To get fit for a plant that's only been running for five months. We recorded 92% in December, which is very close to our target. Importantly, the lithia recovery of 55% for the quarter and 59% for December. I think all of you are aware that the holy grail for the lithium hard rock producers is recovery. There is a close relationship between recovery, grade, and flowsheet design in which to deliver this outcome. This is the ambition for us. This is the focus area for us for the coming months in order to get to where our target should be, and we've got a slide on that. I've spoken about production: 88,000 tons for the quarter. I mean, that's an outstanding effort, again, for a plant that's been running for five months.
Grant and the team are doing a great job on the sales front, and he'll talk a little bit about that in a minute. And then finally, operating cash flow. Again, in ramp-up, we've been able to generate a positive operating cash flow from the operating activities. Next slide, please. Touched on the mining side in my highlights, but here are the specifics. In the open pit, the ROM stock piles are building. We'll talk a little bit about the ROM stock piles when Jon gets to his section. The 2.6 million tons moved for the quarter. For me, the ore mobilising from the lens that we've uncovered, and we're still in that lens, is quite a feat. It's exactly where we thought it would be. It's exactly the grade and chemistry that we expected. So there's been a great bit of work done there in understanding what we're mining.
We've demobilized an excavator and truck fleet as part of the cost optimization work that we did earlier in the or later in the year last year. In the underground, I'll just summarize by saying we're moving development meters. You can see the trend there. That's coming along nicely. And we've got the ground conditions we expect. I mean, I was in the underground just before Christmas with the Byrnecut leadership team, and it was exceptional what we could see underground. And the production stoping activities are on track for quarter four FY 2025. And the productivity from the jumbos, which is the key metric that everyone looks at, is still well over the 300 meters per jumbo per month. And we're mobilizing the third jumbo early in 2026 in line again with the revised mine plan that we issued in November. Next slide, please.
I'll now hand over to Grant, who will take you through the plant performance.
Thanks, Tony. Our ramp-up continues to meet or exceed expectations across plant availability. Milled tons and recoveries continue to move higher, demonstrating our progressive improvements. The SAG mill availability remains high, as you can see from the top right chart, enabling strong mill throughput with over 600,000 tons processed during the quarter, equivalent to an annualized run rate, as Tony mentioned, of 2.4 million tons, just ahead of our run rate, which we guided to in November of 2.3. Our recoveries continue to show progressive improvements, averaging 55% during the quarter, which is 10 percentage points higher than the last quarter, or 23% higher. The bottom left chart shows the progressive improvements over month by month, showing December averaging 59%, which already exceeds some of our peers after only five months of operation.
We still have further to go on this journey with identified actions and a program of work in place to continue advancing towards our 70% target by Q3 2026, which is the March quarter. The combination of throughput and recoveries culminated in production of 88,700 dry metric tonnes during the quarter at a weighted average grade of 5.2% lithium oxide. If we can go to the next slide. Strong production allowed us to push tons sold to customers since the commencement of production to over 100,000 wet metric tonnes. Those tonnes went to a combination of our offtake partners and to spot customers. A particularly strong December saw us produce 36,400 dry metric tonnes, which enabled total shipments of 81,300 dry metric tonnes during the quarter.
Four shipments to customers were made during the quarter, including our inaugural cargo to LG Energy Solution on the largest vessel loaded so far at 33,000 wet metric tonnes, which is a personal best for the company, and we're looking to beat that this month. This quarter also saw us initiate production and shipment of tantalum, which we're looking to turn into a regular flow of production and deliveries to customers this quarter. In another milestone for Liontown, we also called commercial production under our offtake with Tesla, effective from the start of this calendar year. We continue to see robust inbound interest from customers looking to establish regular spodumene purchases from well-known names with an established track record, many of which the callers would be familiar with.
The demand for spodumene, even against a relatively weak backdrop for chemicals, remains robust, demonstrating the embedded optionality of buying spodumene in the face of uncertainty and the continued evolution of battery chemistries. With our forward offtake expected to commence in July 2025, the forward demand outlook for Liontown product remains strong, meaning we expect to have a tight forward sales book for the remainder of FY 2025 and beyond. With that, I'll hand over to Jon Latto.
If you could go to the next page, please. Thank you. Thanks, Grant. So Tony and Grant have covered off on the production and sales data in the top half of this slide. I will now talk to the financial metrics that you can see in front of you. Firstly, from the heading on the page, you can see that we returned net cash flow from operating activities of AUD 16.7 million for the quarter, as Tony mentioned, and you can see that number in the 5B quarterly cash flow statement that we have also released today. At this point, it's important to remember that we are in ramp-up, and we are following the accounting standards, and we are capitalizing our commissioning costs at the Kathleen Valley Processing Plant such that we have a new margin when we look at revenue less our operating costs.
We will continue to adopt this approach until we declare commercial production at the Kathleen Valley Processing Plant, which is expected to occur in the current half-year period. If we had declared commercial production, these capitalised commissioning costs would flow through to the profit and loss statement in the normal manner. We did have AUD 5.3 million of cash commissioning costs in the quarter, and therefore, if we had declared commercial production at the processing plant, we would have recognised these costs as cash outflows from operating activities and returned an adjusted positive cash flow from operating activities for the quarter of AUD 11.5 million. That is a strong result for our first full quarter of operations when the company is still in ramp-up. We returned revenue for the quarter of AUD 89.8 million from sales of 81,341 tonnes of spodumene concentrate from four shipments during the quarter, as Grant mentioned.
You can see that we've reported both a unit operating cost of AUD 1,000 per tonne for the December quarter on an SC6 basis and an all-in sustaining cost of AUD 1,170 per tonne, also on an SC6 basis. There are a couple of points I'd like to make here. Firstly, this equates to a cost per tonne of $ 652 a tonne for unit operating cost and $ 763 per tonne for all-in sustaining cost on an SC6 basis. It is pleasing to see that our average USD realized price per tonne on an SC6 basis was $806 a tonne for the quarter, which was higher than both our unit operating cost and our all-in sustaining cost.
My final point here is that we have included our capitalised commissioning costs in both the unit operating cost and our all-in sustaining cost numbers so that you can get a true sense of how we're performing. Finally, in relation to our cash balance, at the end of the December quarter, we had a strong cash balance of AUD 193 million. There are a couple of things I'd like to note here. In addition to the AUD 193 million cash balance, we had another shipment of AUD 12 million of product before the end of the year, with those funds being received in January 2025. We also had 25,000 tonnes, dry metric tonnes, of saleable concentrate on hand. We also have built and paid for the mining of significant ore stockpiles as planned, and at the end of the quarter, we had 1.3 million tonnes of stockpiled ore.
In addition to that, we also have AUD 25 million of cash on deposit with Export Finance Australia, associated with a guarantee required under the power purchase agreement with Zenith. This has been cash-backed for some time, and we are working with the various parties concerned to have those funds returned to us and replaced with an alternative form of security. If you could turn over to page 10, please. So I'll now go into a little bit more detail regarding our cash flows in the cash flow waterfall that you see in front of you, and I'll move from left to right across the waterfall. So firstly, we start obviously with our opening cash balance of AUD 263.1 million at the beginning of the quarter. We then have cash inflow from the sale of our spodumene concentrate of AUD 91.2 million for the quarter.
The next bar in the waterfall shows our operating costs for the quarter, which were approximately AUD 79 million, and that's essentially our open pit costs, both our contractor costs and our owner costs, our processing and maintenance costs, our site administration costs, and our corporate costs, and in the next bar, you see that we had interest receipts of AUD 4.8 million. It's those numbers that give us our positive cash flow from operating activities of AUD 16.7 million, which then, as the waterfall then shows in the call-out box, you can see how that adjusts to AUD 11.5 million positive cash flow if we were to adjust for the cash commissioning costs that I spoke about previously. Now, those cash commissioning costs you can see are in the next bar, which is the cash flows from investing activities, so I'll now move on to the next bar, which is project costs.
Project costs for the quarter were AUD 45 million, and they are essentially payments for the construction of the Kathleen Valley operation that we paid during the quarter. And these were payments. This AUD 45 million was payments for items such as paste plants, final payments to our structural and mechanical piping contractor, Monadelphous, Mod Squad payments, and payments for spares and other items like that. I will stop there and make a couple of comments here. So last quarter, we said that we had around AUD 65 million of project costs to pay for and that this would be wrapped up in the December quarter. What we now see is that this amount is actually approximately AUD 10 million lower, as some of the project provisions that we had were ultimately higher than we required and combined with our continued strong contract management.
But it will take longer for the project tail to be paid out as we finalize things like final insurance premiums, commissioning of the paste plant, finalization of the Construction Training Fund Levy, and release of project retentions. But what this essentially means is that we have a lower project spend, and it stays with us for longer. It's a good outcome. The next component of the waterfall is other capital of AUD 28 million for the quarter, and the majority of this spend is underground development costs, with the balance being general sustaining capital. We are in a development-intensive phase of the underground now, and I expect that the quarterly costs for capitalized underground spend will not be as high in FY 2026 and FY 2027 as we have seen in the current quarter.
The reason for this is that in FY 2025, we have expanded the capital requirement to establish access to the top of the ore body, being vent rise, decline, etc., in advance of stoping, which will commence around April 2025. Finally, the last bar of the waterfall, we have the lease and hire purchase costs, which includes the lease payments we have for our right-of-use assets, with the largest of those being payments for the power station. And this brings us back to our strong cash position that we see at the end of the quarter of AUD 192 million. And having said that, I'll turn back to Tony.
Thanks, Jon, and thanks, Grant. If we can go to the next slide, please. I do want to wrap up before we open up for Q&A. And in saying that, I think with the listeners, the safety continues to be a priority, and ESG remains at the forefront. And as I mentioned in my opening piece, this is an enduring and continual focus for the company and all mining companies for that matter. Our spodumene production and ship for the quarter of 81,341, sorry, our shipping for the quarter of 81,000 tonnes on a dry metric tonne basis was strong, and tantalite sales have commenced. Our revenues of AUD 90 million, approximately, with a positive net cash flow of AUD 16.7 million, again, a great result for the first full quarter of production. And importantly, we've got AUD 193 million of cash.
Jon elaborated on some of the other funding amounts that are coming in, especially the receivable that we shipped in December but haven't received the funding in January. On the ramp-up side, this continues to be a focus and a strong outcome. It's meeting and exceeding planned. I do want to say to the listeners that, as I sort of alluded to, recovery is the main focus here for us, and we continue to push this and push it hard. We're optimising and testing things as we go. In fact, in the end of December and in January, we put through the plant some of the transition material from the mining. This transition material is material that is high in contamination but is still very good grade.
Now, typically, this product would have been put through our ore sorters, which we then stopped as part of the optimization work. And we're seeing whether we can either blend it through the high grade or the clean ore, or we can run it at a discrete product. So we've done some test work in January to understand the performance of this product through the plant. The key operating metrics, again, are a strong outcome: our all-in sustaining costs and our unit operating costs, our productivity per jumbo of 317 meters, and our plant performance, both the mill availability, which is now pretty well on target to what we expect in normal operation after five months, and our recovery of 59% in December. And we're continuing in January, notwithstanding the trials that we've done with the transition material.
Finally, just to finalize this presentation, we maintain our guidance that we provided the market in November, but also noting that we've deferred AUD 5 million of capital from H1 into H2. So in summary, strong delivery, solid financial position, and a robust foundation for the future value creation. That summarizes our position at the moment. Thank you. Now I'll open up for Q&A.
Thank you, Tony. If you have not yet submitted your text question or joined the live audio queue, please do so now. I will introduce each caller by name and ask you to go ahead. You will then hear a beep indicating your microphone is live. Our first question comes from Levi Spry from UBS. Levi, please go ahead after the beep.
Yeah, G'day, Tony and team. Happy New Year to everyone.
Thanks, Levi.
Couple of questions from me. So maybe just starting on the market, there was a story going around a few days ago about, I think it was SQM, potentially realizing a price in the $900 range. Can you give us a bit of insight into what you're seeing from customers since we've come back from Christmas, I imagine, and just, I guess, remind us when your next ship is set to sail?
Yeah, look, I got Grant did a piece on the market outlook. Just to reiterate that, we are seeing strong inbound interest in spodumene, no question. I won't comment on the specific auction that SQM did, but we also heard one that Albemarle did. There was some press on that yesterday. I mean, that's very positive, and as Grant mentioned, there is a deficit in spodumene in the market, notwithstanding where the chemical prices are, and we presented a graph from Wood Mackenzie in our AGM that showed there's a continual deficit in spodumene into the future, so our next shipment's in this month. I think it's arriving into Geraldton either today or tomorrow, and it'll be our largest shipment so far, so again, we're seeing very strong demand.
Okay, great. Yeah, thanks. And just this idea of optimizing the business, the asset, the ore body for the concentrate grade, can you just talk me through that? So 5.2% now, but all the metrics that you're reporting are on a 6% basis, so production and costs. Is there any? Why wouldn't this just be a 5.2% mine, assuming you get the delta in the additional volume, but reduced realized price and it evens itself out? Can you just sort of talk us through that and how you're thinking about how you're optimizing for that, I guess?
Yeah, that's a good question. Look, I think we touched on it a little bit in our November update, but also in the course of this discussion. We're trialling the transition material to see what impact that has on recovery. Now, for us, we are continuing to optimize the circuit to understand what grade, we know the relationship between grade, mine grade, and recovery. The better the grade, the better the recovery. And we're seeing some of our competitors at times increase their mine grade to get a better recovery. So all those trade-offs, we've only been in operation five months, and we're trying to zero in on what is that optimal range for con grade. Is it 5.2? Is it somewhere between 5.2 and 5.5? Right?
We have produced 6% con, but I think we're coming to the realization that somewhere between the 5.2 and the 5.5 could be optimal, but we're still working that through.
Levi, just its Grant here.
Yeah, okay.
I mean, we use a 6% basis just because it's what the industry standard is. It's not because that's necessarily the target.
Yes.
Yeah, got it. Thanks. Thank you. And maybe just a sneak one in. So just thinking about you've given us cost guidance for the second half, but you're obviously still in ramp-up, and the recovery is the key piece there. And the underground hasn't come in yet. So when will you be in a position to update us on, I guess, more steady state sort of cost base together with that underground mining cost piece when you're fully ramped up and running only on underground ore from part of FY 2027, I think, is the guidance?
We've provided guidance for the rest of the half in November. In July, we'll provide guidance for FY 2026. So I think between now and then, your best target is the guidance we've produced given you, right? And then we'll give the market the view of what the underground will look like as part of our FY 2026 release. And we're starting stoping, as we mentioned, in the quarter four of this financial year. So we'll quickly realize, and we've got a fairly good handle on what our operating costs are underground, given what we've seen so far.
Our next question is from Hugo Nicolaci from Goldman Sachs. Hugo, please go ahead after the beep.
Oh, hey, Tony. Jon, Grant, happy New Year and thanks for the update. Congrats on, obviously, the ongoing ramp-up performance improvements you've seen to date. First question, just appreciate you're still in ramp-up and you're looking to optimize some of your costs going forward, but just given the run rates you've been able to achieve in the quarter, are you able to give us a bit more of a go-forward breakdown of where you're seeing things like processing costs and costs at the open pit?
Yeah, I think, and I'll let Jon step in here. For me, the open pit mining, I mean, we'll conclude the open pit by the end of this year, early next year. So we're at sort of peak production now. So there's nothing untoward there. And in terms of processing costs, as I mentioned, our tonnes through the mill is pretty well at our guidance level now. We've gone 2.3 million, and we're sort of doing just over 2.4 million. So we're pretty well there now, and we'll call commercial production, as Jon mentioned, in this half at some point. So look, I think, Hugo, to answer your question, we're not that far away from what we consider to be steady state on the processing side.
Got it. Thanks for that. All right. Yeah, thanks a lot, Tony. Appreciate it. And then we're obviously already, previous question touched on the possible upside around spot pricing at the moment. I guess just looking for an update, though, around where you're at with conversations with either the banks or LG in terms of the optionality on that extra AUD 100 million of indebtedness capacity. And if, I'm not saying necessarily to use it, but if you did, what sort of timing that you would have access to possible additional funding there?
Yeah, look, Hugo, I think the word to note is optionality. And we do have a fair bit of optionality that we could pull if we felt the need. But at the moment, the focus has been very much on delivering what we've got and which we're doing. So there's a facility there that we could exploit if we have to. But at the moment, we're not focused on it.
Thank you. Our next question comes from Reg Spencer from Canaccord. Reg, please go ahead after the beep.
Thanks, Tony and team. Congrats on a pretty good quarter from a production standstill. I just had a quick question on the capital. If I could just clarify that you've got AUD 11 million of construction CapEx yet to spend over, say, the next six months, whatever that period might be. Can you tell me what your sustaining CapEx budget is for the next six months and then what you expect that to be once you achieve steady state in the underground?
Tony, do you want me to take that one?
Yeah, take it on, Jon.
So Reg, you're right. Our cash outflow for the that remains for the project is AUD 11 million of cash payments out the door. That is true. In relation to if you're talking about our CapEx spend being our underground development spend, I mean, you can see, I think, in this particular quarter, it was circa AUD 28 million, which you can extrapolate that as you see fit. But broadly, this is the capital-intensive year, and we do expect to see a decent drop-off in the capitalized underground development spend as we look forward to FY 2026 and 2027. I certainly don't expect it to remain at current levels.
Yeah, okay. Yeah, got that. So that underground, the AUD 28 million in underground capital you mentioned, that's development of the underground and not necessarily operating capital when you're into the underground?
Correct. So that is the underground development cost. That's correct. That's the capitalized piece. So that's essentially the creation of the underground asset. In addition to that, we obviously do have some sustaining CapEx as well.
Yeah. And the operating development will be in the operating cost because that'll be spent on a year?
Yeah, got it. Thanks, Tony. And sorry, just apologies for harping on about it. And just on that actual sustaining capital number, are you in a position to provide some guideposts as to what you expect that to be once you're at steady state?
I think we've provided you some guidance in our November update, Reg, which showed that we broke the sustaining capital down into what we feel is ongoing PPE, sustaining capital, plant equipment, and then what is the sustaining capital for the mine, right? And I think if you use that figure, that should be a good proxy.
Thank you. Our next question comes from Stuart Howe from Bell Potter Securities. Stuart, please go ahead after the beep.
Okay, Tony. Congratulations on a really good quarter. Just a couple of questions. First, on the ramp-up phase and you talk about the clean and ore-sorted product, could you just remind us about that ore-sorted product, how does that work? Has that been sorted? Is that ready to process? What are the differences between the two products in terms of how you treat them and grades?
Yeah. So the ore- sorted product is already mined and stockpiled. So we've got clean ore and we've got OSP material, right? So it's already—that money has been sunk and it's ready to use. The reason it's been put to one side is, as I mentioned in my presentation, Stu, it's to do with grade and contamination, right? So how much of the host rock has diluted the clean ore? And it can range from 15%-30% dilution, right? So what our initial thoughts was we would ore- sort that material and then put a cleaner product and bring the contamination down to the clean ore spec and then put it through the plant and blend it in, no problem. But we've also considered now, well, why don't we just put it through the plant as is, right, as a discrete product and batch treat it, right?
Which is some of the test work we've done in late December, early January, and see what result that has on product grade and recoveries. So we're still trying to optimize that, but that's the intention. We can either bleed it in as we go because it doesn't impact the plant materially, or we can batch treat it. So that's what we're optimizing at the moment.
Yeah, I just want to confirm that it hadn't already been all sorted and still needs further processing or, as you say, blended in. And then secondly, for me, just on recent FX weakness or Aussie dollar weakness, I just want to, can you extract the full benefit of that through your current off-take contract?
Yes.
Go ahead, Grant.
Yeah, Tony, sorry, I was just going to say the industry standard is to sell in U.S. dollars, so we get the full benefit of that. Obviously, there is a relationship between U.S. dollar strength and commodity prices, but at the moment, that has been definitely a headwind or a tailwind for us.
I think it's important the conversions that we've done for you in our presentations, Stu, was based on the quarterly average of FX, which is the $0.65, right? We know the spot price is lower than that today and has been for a few weeks now. That's even further upside.
And just a quick final one, if I may. The underground mining, obviously, is going very well. That first stoping scheduled for mid-2025, what are the, I guess, key milestones there to get to that first stoping? Your development rate's now about 7.3 kilometers. Do you guys just have to continue doing what you're doing? Is there anything else we should look out for?
Yeah, there are a couple of enablers, I call them. Our ventilation work in order to facilitate the stoping, and we're well on track with the ventilation work. In our quarterly report, you'll see some of the pictures of the raise boring that's been underway. So that's well on track to be in place before we start stoping. The second enabler is the paste fill. And while we won't need a first stoping, not for a while, the paste fill plant is done. It's built. We just now will commission it when we're ready to start stoping. So they're the two big enablers, I think, for steady state production stoping.
I think, Tony, just to add, its Grant here, we've also done the work already to open up various headings, right? And it's really the decision we made around the new mine plan to defer the stoping until April was really driven by making sure that when the gear arrives on site, it's 100% productive from day one and there's not gaps in between. So we could have stopped stoping in November, but it's not the most efficient way of doing it. So we're making sure we've got enough headings open so that equipment is fully utilized on site from day one.
Yeah.
Our next question is from Glyn Lawcock from Barrenjoey. Please go ahead after the beep.
Hi, Tony. It's Glyn. Happy New Year to you and welcome back from France.
I'm not back yet.
Just a quick one to clarify. Oh, you're still back. All right. Well, keep enjoying it then. Just a point of clarification, the realized price, is that a CIF price or an FOB price that you quote, the 806 for the December quarter?
It's a CIF price.
Okay. So your all-in sustaining cost of 763 excludes freight. You mentioned it doesn't include sea freight. What's the sea freight running at the moment?
Yeah, good question, Glyn. I'll make two comments, one of which you didn't ask, but I'll use the opportunity to reinforce it. The 806 is also the 30,000 tonnes of provisionally priced product in there. Unfortunately, 31 December 2024 was probably the weakest pricing point in the market so far. And that has been flowed through as a mark-to-market adjustment, which we don't expect to realise. But the question you did ask on freight, I mean, it depends on the size of the vessel, but as you can see in some of the narrative we've been sharing, we are focused on trying to parcel our own shipments to customers on larger vessels. And that's allowing us to pull the freight down from the kind of AUD 29- AUD 30 a tonne down as low as AUD 19 a tonne. So the focus is very much on efficiency.
Okay. So you really should be comparing sort of 783 to 793 versus the 806. And then the 806 has a provisional pricing hit in it as well.
Yep, that's fair.
Yeah. And then just to clarify again, all your offtake is linked to chemical indices as well. So it looks like depending on the chemical indices you use for the December quarter, you got anywhere around 8.5%, give or take, as a linkage. I know there's a provisional pricing adjustment in there as well. Is that fair? Is that the way to think about it?
Look, yeah, I mean, it is mathematical, so it's fair. Obviously, this quarter here has had a different mixture to what you expect going forward. There's been more spot activity in this quarter than there will be going forward. But you're right, the long-term off-takes are all referenced against a chemical at this point. However, as Tony talked about, there is strong inbound demand, and I think the market is shifting away from that at the moment, and we'll see how that tracks.
So you may do what Pilbara did and move everything to linkage to the spodumene indices then? Is that possible within your contract limitations?
Yeah. I mean, look, a contract's a contract until you negotiate otherwise. But look, the focus on this at this point is to make sure we're driving our costs down and being efficient, but of course, we don't leave any stone unturned.
Our next question is from Hayden Bairstow from Argonaut. Hayden, please go ahead after the beep.
Yeah, thanks. Well, a good quarter, guys. Just a couple of questions for me. Just on the products versus recoveries, I mean, are you out of any pressure to push that product grade higher, or is the current customers you're selling to relaxed about it? And then the follow-on from that is, is Tesla and Ford more restrictive on what the minimum sort of product grades are likely to be, or do you think over through this process of getting to target recoveries, you can worry about the product grade later?
Yeah, thanks, Hayden. Look, I mean, fundamentally, this specification is on contract, so there's no issue there. It's in line with many of our peers. I mean, others produce very similar products. In fact, there's people who produce it below this and sell it successfully. So there's no issue for us. And at the moment, the industry uses a linear price adjustment, so there's no penalty for doing so. So if you can improve overall lithium recoveries and produce more product, it's positive for the P&L.
Okay, great. I'll leave it there. Thanks.
Our next question is from Melanie Burton from Reuters. Please go ahead after the beep.
Hi.
Hi.
Hope you can hear me okay.
Yes, we can.
My question is. Yes, thank you. At the inauguration this morning, we have seen the U.S. administration confirm they're going to roll back their Biden era EV subsidies. I'm wondering, do you see any impact on your customer base or on the market in general?
The way I listened to the speech quite extensively last night, my time, and the emphasis was on removing the subsidy, but I think the president mentioned that he wanted the consumer to have choice, so that boils down to ensuring that the EV suppliers can provide a competitive product from a price perspective, but also a competitive product from a performance perspective, and we're confident they can, given what we're seeing coming out of China and other places, so therefore, longer term, I just don't think it'll be an issue on demand.
Thank you.
It's Grant here. I think it's also important to keep in context the relative size of markets, right? So China last year grew 40% year- on- year. It accounted for 11 million out of 17 million EV sales. So that's about 65% of the market. A comparable number for North America is 1.8 million, and it's growing at about 9%. One of the key things is the driver of demand in China continues to be towards that transition to EVs. And what the Chinese manufacturers have identified quite astutely is that the rest of the world at the moment is about 1.3 million units, and it's growing at about 27% year- on- year. And within two years, that'll put them higher than North America as a market. And that is the target that they are chasing at the moment, having been locked out of the North American market.
Yes, great. Thanks for that additional context.
Our next question comes from Sam Catalano from Wilsons Advisory. Sam, please go ahead after the beep.
Yeah, good afternoon. Tony, Grant, Jon. Look, hopefully, a fairly simple high-level question. Obviously, we had a fair few detailed questions today, but you guys provided a pretty detailed operational update and guidance back in November. So my sort of simple question is, apart from the AUD 5 million slipping into next year on the project spend, has anything happened between the end of November operationally to make you - you've obviously stuck with the guidance - but to make you think there might be a few changes from what we said in November?
No, we're holding firm to our guidance. Other than that deferral of AUD 5 million, which was moved from the first half to the second half, we're on target. Sam?
Yep. Great. That's what I expected. Thank you.
Our next question is a text question from Adrian Rauso.
The question is, does the net operational cash figure of AUD 16.7 million include costs like freight, royalties, et cetera.? If so, you are making money at a spot price far lower than market anticipated. Why do you think that LTR is doing far better than most anticipated?
Thanks, Adrian. Jon, do you want to answer the first part of that question?
Yeah, certainly, Tony. So yes, all of the operational costs are captured in the cash flow from operating activities. That's a fair comment. And I'll hand over to you to answer the second part.
So, well, why are we doing better than the others or anticipated? I think, look, for us, we've said all along that we've put a lot of effort into the design of the plant. We've put a lot of effort into how we plan and how we execute. And I think we're starting to see the fruits of that. And I mean, it's a tough gig starting up an operation and a development company. And we're now beyond that. We're now into production, well and truly. And we'll see further benefits come through as the good team that we've got continues to optimize and improve.
Our next question is a text question from Brenton Saunders from Pendal Group.
What are the steps in the process towards improved recoveries? Which elements of the recovery are the most challenging?
Thanks, Brenton. There's a fair bit in this question. What we've established in the five months that we've operated is it starts at the mine. So the grade that you deliver into the plant is very critical. As I mentioned earlier, better grade, better recovery. The contamination or hygiene is super critical. So we need to produce product that has that low contamination of less than 5% in our case. Then as you move into the plant, what we're finding is the second area of opportunity is grind size. What do we grind the product to to otherwise maximize flotation? So we've got a designed grind size that we've now hit, and we're starting to see the improvements in recovery. The third element is minimising the slimes production. So grinding too fine and therefore not being able to recover it. Right?
We've got to minimize the amount of slimes that we lose and therefore lose lithia. Then finally, there's the whole science of flotation. The mass pull, we're targeting about 15%-18% mass pull. And an overall flotation recovery of 90%, but an overall plant recovery of, as we've said, targeting over 70%. There's a few bits and pieces. On the whole flotation area, I can go into reagent selection, froth heights, and all the other bits and pieces. But simply put, they're the major areas that we are focusing on, starting from the mine right through to the plant.
Our next question is a text question from Daniel Marinescu.
When will you start paying back debt and interest?
Now, I can respond to this, but I'll let Jon do that.
Yeah, certainly. It's a good question. So obviously, I think, as everyone's aware, we've got two debt structures at the moment, one with Ford and one with LG. So if I tackle LG first, the LG interest will be capitalized for the first two years. And essentially, there'll be no debt repayment as such under that. LG may elect to convert. If they don't elect to convert, it will be repaid in one bullet payment at the end of the tenor, which is at the expiration of its five-year period. That's the LG debt. In relation to the Ford debt, we are currently capitalizing the interest.
But in terms of debt repayments, that will commence at the end of the quarter following the declaration of supply commencement under that offtake, which I think, Grant, we've given some guidance to the market is likely to be the September quarter this year at the earliest.
Our next question comes from Paul Krasnoff.
Regarding dividends, Tony and Tim, how likely and when and how much?
Oh, thank you for that question. That surname is quite a famous surname. Dividends. I think my chairman asked me about dividends every day. I think we need to put things in perspective. We've done a capital allocation strategy, which the board has now sanctioned. And the focus is very much on debt repayments and where we can and growth. So at this stage, it's too early to call the dividend piece. But believe me, it's not too far away in terms of our thinking, given our chairman's very keen on it.
Our next question is a text question from Mark Heenan.
246 tonnes of tantalite concentrate produced. Have you had any offtake customers lined up? Can you provide a price guide?
I'll let Grant answer this one.
Yeah. Yes, we do. We have made shipments under an offtake agreement. So yes, we do have customers taking the product. In terms of pricing, there is an index for tantalum, which is available from Argus, which is a pretty useful guide in terms of overall price realization. It is for a different quality of product. So there is some upgrading and processing required. So we wouldn't realize all of that. But in terms of the top line number, that's effectively what the industry uses for payments.
Our next question is a text question from Alan Peace.
When will the shareholders be free from the shorters in our great company? Or do we have to wait until they finish manipulating the SP?
Alan, thank you for the question. Look, I think shorting is part of the market. I'm not sure we'll ever be free. But look, the best way to deal with the shorting is to deliver on the outcomes. And that's where our focus is. Whether the investors decide to short or not is a separate decision they have to make based on the performance of the company. So we'll continue to deliver. We'll continue to do what we say. And the shorting will take its own path.
Our next question is a text question from Scott Gick.
Is Liontown looking to develop downstream processing of lithium? Is this what is the timeline for this?
I'll let Grant answer that.
Yeah. So I mean, as Tony touched on in his opening slide on the strategy slide, we do continue to do work with both LG and Sumitomo on a downstream project, one focused around Japan and the other in another location, probably in Southeast Asia. That work has its own timeline. But at the moment, both projects are in the kind of pre-feasibility stage, if you like. I'm trying to put together some initial numbers in order to make an investment decision as to whether to continue them or not. Clearly, what is going to come out of that is that the current pricing levels are probably not sufficient to justify investment. And therefore, we will need to see an improvement in price expectations for refining to be built and funded.
Thank you. There are no further questions.
Again, thank you to the listeners for being with us today. I'll just summarize by saying we will continue to operate as best we can and deliver what we say. Thank you, everybody. Thanks to Jon and Grant as well.
That concludes today's call. Thank you for joining us. You may now log out.