That has left PLS with greater scale, a strong balance sheet and the capacity to invest through the cycle without compromising on the strength of the core business. Our long-term fundamentals solicit remain compelling. Demand continues to grow broad and deepen, increasing the value of reliable long life supply. We entered FY '27 focused on safety ramping up Ngungaju, further improving the performance of the Pilbara asset and capturing the growth opportunities ahead. I want to thank our team across PLS for what they've delivered during FY '26, an incredible set of results. Thank you, Tim. And I also want to thank our shareholders for your continued support. I appreciate many of you who have remained resolute and the opportunity this incredible market presents. And more than that, your faith in PLS and the teams believe deliver. Thank you for your support. With the platform we have built and a clear focus on disciplined execution, PLS is well positioned to create long-term value for our shareholders. And with that, Alex and Sandra and I will be pleased to take your questions, and I'll now hand back to Michelle to open the floor for those questions. Thank you, Michelle.

[Operator Instructions] Our first question is going to come from the line of Austin Yun with Macquarie.

And the team on the results and strong bidding dividends. So just keen to understand the shareholder return part. This is the fully franked, and following this capital allocation framework, should we anticipate a constant return even when the company goes into the high-growth pace with P2000?

Austin, thank you for the question. Yes, as you said, we're pleased to be able to announce the fully franked dividend this year. It is at a 22% payout ratio. It sits within that 20% to 30% adjusted free cash flow and which is consistent with the capital management framework. As we look forward, in normal course of business, we'll always continue to assess the capital management framework to ensure that it remains sort of relevant. And if there was to be any changes, we talk about them at that time. Obviously, the way that the dividend policy works, it does naturally flex through market cycles because it's tied to our free cash flow, and that's something that continues to make sense given the nature of the market that we're in.

Yes. And I'd just add to Alex's outlined there, Austin. As you know, it's all about price. We've seen a strong improvement in the year-to-date June alone cash operating margin of more than $500 million generated from the business, just incredible returns depending on what the headline prices. So depending on what price you want to pick to the outlook ultimately depends how we think about capital distribution. As Alex sort of outlined, it's a ratio of free cash flow. So it naturally moderates as a function of the headline price that we're receiving.

Just on the point of flexibility, just a quick follow-up. As we're getting into the second half of this current year, the month is tightening and you highlight at the presentation, the operation delivered a strong recovery results. Should we anticipate more flexibility in the rate of the product you offer to the market, given that metal is coming up online to balance and to keep the recovery at the continue a high level slightly reducing the product rate. Is there any scope of that?

Yes. Thanks, Austin. So in terms of delivered product to market, there is no change in sort of our target product growth. What we've done with product grade is it's already optimized to sort of maximize you maximize recovery and through that maximize returns. So no change there. But Ngungaju coming on, of course, it's another processing plant and it gives the team the opportunity to do some more blending effectively across the 2 operations. But as I say, no change to target product growth.

Our next question is going to come from the line of Hugo Nicolaci with Goldman Sachs.

And congrats on the strong FY '26. Look, good to see the Plant 3 or P2000 progressing and getting its own name now, which is great. Just looking at the footprint you've given us on Slide 23, and it looks like that's significantly larger than the P850 model you've got in the background. I correct you in looking at that firstly, the layout, you're going to have to relocate some of the existing waste dump and maintenance work there. And then can you maybe talk to just given the spacing you've got on the plant set up, just the future optionality you're building into P2000 and what sort of potential future debottlenecking opportunities you might have?

No. Thanks, Hugo. As you say, the P2000 expansions, it's significant. Obviously, it's doubling the capacity. What that means practically, it's essentially new everything in terms of new to tip from new crush ore stockpile, a new front-end dry part, a new front-end web plant. And that pictorial that you can see is essentially the 3D visualization of that. So that's a fairly sort of extensive build. To the question of what's on its way, there are some sort of temporary facilities, I'd call it, which are being relocated. There's a small rework that the ranch has already been completed to sort of make way. But in the main, it's a fairly clear area for the build of the part, which is good. And importantly, this makes, in some ways for a more straightforward build and that we get the benefit of a brownfield expansion in the sense that we've got existing cap and existing power or existing support of the structure. But it's greenfields in the sense that especially dislocated from the p1000 plant, albeit there are some tie-ins in the main, it's especially separate. So that makes for a more straightforward build relatively. So we're good standing there.

Great. And then maybe turning to Brazil, just subsequent to the year, I think you spent roughly $50 million buying some tenements off with your Myonico next to Colina, we think about that more as just an opportunistic bolt-on for future flexibility? Or is that likely to be incorporated into your Stage 1 studies at the moment?

Yes. Thanks, Hugo. Yes, the intention is that, that will flow into the studies. Look, it's that particular tender package but up to the bounce of our existing tenure. Look, obviously, we were keen to have it be having commenced a transaction, and we look forward to factoring that in, ultimately, to revise study outcome December quarter next year. .

Our next question will come from the line of Glyn Lawcock with Barrenjoey.

Dale, just to follow up, firstly, on the dividend policy. Can I just confirm, you were thinking about revisiting the 20% to 30% of free cash flow and maybe adopting a slightly different approach. Is that still something you're thinking about? Or are you -- right now, the 20% to 30% of free cash flow, your definition remains your preferred?

Thanks, Glyn. Look, so as Alex touched on, we're applying a couple management framework stands, and that's what we have announced today. As to the possibility of revisiting that, of course, that there's always a possibility. We're not looking to make any changes in the very near term. However, we will consider this later in the year. For the reason that several things will come together. We will provide clarity to the market on some of these capital projects, in particular, P2000. Secondly, we will have had a few more months of operating within the market, we'll see what headline pricing looks like and what the outlook looks like. Really the sum of those things will come together and we will continue to reassess it. add all that, we're not saying we will change it, but it would be sensible to reassess later in the year or early next year, we'll see how we go. Alex, anything to add on that?

Yes. Great summary. I think it's something that we will naturally always consider. I think the other pieces that I'd add is, as we look forward through our upcoming investment phase. We're well placed in terms of different funding options. We've been really pleased with how the bond has traded since the issue in April that creates a really good benchmark for us. as we go forward. And so that, combined with broader market outlook. And the third piece I'd add is as we navigated through the last cycle. The strength of the balance sheet has definitely been a strategic asset for us. and that's something that we will always consider as well in the broader context of capital management framework, ensuring that we've got good, strong liquidity on the balance sheet to ensure that we can navigate through any conditions and make sure we're making those right long-term decisions for shareholders.

Yes. Great. And maybe just pushing that a little bit further. I mean when you think about the change, I mean, what does it you think you need to do? Is it move to a payout ratio approach as opposed to a percentage of free cash flow? Or is it just simply the amount? I mean, what -- can you give us any insight into your thinking?

I mean, I think as seen and with the dividend being announced within the framework and within the payout ratio, it works well for the organization. that we're in. It naturally flexes based on market conditions. And I think that's always important and relevant, particularly as we look to the chapter ahead some really significant investment opportunities for us. So 20% to 30% feels like a reasonable balance and the right judgment will continue to assess, but there's nothing says that it's not suiting us well at the moment.

Okay. That's great. And then Dale, just one final question. Just the unimproved CapEx that you call out, the sailing the road, the camp, the HME. I assume all of those need to go ahead regardless of your P2000 decision? And I'm surprised we haven't made those decisions yet, like I thought we might have seen one or 2 of those announced today. What's the sort of timing when we get some insight into those spend? Will it come with the P2000 in Q4 or before?

Yes. Thanks, Glyn. Look, as we've flagged, the sort of the 3 categories of spend, the base operation, the enhanced category and then the rig growth category yes, the enhanced category, the second one really speaks to that point around investments that you would do in all cases because lower than the operating costs overall, it makes a more resilient operation. So we do have in that category, as you say, some investments we plan to do over time in terms of roads, camp, et cetera. And we flagged this to market, I think it was May. So not that long ago. As to timing, well, we're in study modes, some things are out to tender that, that process is in motion. And when we ready to advise the market, we'll update you. But -- so just look after that one, Glyn.

Our next question comes from the line of Rahul Anand with Morgan Stanley.

Alex, sorry to labor the point on the dividend. I know you've had a couple of questions on that. Just if we can perhaps revisit if we're not changing the policy here? And if we just go back perhaps 2, 3 years when you're undergoing significant CapEx for P600, P1000. The thinking at that time was that you want to maintain a conservative balance sheet and that cash balance sheet. Obviously, the lithium markets were fairly different. If we do look forward now, I think what's changed really in the company is that you've got a really solid base of producing asset now generating some really healthy cash flow and perhaps you're much more protected from the lithium cycle in a way in terms of the cash generation. So I guess the question is, if you do undertake 1 or 2 projects at the same time. Obviously, I'm talking about Colina here into next year or end of next year, and at that time, you would assume that P2000 is still ongoing. Is there an element of conservatism that perhaps sneaks into that framework again? Or is it purely the 20% to 30% payout and the leverage ratio that's been defined is the right way to think about the Board's thinking on the dividend from a go-forward perspective? That's the first one.

Yes, Rahul, thanks for the question. I think you've articulated well all the different factors that we consider. The first piece is, as we think around the broader balance sheet and capital management. The first pillar is a conservative balance sheet to ensure that the operations through any point cycle give us the ability to continue to invest in sensible projects rather than needing to make short-term decisions. So that's the first thing. I think the second part that's changed as the business is naturally mature and particularly as our funding options have matured is we have different financing options as well that help complement what is the right amount of liquidity to keep within the business. So that's the second part that we think about. And then the third piece is just naturally we will always be operating in a sector that with any commodities will cycle. And so a dividend policy that's linked to different cycles makes but we're also aware that for a number of our shareholders, dividends or a feature. Now ultimately, we are a growth organization, and we believe that, that is the #1 priority for us and where we can deliver the best long-term shareholder outcomes is really investing in those significant projects that we have in front of us, and so that will be a priority. But at the moment, we see that there continue to be a balance amongst all of those different features that I've talked about if it doesn't need to be one or the other.