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Good morning everyone and welcome. I'm David Boshoff and with me is our CFO, Steve Fewster. We're pleased to be joining you today for this September Quarterly Update. Before we get underway, I'd like to highlight that today's presentation should be read in conjunction with our September Quarterly Report. This is now available on our website. As we move through today's session, if you have any questions, please feel free to add it to our live Q&A tab, that's on the right-hand side of your screen, and we'll address those questions at the end of the session. It's been another strong quarter for BCI Minerals, marking one year of operations. Switching on the pumps last year, since then we have moved more than 185 gl of seawater into our ponds, with continued progress on inundation of ponds one to nine ahead of the 2025-2026 summer season.
Our focus remains clear, ensuring a safe and sustainable operational ramp-up as we bring more assets online and close out the final construction packages. What really stands out this quarter is how strongly our people and our partners have lived our values. A great example was our goal to achieve 90% pond inundation by the 1st of August. I was actually on site the day that that happened, and the team achieved it two days ahead of target. They really smashed that goal. That's our 'We Do What We Say' value in action, showing commitment, teamwork, and pride as we are producing together. Now I'd like to take you through the highlights for the quarter. In safety, we continued to strengthen key fatality prevention controls by completing 301 critical control verifications.
We also performed 640 field leadership interactions, and our total recordable injury frequency rate reflects an ongoing focus on safe operations, with a 12-month rolling average at 3.1. By the end of September, the pond service inundation has reached 93%. We also introduced new technology that's giving us real-time insights into how our operations are performing. This data is helping us to make smarter and faster decisions and plan more effectively for the future. I'll share a little bit more about that later. Construction also continues to progress well. We are both on schedule and within budget, with the overall completion of the construction packages now sitting at 74%. Finally, the commissioning of the pre-KTMS pilot crystallizers, which is an important step of our sulfate of potash progress, has also progressed well. We are now in commissioning. I'll now hand over to Steve to walk us through the financial highlights.
Thank you, Steve.
Yeah, thanks, David. With construction on budget, BCI remains in a strong financial position. During the quarter, we drew $110.9 million from our syndicated debt facility, and that brings total cash drawn to date to $347 million. In July, we also received a deferred payment of $34.1 million from the sale of Iron Valley. I'll share more on the cash flow shortly, but first, David will provide a more detailed update on our operations.
Thank you, Steve. I'd like now to start with a quick overview of the salt-making process and how it's unfolding at Mardie. Salt production starts with the intake of seawater from the Indian Ocean, which is then transferred through nine evaporation ponds. Our operations team then carefully monitors the density in each of these ponds to ensure the brine is moved at just the right time. This process is very important because it ensures that the impurities in seawater are precipitated ahead of the crystallizers, and this enables the production of salt to our customers' specifications. As the water temperatures rise, the natural evaporation process increases the salinity of the seawater and gradually transforms that seawater into brine. Once the brine reaches the target density, which is typically between 1.21 and 1.22 kg per l, it's pumped into the crystallizers, where industrial grade salt begins to crystallize.
Once enough salt is crystallized, it is harvested. The harvested salt is then processed through our wash plant to remove the last of the impurities before it's being shipped to our customers via our Cape Preston West port. As you can see on the map on the left of your screen, the ponds vary in size all the way from pond one to nine. As I mentioned earlier, we've achieved 93% pond service inundation, with most of our ponds at or near capacity. Our focus is now on reaching the target brine density. In particular, we're looking at pond nine and to make sure that reaches the right density of brine before it's transferred to the crystallizers at the perfect time.
To support this process, we have developed a digital twin, which is a digital model specifically designed for our operations, and this allows us to monitor in real time and make data-driven decisions. The digital twin is now fully integrated into BCI Minerals' production planning process, combining real-time operational data from the primary seawater intake all the way through to ship loading while incorporating historical weather information. The chart you can see there on the left of your screen has been created utilizing various weather scenarios from the digital twin, and it illustrates the range of time of when the brine in pond nine is forecasted to achieve the density. You can also see on the graph where the actual density of pond nine is sitting at the end of September.
The chart here you can see illustrates that range, and then this analysis also shows the target density is likely to be achieved during the period between January and March, and this obviously will depend on the actual weather conditions we experience in this upcoming summer. Importantly, we continue to work towards our target of having our first production salt on ship in the December 2026 quarter. Other operational activities during the quarter included the commissioning of the transfer station at 6/7, also the ongoing fabrication of our salt harvester here in Perth, and the development of the Mardie Salt Operating System. We continue to make good progress towards our construction milestones. Specifically, engineering and design of the salt wash plant has reached 60% completion. Earthworks have also commenced, along with other orders placed for major long-lead items.
These long-lead items include the centrifuge, the luterator, the ordering screen, and also the screw classifier. Committed costs for the salt wash plant now stand at 30%, with the remaining costs to be committed over the coming two quarters. The primary and secondary salt crystallizers were also completed, marking the conclusion of the majority of the bulk earthworks, as well as pond and crystallizer infrastructure required to support full-scale production. In April 2025, we commenced commissioning the first crystallizers with seawater to test their permeability and help inform the optimal sealing solution. Sealing the crystallizers is a critical step prior to transferring valuable high-density brine from pond nine, as I described earlier.
The results from these seawater trials confirmed that the use of liners is a superior solution to sealing crystallizers because, firstly, it creates a more predictable harvesting environment, and secondly, it eliminates seepage, thereby creating additional ramp-up tons in the early years of production. Consequently, BCI Minerals is implementing a program to seal the crystallizers, with this cost expected to be fully funded within the $1.443 billion SaltFirst budget. Sealing of the crystallizer trains will commence in the current quarter, with the first crystallizer scheduled to be ready to receive brine from February 2026 onwards. The sealing of the remaining trains is planned to occur as required to meet our production ramp-up schedule.
Also, now the marine package of the Cape Preston West port has reached 93% completion, and the environmental approval for the offshore placement of bridge bore has transitioned into the next phase with both the state and the Commonwealth regulators. Steve will take us now through the financial highlights. Thank you, Steve.
Thanks, David. Total construction now sits at just over $1 billion, having spent $67 million this quarter. The largest packages of work remaining include the dredging, the crystallizer, the lining, and the salt wash plant. Other than the long-lead items that have been ordered for the salt wash plant, these packages will be funded from the $386 million we have in uncommitted funds. From the engineering design work on the salt wash plant and the procurement of materials to date, we are confident the salt wash plant will come in on target and to schedule. With dredging, the tenders closed last week, and based on our early analysis of this package, the costs look to be aligned with our budget. Lastly, this week we placed an order for the first package of the crystallizer liners, with the cost of this order being in line with our forecast.
The progress being made on these three major construction areas supports our confidence of remaining on budget. Looking forward to the next quarter, as we prepare the site for the arrival of the materials for the salt wash plant and the crystallizer lining, construction activity at Mardie will be lower than recent quarters. Both of these work fronts will be in full swing during the March 2026 quarter, and dredging will follow in April 2026. These activities align with our construction schedule and remain on track to support our FSOS target. As mentioned earlier, we drew $110.9 million from our syndicated debt facility during the quarter. At the end of the quarter, BCI had available liquidity totaling $676 million.
With approximately $441 million required to complete construction, we remain fully funded to complete the construction works, as well as having sufficient working capital to be able to operate through the ramp-up. As we previously shared, a drawdown process runs on a 45-day cycle. Prior to each drawdown, we are required to undertake a project cost reconciliation and provide this in conjunction with an opinion from the lender's independent technical expert, or ITE. The ITE's opinion confirms to lenders that BCI remains fully funded to complete construction, as well as having sufficient working capital. To date, we have successfully completed six drawdowns totaling $347 million. I'll now provide an overview of what we're seeing in the salt market.
You'll see the CFR prices that we quote in the quarterlies are based on the price of salt, as well as the weighted average cost of freight to get that salt to the customers' ports in Indonesia, Japan, Korea, Taiwan, and the Philippines. As such, freight is a key component of the CFR price. The factors affecting the cost of freight include the size of the ship and the distance from the supplier to the customer's port. During the June 2025 quarter, Indonesia imported proportionately more volume than other buying countries when compared to the March 2025 quarter. With a lower shipping distance from Australia to Indonesia, this reduced the weighted average freight cost, and hence the CFR cost in the June quarter was $5 lower. On an FOB basis, or the price that the supplier receives for their salt, the Asian market remains relatively stable.
As we previously shared, the Cape Preston West port is a strategically valuable asset for BCI Minerals and the region. This is a multi-user port that has been designed to export approximately 20 million tons per annum of bulk commodities such as salt, SOP, and iron ore. At known plate capacity, Mardie's SOP and salt operational needs are around 5.5 million tons per annum. This gives a surplus capacity of around 14.5 million tons per annum. This infrastructure could be part of the solution for some of the proponents in the West Pilbara region who don't have access to a port. By the end of September, construction reached key milestones marked by the completion of all the heavy lifts. This included putting the ship loading tower in place, installing small boat landing, as well as a subsequent demobilization of the jack-up barge.
Works on the electrical mechanical installation are now well advanced. Pleasingly, BCI Minerals continues to receive inquiries from potential third-party users of this facility in the region.
Thanks, Steve. The SOP part of our production stream is a key byproduct of our salt production, and it's a really important revenue stream for BCI in the future. This quarter, we visited several potash producers in China and India to gather insights and benchmark their operating practices. The learnings from these visits are now being incorporated into our pilot plant design. We successfully commissioned the pre-KTMS trial crystallizers, as you can see on your screen on the left, and we are now operating these in line with expectations. Preparations for the pilot plant construction are also progressing well, and we will commence that work early next quarter. While our focus remains on safety and wrapping up our operations safely and completing construction, we continue to prioritize environmental stewardship. During the quarter, we delivered a wide range of environmental monitoring activities in collaboration with specialist consultants and our traditional owners.
We also hosted our second implementation committee meeting with the Wirrawandi Aboriginal Corporation and commenced work on an updated Indigenous engagement strategy. On the community front, BCI visited Karratha Senior High School to support the Positive Behaviour Support Program and the student achievement through the BCI High Value Rewards Initiative. We also marked our first presence at the Resource Technology Showcase, and this showcase is Western Australia's premier mining innovation event. As we close this quarter, we do so by consistently applying our values in doing what we said we would do. We are well positioned to respond to forecast salt supply shortfalls in face of rising global demand while creating sustainable multigenerational benefits for our shareholders, local community, and also for the broader Australian economy. This brings us to the end of the presentation.
If you've got any questions, please add them to the Q&A tab on your left of your screen, on the, sorry, on the right-hand side of your screen, and we'll go to questions now. Thank you.
David, can you talk to the remaining packages of construction yet to be committed? Given the salt wash plant design is still not complete, when will you be in a position to award that work and cost to complete known?
Thank you. So yeah, the salt wash plant, as I mentioned, is 60% through design. The natural process of the design would start with the earthworks design, the footings, the structure itself, and then as you move through the components that you add to that wash plant, and then eventually the electrical and instrumentation. The work that's complete is all our structural design, all the design for the selection of our components, as I mentioned earlier, the long-lead items. What is currently underway is piping, electrical, and instrumentation, which is naturally to the back end of your process. We have already locked in and ordered our long-lead items, which means that cost is a natural cost. We've also commenced our earthworks, and we are about to award the concrete and footing packages at the end of this month, during November.
The next packages will be electrical and instrumentation, and I'm expecting that will still be early in the next year, probably around February, with us then commissioning the salt wash plant in September of next year.
Thank you. Steve, you mentioned in the quarterly report that the upcoming quarter will be slower in terms of construction progress on site. Does this put FSOS timing at risk?
Yeah, we're naturally going to have a slow quarter this quarter. We've come off the back of almost completing the jetties. Our jetties are at 93%. The ponds are now constructed, water in the ponds, all the bulk earthworks, the crystallizers are complete. There's pump station, or lift stations that are closing in on completion for the crystallizers. Everything is tracking to schedule, and we were always going to have this naturally quieter quarter this quarter. For many of the reasons that David just spoke about, the schedule was always aligned to have the design work for the salt wash plant. Now, dredging was always going to commence in April next year because of the dredge windows in the region. At this stage, there's nothing we see on the construction front that puts it on a critical path for FSOS, which we're targeting at the back end of next year.
Thank you. David, your decision to line the crystallizers, can you outline the cost of procuring and installing the liners, what the timing is, and what the catalyst was for that decision?
Yeah, I think this is important for me to highlight a couple of things. When I started with BCI Minerals, we operated with what I would call a static model, basically a model that requires manual inputs to be changed, and it took us about a week to a week and a half to run different scenarios. Since then, I mentioned we've done the digital twin. The digital twin is a fully modeled replica of our operations. It includes the size of our ponds, the amount of water we can intake, our actual weather data. What that enabled us to do is to run scenarios in a couple of hours. If I went to Steve and I asked him, "What if we do this? What's the impact to NPV? What if we change that?
How does it impact our cash flow in the future?" it was quite a hard and arduous process to determine that. With the digital twin, that happens in a couple of hours. One of the things that we've looked at very carefully is what is the impact of the planned and forecasted seepage for the crystallizers on our revenue in the future, and is there a better way to do it? The digital twin then enabled us to run the scenario with sealing and without sealing. Of course, we included our forecasted cost for the sealing in that model, and the NPV for sealing those crystallizers is vastly superior than not doing that. That then allowed us to say, "That's a better solution for shareholders." We commenced with exploring exactly how we'll do it from a cost perspective and from a timing perspective.
This then led us to the decision to take it to the board, and that enabled us to commence that process. We expect the sealing process to happen; procurement has commenced. Sealing of the first train will happen between now and February. February is when we expect, again, the digital twin giving us this clarity. February, we expect the water in pond nine to be ready to be transferred into the first crystallizer. We've worked back from our date to ensure the first train is ready to receive brine, and the subsequent trains are then scheduled in line with when that brine volume will come from pond nine. I see this as a great opportunity. I think the digital twin has improved our insights in how to maximize productivity, and that leads to smarter decisions for the future. I would just probably just add one thing. Thanks, Steve.
Just one quick, I guess, in closure before I hand over to Steve is the good work the team has done so far has enabled us to have headroom. Steve will be able to share a little bit more detail on that.
Yeah, I was going to emphasize that point. We've got an outstanding projects team, and through getting the project to 74%, their discipline around cost management, cost control, thinking through really effective solutions has meant we've been able to build up a buffer in our budget. When we look at opportunities to maximize the return to shareholders, as we have done with the lining of the crystallizers, we've been able to do that within that funding envelope, within that capital budget of $1.443 billion. I think, you know, full credit goes to that project team and that discipline in managing that budget tightly.
Yeah, exactly.
David, can you say a little bit more, explain a bit more about the water flow from pond one to pond nine? There's a question around, does the pond get emptied 10% and then replenished?
Yeah, I think it's important for me to just step through that. The densities between ponds are managed based on a very specific market density at each transition between ponds. So the ponds are maintained at the exact same level throughout its production cycle. What happens is you continue to transfer, call it fresher water or more less saline water from the south into the pond and monitor the density. When it gets to the required operating density, some of that water is then transferred into the next pond. At the same time, that water that's been transferred is replenished from the pond just before. Imagine a total system where all the ponds are staying roughly at the same height throughout its operating period, but the density is fluctuating a little bit up, a little bit down based on that continuous transition over time.
What that allows us then is to have a continuous stream of highly saturated brine in pond nine that then feeds the crystallizers. Where the process is more staged or where processes where they empty and fill is in the crystallizers. The crystallizers are continuously filled until you have enough harvestable product, and then that crystallizer will be drained to make it ready so you can harvest that product while the other crystallizers are then crystallizing. That goes into a cycle where you rotate through your different crystallizers in the production process.
Thank you. Steve, can you comment on what the possible revenue is per year for the port for non-salt products?
We haven't set a unit price at this stage. We have looked at other ports in the region. Build Reports do publish their rates, and I think we can look to those rates and probably to the south of us at Ashburton Port, which is probably the best comparison to what Cape Preston West Port is as compared to, say, Port Hedland. What you'll see in the published rates there, it's about $9.10 per ton that Ashburton Port is charging. Part of the cost, or part of how your price will be built up, will be based on what's the capital expenditure and what's an appropriate return. As guidance, if you want to go and look at the Ashburton Port, that's probably as good an indication at this stage as anything else.
Excellent. David, given the seepage in the crystallizers that you've talked about, will you need to line pond nine? Is this why it isn't full?
No, so that's, yeah, I'll clarify that. I think an important point. Pond nine is the last one that was finished. You might recall from the previous quarter, we've only just finished the, we call it the port road or the PPA road, which is the northern boundary of pond nine. That part is only the crystallizer, sorry, that pond has only just been commenced to fill in the last couple of months, and it's steadily rising. You'll also notice from the picture that I shared earlier, pond nine is tiny compared to some of the other ponds. That pond, I'm expecting in the next three months, will continue to fill.
Obviously, to the seepage question, we've been monitoring the seepage in the ponds, and I'm happy to share with you that any seepage in those ponds, particularly in the ones we filled in the beginning of or about 12 months ago, the seepage has completely stabilized in those ponds. The natural process of where, you know, I mentioned the impurities dropping out, my expectation is when pond nine gets to its required density and those natural impurities drop out, that'll continue to, I guess, get that pond into the right production capacity and allow it to operate as it should. My final point on that would be that these ponds are based in mudflats. Mudflats, of course, create a natural boundary to the seepage of those ponds.
Thank you. Steve, assuming you go ahead with producing SOP, will this be funded by debt or equity, and what would the timing and magnitude of the capital be that's required?
Yeah, we frequently say the CapEx is probably somewhere between $150 million and $200 million, and the work that the SOP team will help inform the ultimate value of that construction. In terms of the funding, by the time we complete the pilot trials, select our design, and then need to fund that construction, we would fully expect that the salt business would be generating free cash flow. A business that generates free cash flow has a wide range of options to be able to fund that. I think we'll have very, very flexible options at the time we need that funding.
Great, thank you. David, can you comment on the status of the dredging sea dumping approvals and how they are tracking?
Yeah, absolutely. I mentioned in one of my remarks that we've progressed to the next stage. Last week, we had the EPA board meeting for the state approval. We're currently in the consultation phase, so we received our draft conditions that included sea dumping, among other tweaks in our conditions. The team is expected to respond to that today. That is still on track to receive our approval from the state for those conditions well ahead of our April commencement date for dredging that we spoke about earlier. On the federal side, we're also in the conditions consult period. Those conditions are currently being drafted, and we expect those conditions to be with us somewhere next month. That team is tracking on time ahead of that April due date.
I'm pleased to say that those things are progressing, and we will have to continue to work hard that we deliver on those approvals as we did for the Grant Water Management Plan and the overall approvals in the past.
Thank you, David. David, at what level of strength has the pier jetty been constructed to withstand what level of a cyclone?
Yeah, our design specifications for the port have been a one in 500-year rain event. That, of course, is quite superior to many other ports, but it's the design requirements that we've set for the construction contractor. One in 500-year will certainly stand, I guess, the test of time. It can also do a Category 5 cyclone. There are some tie-down procedures for the conveyor belt itself, but the structure is designed for well and truly above that.
Thank you. That concludes our questions.
Thank you, everyone, and we'll see you next quarter.
Thank you.