Good day, and thank you for standing by. Welcome to Pilbara Minerals' March 2024 quarterly activities report. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Dale Henderson, Managing Director and CEO. Please go ahead.
Thank you, Maggie, and a warm welcome to those who have joined us on the call today, in particular to our long-term shareholders for your ongoing support. I'd like to begin by acknowledging the traditional owners on the lands on which our businesses operate, the Whadjuk people of the Noongar nation in Perth, where we are undertaking our call from today, and Yamaji and Yamatji people, where our operations are located in the Pilbara. We pay our respects to the elders, past and present. With regards to introductions, the speakers joining me on the call today are Luke Bortoli, our CFO, and Vince De Carolis, our Chief Operating Officer. Also in the room, I have a number of the team supporting the call. For the call today, we have 45 minutes, and we'll step through a short presentation, followed by a Q&A for the remaining time.
We will aim to keep our comments brief. However, we will offer some expanded commentary on the partnering feasibility study we announced during the quarter. We will then move to analyst questions, and we'll set aside five minutes at the end for webcast questions. As it relates to the March quarter, well, the March quarter was one of solid operating performance and on-track project delivery. During the quarter, we have seen an uptick in pricing from recent lows observed through December and January. This uptick is comforting. However, our strategy remains unchanged: to prudently invest in expanding our production platform to position the business with, one, a lower unit cost profile post-expansion, and two, yield the benefits of higher produced volumes and higher-priced environments with this expanded capacity in store.
Now, although we are expanding, we retain our focused approach on, one, cost, continuing our pursuit of cost down through operational efficiencies, improved lithium recoveries, and sensible capital investments for further OpEx reductions. And secondly, balance sheet. Prudent management of the balance sheet, which we touched on in the half-year update. These two focus areas, cost and balance sheet, are business as usual for Pilbara. Continuous improvement is our DNA, and ongoing cost reductions is an output of our continuous improvement culture. Now, moving to slide two. The pillars of our strategy are prioritized to generate the most rapid value creation for our shareholders in service of our vision, which is to be a leader in the provision of sustainable battery materials products. Now, the March quarter made steady progress against each of the planks of the strategy. Moving to slide three.
Now, for the quarterly highlights, as it relates to production, the production outcomes were on plan for the year volumes and unit cost. 179,000 tons are produced at a unit cost of $440 per ton or AUD 675 per ton, which is an improvement on the first half costs of AUD 691 per ton, so trending well. Although it was a quarter of two halves, which Vince will speak to in his section. As it relates to the operations, the month of March was a key highlight, with nameplate production for the P680 primary rejection circuit. This period demonstrated peak production, with 80,000 tons produced across the combined operation. I would note that the month of March had no shutdowns, high head grade, and high recoveries.
However, it serves to demonstrate the sprint capability of the operation and the new capacity we have in store, and I'd also add the incremental benefit and corresponding unit cost reduction with this stronger volumetric output. Well done to all the team on this milestone, in particular, the Pilbara Minerals operations and projects team, who've been working tirelessly during the course of the year to bring forward this outcome. As it relates to sales, they were in line with production, with shipments relatively evenly spaced across the quarter. In a related area, Pilbara Ports Authority announced yesterday, this week, that Pilbara Minerals, alongside Mineral Resources, are foundation customers for Lumsden Point. Lumsden Point will provide a common user outload facility using shared bulk outload facilities at Port Hedland.
These facilities will ultimately are expected to provide a unit cost reduction compared to the current outload methods that Pilbara uses at port. Congratulations to the Pilbara Ports Authority on this next step. We are delighted to support this important asset development at Port Hedland. Moving to growth, the projects team continued to deliver very well, and I'm pleased to say that both our major mine expansion projects remain on schedule and budget. As it relates to offtake, consistent with our sales strategy for securing medium-term supply sales whilst preserving long-term optionality, the company executed a series of three-year commitments with three leading chemical conversion customers, whom all have global supply chain relationships. This included two agreement extensions signed with Chengxin and Ganfeng, and a new agreement with Yahua. Yahua joins Pilbara Minerals' stable of Tier 1 customers, who are, in our view, amongst the best in the business.
As it relates to partnering. We are pleased to expand our relationship with Ganfeng via the commencement of a joint feasibility study for a potential downstream joint venture. I'll elaborate on that shortly. Thank you, and well done to the commercial team for landing this suite of offtake updates and this important partnering agreement with Ganfeng. Pilbara's foundations are further bolstered through these agreements. With that, I'll now pass the call over to Vince for an update on the operation. Over to you, Vince.
Thank you, Dale. Starting on slide five with safety. As you can see, safety performance is steady, with a modest increase in TRIFR from 3.53 in the prior quarter to 3.73 for the March quarter. Our safety program initiatives continue to gain traction, empowering employees to actively participate in creating a safe working environment. Moving on to slide six. We had a solid operational quarter with production and costs in line with expectation. As Dale mentioned, we did have some issues with adverse weather and ore supply challenges in the first half of the quarter, but we've worked hard to resolve these and had a very good second half of the quarter. This was supported by achieving nameplate production capacity from the P680 primary rejection facility in the period.
Mining performance was delivered to plan, for volumes achieving 9.3 million tons, and I note that this is a 16% lift in volumetric movement for the same quarter in FY 2023. On spodumene production, it was again, in line with our expectations and a record for the quarter at 179,000 dry metric tons, which is ahead of quarter 2 at 175,969 dry metric tons. However, it was a tale of two halves, with the first half of the quarter impacted by weather events and ore supply challenges that are now resolved. In the latter half of the quarter, and in particular, the month of March, we set a new monthly production record with over 80,000 tons of spodumene produced, demonstrating nameplate performance for the P680 primary rejection facility.
This peak performance was underpinned by continuous operation of the P680 expanded production capacity and no shutdowns planned, higher ore lithium head grade, and higher lithium recoveries due to operational improvements, including the mobile ore sorters. I would like to emphasize that this was a peak performance month that demonstrates what can be achieved with no shutdowns. However, this should not be construed as an annualized run rate. Recoveries were below target for the quarter at 65.3%, but largely in line with the previous quarter of 65.9%. As mentioned earlier, this is a result of ore supply challenges that impacted feed mineralogy. This was resolved in the later stages of the quarter, and we are now seeing improved plant performances, including inclusive of recovery of above 70% for the month of March.
We continue to work on strategies to improve our recovery, such as ore sorting, and we expect those to improve in quarter four and into FY 25. Moving on to costs. Our costs for the quarter was $675 per ton versus $635 per ton for the previous quarter. Unit costs were slightly higher than quarter two, primarily due to pre-investment spend for P680. However, we will see the benefit of this investment into Q4 as the increased production rates flow through the whole quarter. The feed mineralogy noted earlier, which impacted production in the first half of the quarter, the investment into the mobile ore sorters, which have been strategically brought in to test ore sorting, train our workforce ahead of the primary P680 ore sorting commissioning, and also provide supplemental ore.
The mobile ore sorters are now fully commissioned and will assist in our June quarter production profile. These mobile ore sorters increased our unit cost for the quarter by AUD 50 per dry metric ton. If we excluded these ore, these ore sorters, the underlying, the underlying unit operating costs for the quarter would have been AUD 625 per dry metric tons. In parallel with supporting our ramp-up activities, we continue to implement operational productivity improvements that will result in further unit cost reduction over time. Some of these key initiatives are: reduction in our mining fleet, enabled by productivity improvements, our HME strategy, Phase One, which is purchasing our own fleet and reducing hiring costs, and our optimized shutdown strategy, to mention a few. Thank you, and now I'll hand back over to Dale.
Thank you very much, Vince. Then turning to slide eight for the P680 and crushing ore sorting update. I haven't been on site last week. It was great to see the progress on the ground. The P680 crushing ore sorting project remains on track for schedule and cost. As noted in the deck for the quarter, and updates included structural and mechanical piping, and the E&I works commenced, and delivery and installation of steel and mechanical equipment are continued. Ramp-up is scheduled for the September quarter. Now, I'm particularly excited by this project. This is the world's largest lithium ore sorter. It is scaled to take whole-of-ore feed and stands to materially improve the operating performance over time from our asset.
As a side note, the test work and pursuit of this technology deployment goes back to 2018, with testing and progression of the project continuing through the last downturn. The ore sorters are well-proven technology, however, the application for this use at this scale is leading for our industry. We all look forward to seeing this project come to life. Now, the next leg of expansion is the P1000 project. So turning to page nine of the deck. As you can see from the photo, the progress is well underway, and this project, too, remains on track for schedule and cost. Progress for the quarter included bulk earthworks and engineering, concrete construction, and underground services work. The first consignment of steel and modular units were completed, having been shipped to WA.
A reminder that first ore is targeted for the March quarter of financial year 2025. Now, moving to slide 11, as we move to chemicals. On slide 11, a reminder of our different lithium product pathways that we have, with increased level of processing, with involving more value adding, moving from left to right, with our spodumene concentrate on the left and battery-grade products on the right. As it relates to battery-grade products, a joint venture with POSCO is our first foray in this regard. So now moving to Slide 12, for an update on our POSCO joint venture. I'm pleased to say that our commissioning and ramp-up schedule was maintained by the POSCO Pilbara Minerals JV in South Korea.
As noted, a small volume of uncertified lithium hydroxide was produced in the quarter as part of the commissioning process of the first train. The JV will progress ramp up over the coming 18 months. Meanwhile, construction of Train Two progressed as planned, and the JV is on schedule to commence commissioning in the second half of calendar year 2024. The JV also commenced the product certification process. This is expected to occur within the next 12 months. Now, turning to slide 13. During the quarter, we announced the outcome of the downstream partnering process, with an agreement with Ganfeng for a joint feasibility study for a 32,000 ton downstream lithium conversion plant.
As a reminder, the aim of the partnering process was to explore partnerships that provided an accretive benefit to Pilbara Minerals shareholders, through extracting more value along the supply chain, whilst also creating a more resilient business through deeper supply chain integration. As discussed in previous calls, the industry is growing and evolving rapidly. This includes new government-driven subsidy regimes, major commitments downstream, and evolving supply chain is emerging. As such, this presents a level of uncertainty on where the winning supply chain hubs will ultimately reside and whom will occupy them. This set of conditions presents both a challenge and an opportunity. With this backdrop in mind, the partnering process threw a wide net to explore the full global opportunity set at the time.
Prospective partners in the process include OEMs, battery makers, cathode producers, and lithium chemical converters, to which we have selected Ganfeng. The study pathway agreed with Ganfeng combines our respective strengths to solve this Rubik's Cube of opportunity. Both parties recognize each other's respective strengths as two large-scale industry operators, and the merit of combining our talents on this shared aim. Key strengths of this match are many, but I highlight four. Commercial alignment. Strong commercial alignment is presented with both parties, with the aim of maximizing project economics. Expertise. Ganfeng's pedigree is one of the world's leading lithium chemical converters, having built and operating seven lithium chemical plants. They also have chemical conversion intellectual property, and of course, experience converting Pilbara Minerals product. Thirdly, supply chain integration. Ganfeng's global reach and Tier 1 customer base is an important advantage.
And fourth, both companies are aligned in our pursuit of ESG performance. Lastly, Pilbara and Ganfeng have established a strong relationship over the past five years working together. Now, if the JV proceeds, we've agreed on a range of principles which the parties intend to give effect to. This includes 50/50 JV ownership, provision of 300,000 tons of spodumene concentrate at market prices, and a willingness to explore IRA benefits via project equity sell down, if required. This study-first approach provides Pilbara Minerals with the option, but not the obligation, to proceed with the lithium chemicals joint venture. We see this as a prudent approach to ensure Pilbara Minerals only proceeds with the joint venture if the investment case is sufficiently compelling.
This approach, with Pilbara Minerals' staged and incremental approach to downstream exposure, is what we undertook with the joint venture partner, with our previous joint venture partner, with POSCO. So we are consistent in this staged and incremental approach, and we look forward to progressing the study with Ganfeng. We expect to complete the study in the March quarter 2025. Now, with that, I will now pass to Luke to take us through the financials.
Thank you, Dale, and good morning to those on the call. Please turn to slide 15 of the presentation for a summary of the group's key financial metrics for the quarter ended 31 March 2024, relative to the prior quarter ending 31 December 2023. From an operational perspective, the group delivered in line with its plan for the quarter in terms of production volume and unit cost performance. We reported production volume of 179,000 tons, 2% higher than the prior period, and sales volume of 165,000 tons, 3% above the prior period. Average estimated realized price was $804 a ton in the March quarter, declining by almost 30% compared to the December quarter. As Dale mentioned, pleasingly, prices stabilized in January, increased in February, and increased again in March month.
A BMX pre-auction sale of 5,000 tons in March month at $1,106 per ton, SC5.5, demonstrated the improvement in prices in the period. Group revenue in the March quarter was $192 million. This represented a 27% reduction on prior quarter, driven almost entirely by the 28% decrease in average realized price, partly offset by the 3% increase in sales volume mentioned earlier. Looking at unit costs, unit operating costs on an FOB basis increased by 6% in March quarter to $675 per ton. This increase was largely driven by the previously disclosed planned investment in production-related costs to support P680 expansion, including the use of mobile ore sorters. This investment has occurred before P680 volumes have come on stream at nameplate capacity for a full quarter period, as mentioned by Vince.
Also, as mentioned by Vince, March month was a record for the operation and demonstrated what is capable at P680 nameplate capacity. March month recorded over 80,000 tons of production volume at a unit operating cost, FOB, of less than $625 per ton. On a CIF basis, unit operating costs reduced 2% to $789 per ton, primarily due to a decrease in royalty costs from lower sales revenue. We also note that the difference between production and sales volume in both the December and March quarters simply reflects shipment timing rather than an intention to build up inventory.
More specifically, from the beginning of the December quarter to the end of the March quarter, there was an approximate 27,000 ton increase in spodumene concentrate inventory, with approximately 26,000 tons sold across the first two weeks of April, offsetting that amount. Finally, the group's cash balance at 31 March was AUD 1.8 billion and remains strong. I'll speak more about this later in the presentation. Turning now to Slide 16. This slide outlines our March year-to-date FY 2024 operational and financial performance relative to the prior corresponding period of the nine months to 31 March 2023. Production volume in the March year-to-date FY 2024 period increased 9% relative to the PCP at 499,000 tons. This metric is beginning to reflect the additional production capacity provided by the P680 expansion project, particularly in the March month.
Sales volume increased by an equivalent rate of 9% to 471,000 tons, enabled by higher production volume capacity. Revenue for the March year-to-date FY 2024 period was just shy of AUD 1 billion, at AUD 950 million. March year-to-date revenue is 70% lower than the PCP, almost entirely reflecting the fact that the prior period incorporated close to all-time high prices for spodumene concentrate, with prices 73% lower in the March year-to-date period. At a unit cost level, unit operating costs, FOB, were 13% higher at AUD 685 per ton, due primarily to pre-investment to support P680, as mentioned earlier.
Importantly, unit operating costs, FOB, of AUD 675 per ton in March quarter, is lower than the year-to-date period at AUD 685 per ton, and the half-year period ended 31 December 2023 at AUD 691 per ton, demonstrating the trend of improved unit operating cost performance during FY 2024. Turning now to Slide 17. This slide shows a waterfall chart representation of our March quarter cash flow statement. As mentioned earlier, the group's cash balance as of 31 March 2024 was AUD 1.8 billion and remains very strong. The organization continues to closely manage operating costs and rationalize other non-essential capital investment to maintain the competitive advantage that our balance sheet strength provides versus our peers. In March quarter, cash reduced by AUD 362 million.
A key driver of the decline in cash was negative customer settlements or final price adjustments on shipments made prior to 31 December 2023, or the start of the March quarter period. You will recall that December quarter shipments were backended, so there was a higher-than-usual number of shipments where final price adjustments were captured in the following March quarter. In addition to that, March quarter was unusual in that it was impacted by sharply declining prices that have since stabilized. These final price adjustments realized over March quarter amounted to AUD 218 million, largely offsetting the AUD 225 million of receipts from customers for March quarter sales. Cash margin from operations measured as receipts from customers, less payments for operating costs was negative AUD 146 million.
However, once adjusted for final price adjustments on previous quarter shipments of $218 million, cash margin from operations was + $72 million. This + $72 million demonstrates the positive cash generation capacity of the operation, even at lower estimated realized prices of approximately $800 a ton, as seen in the March quarter. If prices remain stable over time, the impact of final price adjustments or customer settlement amounts is negligible. In March quarter, we saw prices stabilize, and we then saw the opposite trend, where prices have risen. In terms of investing cash flows, there was $170 million of cash outflows in March quarter for property, plant, equipment and mine properties.
This included gross capital expenditure of AUD 110 million on the P680 and P1000 expansion projects, AUD 31 million of capitalized mine development costs, AUD 29 million in new projects and enhancements, and AUD 19 million of sustaining capital spend. This capital spend is in line with our guidance. As mentioned at half-year results, the group's near-term strategy remains squarely focused on P680 and P1000 expansion, while seeking to reduce unit costs through that expansion, as well as the deferral of non-essential capital expenditure. This will aid in preserving our balance sheet strength position while expanding production volume. By focusing on this strategy, the group will capitalize on improving market prices with the benefit of higher production volume capacity and proven capability to operate at that higher capacity.
We believe this will further position the company ahead of our peers, and to that end, we're pleased that in the second half of the March quarter, the operation achieved full nameplate capacity on P680, as Vince mentioned. I'll now hand it back to Dale.
Thanks very much, Luke. Now, to finish just with a few brief comments on the market, turning to slide 19. We have the team's updated the data from Rho Motion and Benchmark there for EVs and lithium demand. For my comments, I'll step through four parts: demand, supply, pricing, and Pilbara Minerals insights. So starting with demand, during the quarter, there was a number of noteworthy data points reinforcing the direction of the industry. Touching on a few of these as it relates to EV sales, Rho Motion have released preliminary numbers for quarter one for calendar year 2024, of 3.2 million in sales globally, which represented 23% year-on-year increase.
As it relates to China, EV sales, the quarter one numbers for calendar year 2024, 1.8 million units, representing a 34% year-on-year increase. As it relates to supply chain investment, a number of announcements, I won't go through each of these, but Hyundai, Northvolt, LG Chem, JSW, L&F Co. Just calling out one of these, Northvolt, sixteenth of January, secured $5 billion loan for gigafactory expansions. Another one here, LG Chem, seventh of February, $18.6 billion cathode supply deal with GM. So, more announcements which highlight the build-out of the industry. As it relates to government investment and policy support, U.S. government, China, and German government made announcements, those dates, fourteenth of March, third of April, second of February, respectively.
I'll just call out one of these, the German government setting up a EUR 1 billion fund for critical raw materials investment. So again, a positive signs of the investment going into the industry to build out the industry. Moving to supply comments. During the quarter, we know there was a number of supply curtailments occurring or flagged. These included a number of updates across a number of the Australian supply sources, and of course, most notably, Core Lithium. As it relates to China, there, too, there were some curtailments noted, calling out some shutdowns in January, as noted by SMM on the sixteenth of January, and also some other curtailments in relation to environmental inspections, again, via an SMM announcement on the twenty-first of February.
So a series of supply curtailments, partly, yet driven by the lower pricing that we observed through December, January. As it relates to pricing, and as we've covered, we have seen an uptick of late. Now, on a quarter-to-quarter basis, moving from December to March quarter, an average decline across all metrics. However, when you look at the past 60 days up to mid-April, the increases are feeling material. So just touching on these, over the last sort of 60 days to the 16th of April, we've seen a 27% increase for spodumene concentrate, across, at 27% increase as an average of the five PRAs. As it relates to Chinese domestic carbonate, the last 60 days has been a 14% increase, utilizing the SMM sources.
And seaborne hydroxide, past 60 days, a 6% increase, care of Fastmarkets. So, those numbers obviously underlie the upwards movement that we've been discussing. Lastly, as it relates to Pilbara Minerals insights, as you've heard, we've a number of support points here of the new offtakes, obviously, that we discussed, a strong indicator of demand and where the market's heading. As it relates to our offtake compliance, for the avoidance of doubt, there's absolutely no issue there. And furthermore, we are getting pushed for more supply. So again, our insight into the industry is very positive in terms of demand for our product and the direction of the industry.
So given this demand, supply, and Pilbara's insights, we remain of the view the emergence of this lithium industry remains well underway with a long runway ahead. We remain focused on delivering our strategy to maximize and realize the value creation opportunity for our shareholders that Pilbara presents, care of a unique position that Pilbara offers, being a Tier 1 asset, Tier 1 location, demonstrated operating track record and know-how, low cost position, and a strong balance sheet. Now, with that, I'll hand back to Maggie, and we can move to Q&A.
Thank you. We will now conduct the Q&A session. Please have one question and one follow-up question per person. If you have more questions, please requeue. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by as we compile the Q&A roster. Our first question comes from Kaan Peker from RBC Capital Markets. Please go ahead.
Hi, good morning, Dale, Luke, Vincent, team. Yeah, two questions from me. The exit run rate for March, pretty impressive at 80,000, and unit costs as well. I just wondering what that throughput rate was for the month, and have you continued to see higher grades and recoveries in April? I'll follow up on the second.
Yeah, thanks for the question. Through our Pilgan operation, our tonnages per hour rates went around 380 tons an hour. And we continued to improve on that. So that, that's from low 300s prior to the primary rejection expansion. So that's been going very strongly. And in terms of recoveries, yes, we continue to be trending in April above 70%, so we're seeing the continued strong performance.
Thank you. Secondly, the mobile ore sorters, were they part of the original ramp up? Maybe if you can talk around the performance of that and how long they're meant to be operational. Thanks.
Yeah, good question. So the mobile ore sorters, part of the strategy for us was to bring them online to test and train our workforce, given that the P680 crushing ore sorting is going to be the largest facility that's been seen in our industry. So that was one of our strategies to bring them online. In terms of how long we want to have them on for, we're still working through the budgeting process for that. And essentially, as soon as the P680 crushing and ore sorting commissions, which is coming up into the next quarter, we will decommission the mobile ore sorters.
So as we work through the budgeting process, we think that's probably going to be in the first quarter of the next financial year.
Sure. Thank you. I'll pass it on. Appreciate it.
Thank you. Our next question comes from Rahul Anand of Morgan Stanley. Please go ahead.
Hi, Dale and team. Good morning, thanks for the call. My first question is just around inventories. You talked a bit about the two missed shipments this quarter. So on my estimates, you're sitting at about 73,000 tons of inventory, which is now roughly six weeks of your production for this year. Admittedly, obviously, production is rising, so you probably, you know, have a normalized number coming up. But what I wanted to know, perhaps, was where is the normalized level of inventory for you? And where does inventory become a headwind, and are you holding back on any of the sales, given the market at the moment? I'll come back with the follow-ups.
Thanks, Rahul, for the question. It's Luke here. I'll answer part of that question and then pass to Dale. So you are correct in that ending inventory at the end of March was around about 70,000 tons. The two shipments that occurred in early April were not so much missed shipments as just the phased timing of shipments. And that the balance of inventory back by 30,000 tons to circa 50,000 tons. At that 50,000-ton level, if you look back through history, that is sort of approximately where our inventory balance sits through time. I'll just pass to Dale in respect to the strategy around inventory.
Yeah, thanks, Luke, and thanks, Rahul, for your question. Yeah, as mentioned on prior calls, we're not pursuing any finished goods stockpile strategy. The aim is to move the product on to our customers as efficiently and as rapidly as we can. And part of the rationale for that is really two parts. Firstly, we're a very big producer now, and the logistics around ensuring that the passing of the product works hand in glove with our customers is a key thing that we work through as part of setting up the production profile for the year. So this is one element. The second element is, of course, the movement in pricing.
The lithium industry has a history of moving sharply in all directions, which can be hard to predict. So, we don't think it's a sound strategy to be playing any sort of stockpiling game for the purpose of trying to realize the benefit, particularly given the disruption that that can cause for our important customers. So, for that reason, the strategy is to move the stock on.
Okay, got it. Look, in terms of the follow-up, I just wanted to ask a follow-up to Kaan's question, if I may, around recoveries. In terms of your medium-term targets, are they still at about 75% recovery for 5.2% grade and 65%-70% for 6% spodumene? Or has there been any movement in that? Obviously, keeping in mind the impact on costs, driven by recoveries.
Yeah, I might take that, Rahul, and Vincent might want to add to it. Yeah, I can confirm that the long run recoveries that we're targeting are 75%, as communicated in the previous FIDs that we've done. As it relates to the very sort of near term, this of course has been a ramp-up year, and next year is also a ramp-up year care of the P1000. So inevitably there is a bit of impact through integration of circuits and optimization, et cetera, et cetera. However, as it relates to incremental improvements, it's fair to say the team are progressing a number of fronts, which are pretty exciting, which will ultimately play through to ensuring the 75% is attained, and hopefully beyond that.
These include things like online analyzers, which are coming with the circuits, which are coming online, both with the crushing mill sort of and with the P1000 Project. There's ore petrology work that Vince and team have been doing to better understand the perfect recovery set points as a function of known mineralogy and the ore body. Froth cameras, other online analyzers, you name it, the operations mission is ongoing recovery improvements. So, I like the idea that we move beyond 75% ultimately. But yeah, very much in our sights. Vince, do you have anything to add?
No.
Just that 75% at 5.2% spot, or is that for 6% spot that you're talking about? Sorry.
The 75 was on a 5.7, based on the last-
Yeah.
Last major FID.
Got it. Okay. So that's still the target, and you're looking to even better it in the medium term, if possible?
Yes. Yeah. Yeah, that's right.
Okay, that's very clear. That's all from me. Thanks.
Thanks, Rahul.
Thank you. Our next question comes from Hugo Nicolaci of Goldman Sachs. Please go ahead. Hugo Nicolaci, please go ahead.
Yeah, sorry, I think it might have cut out there. Thanks for the update this morning. Just, first one from me. Dale, just wanted to get a better sense around some of the offtake agreements that were signed. Just wanting to confirm that, I guess, the new sort of medium-term contracts are more akin to take or pay agreements. But then just going back to some of the legacy, longer-term offtake agreements, I just wanted to get a better sense of how much up or downward flex in any given year do your customers have in terms of wanting to take volumes there?
Yeah, good day, Hugo. So, yeah, the extensions that we've done to those offtakes are effectively on the same terms, or better. As it relates to flex, on volumes, you'll know from those announcements that we've built in some options at Pilbara's election. And, yeah, so I think we're in fairly good stead. Across those customers, in pretty much all cases, they were seeking more product. But so from our perspective, we had the good problem of setting up our sales book profile optimally for Pilbara. Hence, we built in to those agreements some options at our election.
But I guess the-
Yeah.
Yeah, just clarifying that one. I guess outside of the options that you have to add, you know, another 50,000 tons to the 100,000 tons a year, of the original hundred, you know, can the customers say that we want, you know, 90,000 tons, not a hundred, or a hundred and ten thousand tons, not a hundred? Is there any flex on those?
No, not in that direction. No, they've got an obligation to take, and we set up those sales schedules at the start of the year, including each of the best timing, et cetera, et cetera. Hence that earlier comment to Rahul on how we manage inventory.
Yep. Great. Thanks for clarifying that one. Then just one more, if I could, just on the POSCO JV. Just noting you've, you've produced first volumes there. Just wanting to know, when do you start that certification period? Is it from first volumes, or do you need to produce a bit more volume this quarter before you can kick that one off?
We understand from the POSCO team that the process has essentially commenced, and that certification process is very much dependent on that particular customer. But as mentioned in the release, they're expecting the process to be completed within 12 months.
Great. Thanks for that, Dale. I'll pass it on.
Thanks, Hugo.
Thank you. Our next question comes from Kate McCutcheon of CICT. Please go ahead.
Hi, good morning, Dale and Luke. Your pre-auction volume that you did was done at 5.5%, and I know it's a small volume, but given that's the December delivery, should we expect the rest of the year to continue to average that 5.2% produced product grade, or should we expect the back end of the year to lift to about 5.5%, or is it just a discrete higher grade parcel that was done for the auction?
Yeah, good day, Kate. The aim is 5.2, typically. And that's predicated on maximizing the economics for our shareholders as we achieve a higher recovery at that lower grade. And we don't see any reason to change that at this point. That 5.5, we built in some parameters around that such that we could deliver a slightly lower spec if we chose to. So although the headline was 5.5, we have provision in there to scale down a little bit on a linear basis.
Yeah, got it. And then year-to-date CapEx, AUD 656 million-ish, tracking below your revised guidance range. Should I think of it as being Q4 weighted or the biggest quarter of the year coming up? Or will some of it shuffle into next FY?
That's correct, Kate. Yeah, you should think about an increase in Q4.
Yeah. Okay, got it. Thank you.
Thanks, Kate.
Thank you. Our next question comes from Rob Stein of Macquarie. Please go ahead.
Hi, Dale and team. Two questions or one strategic question for me re: capital allocation. If I look at the cash position in the quarter, it was a pretty bleak quarter, but you still broke even, and added a little bit of cash to the hopper. Are we looking forward to the end of the half and expecting an outsized capital return to work down some of that cash balance, noting that you've got about AUD 1 billion-AUD 1.1 billion of cash for the Piedmont Basin left to spend? And then secondly, how should we think about capital requirements for the Ganfeng JV and further downstream investments going forward?
Good day, Rob. Thanks for your questions. As it relates to the approach to capital management, no change in the way we're thinking about that from previous messaging. You know, as a general comment, we're taking a conservative approach and ensuring that we retain a very strong and healthy balance sheet. Given that, you know, the market has sort of gone through a sort of a downward pricing period, and given the volatility of the industry, we wanna make sure that we've got a very strong balance sheet to carry on supporting the build-out of the business in support of our strategy.
So, I'd say unlikely the board would take a view around a capital distribution. That being said, however, it's very pricing dependent, and as we've seen historically, very strong, you know, we had some strong movements in pricing, which quickly translated to very, very strong returns quickly, and we've got on them with the job of distributions back to shareholders. So, look, if that occurs, happily, you know, get the dividends rolling again. As it relates to. Sorry, second question, what's that? Capital requirements, can these-
Capital requirements for downstream.
Oh, yes. Yeah, thanks. That's, that'll be some time off. So the first step for us is to progress the feasibility study, which is all about location assessment, selection of process, et cetera. Those things will ultimately start to put some shape around capital requirements. We need to really work through that study, which is due March quarter next year. And from that point forward, there's probably likely another step of study, which would ultimately progress the shape of that. So any capital, major capital requirements are quite some time off in that regard.
Thank you.
Thanks, Rob.
Thank you for all the questions. This concludes the Q&A session. I would now like to hand the conference back to Dale for closing remarks.
Thanks very much, Maggie, and thanks, thanks for everyone who dialed in today. For any questions we didn't get to, please send those through, and thank you all for dialing in. March quarter has been a very solid quarter in terms of operating performance and project delivery. We remain focused on delivery of our strategy and building out through this part of the cycle to enjoy the fantastic opportunity the Pilbara Min- Pilbara Minerals business presents for this growth market in lithium. Thank you all for dialing in, and we look forward to our next call in the future. Thank you.
Thank you. This concludes today's conference call. Thank you all for participating. Have a great day, everyone.