PLS Group Limited (ASX:PLS)

Investor Day

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May 11, 2021

Good morning, ladies and gentlemen. A pleasure to be with you. Thanks to those participating here in the Melbourne Hotel. Thanks to those participating via the Chorus Line and a big thank you to those participating via the webcast and especially if you're a Pilbara Minerals shareholder. We really appreciate your attention. Welcome to Pilbara Minerals Strategy and Investor Forum. A slightly different forum to how and where you might have heard from us historically, but we think an important opportunity to present a more fulsome story about what Pilbara Minerals is up to and why. And in particular, the important piece that we think we have to play through a fantastic team and an amazing resource at our Pilgangora project. A quick reminder that there's a Q and A session, running at the end of the presentation and we'd like to be able to hear questions from each of the forums. So just a reminder, for those that are participating via the webcast, you can ask a question. There's a tab named ask a question and you can log your question. Our team will be paying attention to the chat line and as a result we'll do our best to try and address questions from each of the forums. I want to introduce you to the hardest working executive team in Australia. Today we have presenting Dale Henderson, our Chief Operating Officer, Brian Lynn, Chief Financial Officer and attending and in particular for all the tricky Q and A, Alex Eastwood, our General Counsel and Company Secretary. Very, very proud of what the guys have achieved over several years now and I'm sure, like you, I'm looking forward to hearing from them as well. So we're in this amazing time. We've been through a tough period when the lithium markets, lithium raw materials clearly wasn't working in our favor. But Pilbara Minerals got through it with aplomb and we are now ready for the global energy transformation. Our opportunity today is to share with you how we think we can go about it and and the reason as to why Pilbara Minerals and our Pilgangoora project can be worth so much more. It starts with some introductory comments. Dale will talk about projects, current operations and also more detail about what we're up to with the combination of our midstream or proposed midstream business and the downstream business. Brian is going to talk about our financial discipline, what we've done to get ourselves in what we think is a great position as the market starts to head in our favor. And lastly, I'll close with a summary, a summary position about our strategic intent and of course, lastly, followed up by the Q and A. How lucky are we to be living here in Perth, almost, almost COVID free, but we're on the Noongar lands and in particular, the Whadjuk region, host for the Whadjuk people. We respect their culture and their connection to their country and obviously, we hope that you do too. I'd also like to make special mention of NAMO, our key partners in the development of the Pilgangoora project. We pay respects to their elders past, present and emerging. Let's get on with it. I'll point you to the usual disclaimers. You can read them at your leisure. That's available via our website and via the ASX. I think it's fair to say that most of you know where we are. We're at the Pilgangoora project, massive endowment, huge mineral resource, huge reserve, having just got bigger through the acquisition of Altura Lithium Operations. We now have two plants, two production facilities with massive flexibility to grow production off a really, really large resource. We've renamed the plants and I'll explain the history as to why we've got there in a little bit more detail. As a result of a fantastic resource, very, very long lived mine, we've attracted some incredible partners both as key shareholders, but also as key partners in the business downstream including critical offtake positions. And lastly, we've developed an alternate sales channel that I'll explain in a bit more detail and get to the heart of the logic why that model makes sense for our business. I'd like to introduce to you a new addition to the Pilbara Minerals team, David Han, Investor Relations Specialist. David has a long history in the combination of broking, the analyst community and financial sectors. We're lucky to have David on board and he's a fantastic fit for our team. I encourage you all whether you're online, via the email or via direct calls to David, you'll find him an important resource for Pilbara Minerals information going forward. Key strategic shareholders, they're all a big part of our business. You might very well be familiar with our team. I think a fantastic board and a board that's deeply integrated with the management team and vice versa. I'm really proud of the dynamic that's emerged between the board, the capability and the skill that they bring to the table and how information is shared seamlessly between the management, the exec and the board. I think you'd agree that that's one of the reasons why we've been able to develop our company at a great rate of knots. And as I alluded to earlier, they are Australia, I'm not joking, They are Australia's hardest working executive team. At the heart of it, a lot of it hinges on our people. Who wouldn't want to work for our purpose, making the world a better place by enabling the global energy transformation? If you're at risk of going the way of the dinosaurs and you're in fossil fuels, you need to work for Pilbara Minerals. If you're stuck in the rust Belt in iron ore, you need to work positioned for the future. You need to work for Pilbara Minerals. There is a big change happening around the world and we want our employees to be an important part of that change. That change and that's why we've created what we stand for. This is quite long standing within our company, albeit the first time we've sort of thrown it out there in the public domain in a meaningful way, but it really gets to the heart of the way we work. We are a bit different and we don't mind that. The contribution that our team makes is really important as we consider the big changes that are going on around the world. So people, culture, it's right at the center of the work that we do. Of course, we have some fantastic assets and we've built more sophisticated systems and processes as the company has grown, but it wouldn't happen without our great team and we really appreciate them. Of course, we also appreciate the Ngunnawal people. I've been working in the Pilbara for quite a long time now. It's getting close to twenty years, and I'm really proud to have got to know many of the elders in the Pilbara, not just Ngunnawal elders, and I consider it a privilege. They are constructive and sophisticated partners to our business. We really appreciate their involvement and that's why we decided to use them to help rename our facilities at the Pilgangoora project. So now what was formerly known as our Pilgangoora stage one project, it's the Pilgang plant. The Pilgang plant, it's a representation of Pilgangoora, the bigger picture. Pilgangora Hills, the land adjacent to the hills, the Pilgang plant is well positioned adjacent to the Pilgangora Hills. Nagaju, Nagaju, slightly different spelling, but Nagaju is the name of the Altura plant and that's because it's adjacent to abundant water. There is natural springs right adjacent to the old Altura plant and as a result Narmel said you could not think of a better name And we agreed, of course. It's fantastic. Nuggethu, the Nuggethu plant and a key part of our consolidated facilities at the Pilgangoora project. And by the way, I remember when we first started drilling out at Pilgangora and everyone said we'd never find water, I can assure you there is plenty of water at Pilgangora and of course our traditional owners, the normal people, they knew that all too well. So we got plenty of water, don't you worry about that. It's been a wild ride. A lot's happened. There's been a few ups and a few downs, but mostly it's been a lot of fun. Fun because we all work amongst a great team and that's allowed us to do things quickly. There's not many mines that you'd find that have gone from first exploration drill hole to exports in less than four years, but that's exactly what our team did. And that's because there are a bunch of capable, grounded people working as a really, really strong team. The Alterra acquisition, it goes without saying it was a fantastic addition to our portfolio. And as much as we are sorry for shareholders and unsecured creditors that have lost money, it represented a fantastic opportunity for Pilbara Minerals. Having bolted on the former Altura assets, now the Nagaju plant, we've given ourselves an incredible amount of flexibility as it relates to the next generation of growth at Bilgangora. But there's also a very, very important link to the off take position. That's something I'm going to discuss in a bit more detail later in the presentation. But in short, we've got incredible flexibility as to what we do with that product and it now represents significant value. So huge critical mass, lots more to be done through the integration of the assets and Dale will explain a little bit of that in more detail. And on that segue, I'll hand over to Dale. Thanks, mate. Appreciate it. Thanks, Ken, and good morning, everyone, for those in the room and for those online. And in particular, very special thank you to those shareholders who really did have gone the journey with us, who backed the thematic, but backed us as a team because it's been an ups and downs as the way Ken described it, but it's been a hell of a challenge. But we've worked through that. So for those shareholders, thank you. Your support meant a lot and we're now on the other side of it and looking forward to enjoying the upswing. What I'll be speaking to is a bit about the operations and looking back and then looking forward and looking at our value add initiatives in the form of a midstream product and downstream product. So I'll take you through that. But to kick off with, we thought I might jump into a video just to give you guys a bit of a feeling for what it looks like at site. So we've got a bit of a flyover here and what you can see here is our central pit adjacent to the Pilgan plant. It's our widest ore load, which we've been developing the last two years. You can see Macca, our mining services contractor loading out some of the spodumene ore there, which is the white gray ore. Off to the ROM, the run of mine to be fed there into crushing contractor partners plant CSI, a pan around of the Pilgan plant, the comminution circuit in the foreground, float circuit out to the top right and sheds which hold the final con top left. Big integrated plant, 900 meters end to end float concentration and course. This here is our new Hall Road connecting through to Altura, the Nungaju plant, affectionately known as Ramsey Street, which is a bit of a shout out to Neighbors TV show. Thanks Macquarie for that one. It was a good idea. And here you have the Nungaju plant being the former Altura asset, sitting ready to go, albeit needing a little bit of love, a bit of a pan around there of their plant. And then lastly to finish, white gold coming out the end of our Pilgrim plant, course product to the left and our fines product sorry, fines product to the left and course product on the right hand side there. Loading out to cube, our haulage contractor and there you have it. So we are twenty five months into operation. So 04/01/2019 was when we kicked off. We've done 33 vessels comprising some 40 plus cargoes. So we're well into the thick of it having produced over 500,000 tons of concentrate. And yes, here we are looking forward to taking a stepwise fashion into expansion. But to start with that story, I just want to recap on the resource, which Ken touched on. We do have one of the largest hard rock pigmentite systems globally and that was before the Altura acquisition, which of course adds to that. So then sort of stretches well and truly positions us in that top quartile category as a Tier one asset owner and developer and we can reasonably expect to find more. And case in point is the drilling program we've had progressing down the boundary of what was formerly the Altura to Pilbara Minerals tenement boundary. We're two thirds through that drilling program and it's been coming up with some great results, albeit early, but we've got some really healthy intercepts, thick loads near surface and the grades looking good. So looking forward to drilling that out further and we will report that reserve increase as part of our annual reserve reporting, which will be September this year. So given this massive Tier one asset and our base operation, how are we thinking about our expansion strategy? Well, it's all about value creation and the way we think about value creation is really through three driving forces. It's about expanding and getting larger and in fact getting much larger up to three times the size of our current operation. Secondly, it's about increased margin value adding. So looking for ways to value add our lithium product into more valuable refined lithium products. And then the third driver really relates to ESG and specifically to carbon reduction and carbon out. That's a thematic, of course, globally, particularly the heavy industry, but furthermore for us as a battery materials business, it's a must have. So those three drivers are really shaping our value creation, getting larger value added product and the ESG drive with Carbon Out. And what we've displayed here is a sort of a pictorial of how we're thinking about our expansion. On the left hand side is our core business, which is what we do today producing spodumene concentrate with the stepped expansion path from that point. In the first instance, that's about debottlenecking improvement projects, which are under construction now. Then looking to bringing online the Nungaju operation being the former Altura plant and then moving on to the phased expansion for what was our stage one operation at the Pilgan plant. Moving to the right hand side, we've got what we call our midstream product. Now this is an R and D focus for us as a business and this is about the creation of an intermediate product, which does some of the processing of the spodumene product to get it into a more valuable straightforward form, a better product for carrying lithium units. And lastly, to the right hand side, downstream in the form of either lithium hydroxide or lithium carbonate, our ongoing work with on the joint venture has been our first foray. But in the picture, this is the pathway and as we think about the future over time, although our business is positioned on the left, ultimately we want to move to the right, which is around higher value add, higher levels of integration and separating ourselves away from the pack. So, starting with the left hand side and a bit of a talk about our core business around spodumene concentrate. What you have here is a bit of a schematic of the Pilgan plant. In the background, we have the ore body sort of going left to right on the screen, 10 kilometers in strike length, six sub ore bodies. In the foreground, of course, you've got the plant crushed ore stockpile to the right and power station to the left. From a safety performance perspective, it's been pretty good. It's been steady, not perfect, but steady. As a low hours site, as in small staffing, very sensitive to the atrophy rates are very sensitive to injury, but we've been going not too bad and the trend continues to be injury, but we've been going not too bad and the trend continues in the right direction. LTI free for coming up to two years, which is in good stead. So not too bad, but as always a continual focus on safety, it's foundational for our culture and for our operation. Moving from safety performance to production performance, this picture really does paint a thousand words in terms of the journey we've had and really three chapters we have moved through as a business. We had sort of Chapter one, which was around construction and commissioning back in 2017, '20 '18, a period of elation, white gold, the new oil, it was a bright future we had ahead. And just as we almost got to nameplate, that pricing started rolling downhill and we entered sort of second chapter being one of challenge and frankly survival for the industry and many of our peers. Moderated production is what we called that phase and it was exactly that. It was about managing our operating asset in lockstep with sales and cost down, balance sheet preservation and maintaining a war footing to survive that part of the cycle, such that we could be here today and stepping into Chapter three, which is around capitalizing, but capitalizing with discernment and leveraging off the position we have this massive asset and scaling up and a timing which makes sense for the business. Now as part of this period through the moderated production, it was a hard fought period, not only around being on the other side of that period, but during that period, it was a key phase for the business to really get better frankly. And for us that was about becoming a leaner, more performance driven organization, driving down cost and improving operations performance, namely, Lithia Recovery. And to that end, that's been our journey with Lithia Recovery. I love the trend. That's a linear line going straight there. Ken wants it to keep continuing. I'm telling him no, it's got to taper off at this point. But where we find ourselves today is 70% is the new normal for our Lithia Recovery and we see ourselves frankly, head and shoulders above many of our competitors and we see this as a key differentiator. But as I said, it was hard fought and it's come through the dedication of our team. In all aspects of business wide effort of teamwork, a relentless focus on improvement and a first principles approach to test work, test work, engineering implementation followed with operational discipline in the field. And that's played through starting in the ore body, our ore body understanding where we did all petrology studies with a gentleman, John, starting with the defects period following RCR when they went into administration, which that happened too by the way, just to remind everyone, we had that plus plant improvements itself. You name it, we've done it plus the operating discipline aspect. All of that sums through to what you see today and we have a first rate team who is incredibly capable and it's through this technical backbone gives us so much confidence about where we want to take the Nungaju plant, the Altura operation. So the Nungaju Altura plant into operation and then bringing the expansion focus back to our Pilgan base operation. I think the thing to emphasize here is we've got flexibility. We can time this expansion when it makes sense. This is not Greenfield's expansion, this is Brownfield's expansion of a base which contemplated expansion. So we're in an incredibly solid position to step into expansion when that makes sense. And as you can see from the blue sort of stream that that is the step up from the Nungadoo plant, Kirra Veltura's operation. And just like to give you guys a bit of insight into what that looks like. Their asset, their tails facility at the top in the background, their pit output I should say, out to the right. And where we're at with the acquisition is it transferred in January and subsequent to the transfer, our focus has been really around getting ready. It's been around the evaluation work, mine plans, understanding the maintenance requirements through the asset, studying the engineering fixes we'll look to deploy, assessing the contracts, etcetera, etcetera. Now all of this is summing through to a decision point, an FID decision point, which we're timing for late June next month. So coming up upon us and we'll be taking that forward to the board. And so subject to market conditions and those approvals, we will look to get it back into life. We're thinking most likely would be a recommissioning in December this year, initially using some of our transitional ore, which we've stockpiled. So we think that's a really smart way to undertake a rolling start to bring the operation back to life. And then as we step into next calendar year, January onwards, we'd look to ramp it up to a full rate of knots. And the future business we're building and starting with, we've got a series of projects which are starting to take us in that direction and these are related to emissions reduction and carbon displacement. And the noteworthy mentions here, firstly, we're underway to deploy a six megawatt solar farm. The team is busy working on that and we're looking toward that in the second half of this calendar year. We're doing some work on ore sorting. In fact, we have done for the last two years. We see that as a really important capital investment, not only to reduce energy intensity in our processing operation, but also it's about maximizing reserve, extracting every ounce of lithium we can out of that incredible asset that we have. The last key initiative to touch on is our midstream product, which I'll go into further detail in a second. This is a really key initiative, very early days, but it absolutely is about, we'll get into the detail about the drivers. So from an industry perspective, the industry needs to change, frankly. The hard rock lithium processing industry, like all heavy industries is carbon intensive. Firstly, it's high energy intensive and it's a carbon based energy. There are smarter ways we think there are smarter ways to move to and certainly lower carbon solutions to move towards. And yes, we're up for the challenge. Now the lithium industry different from many of the other industrial industries has got a special position and that is growing. It's growing rapidly. That's probably point number one. So it's got a chance to pick better solutions from the outset and grow into a better format from the outset are really around. So the two drivers shaping the industry are firstly on the demand drivers being EV, a growth industry and secondly, this carbon necessity, carbon out necessity, which for many of you would have seen is well and truly end to end through the materials supply chain. So frankly, we don't have a choice and it makes sense to step down this direction. So in terms of the solutions we've been looking at here, in a nutshell, what we've been pursuing is the creation of a superior lithium concentrate product, one which is greener and one which is simply better, higher in lithium concentration, more pure and easier to receive by the customer. And we think we're onto it. We think we're onto a good thing here. And to describe that in a bit more detail, what we've displayed here is a compare and contrast of the existing industry as it stands today versus where we think we can take things. So the existing industry, as I mentioned, the hard rock lithium processing, incredibly energy intensive. We mine, so it's blast, drill and blast, mine haulage, we crush, mill, grind, then we float and what flows from the back of that is a 6% lithium product, which you can see the picture of there that goes onto a vessel, 6% lithium, 90 plus percent other stuff being alumina silicate. We sell that to chemical conversion customers who then take that product. The first step of their process is heat treatment in the form of calcination, which takes the spodumene concentrate through a phase change like popcorn, alpha to beta, an expanded phase through these big kilns fueled by fuel gas. And this expanded product, which comes out the other end is then in a state that can then be digested and acid. And from that point, it goes through a series of precipitation and concentration steps ultimately to crystallization to produce a lithium hydroxide or lithium carbonate product. And that's what we do today and what we have done today. The below the line is a view of where we think the industry can migrate to over time. And the big difference here is taking the front of the chemical conversion process and bringing that to the mine site. That's part one, part to the job that they do, but B, powered by renewable energy. So this is essentially what we've been working out through on a lab scale. The picture down the bottom is an example of a lithium salt we've produced and the benefits that achieves all those aims that I mentioned and that moving from spodumene concentrate to a lithium salt, lithium chemicals offers the advantage of a material step up and lithium concentration. On a metals unit basis, you can see it goes from sort of 2% well up to 15% and above. From a waste perspective, that alumina silicate I mentioned, that 90% waste hitting off on the boat that doesn't go on the boat, it stays at the mine site, another key advantage. And from a purity perspective, we think much higher levels of purification can be achieved through the right lithium salts concentration process. So many, many advantages plus of course is the deployment of renewable energy process solutions in the form of in particular the form of the calciner. In the calciner space, we've been working with Calix. Calix is another great Aussie company living on the other side of the island who's been working in this area for some time. Now their electric calciner unit has been deployed at industrial scale, been deployed in cement plants in Europe. And we've been working with Calix over the past year for the application of their technology in this space and spodumene calcination. And the good news is, is those results are looking really encouraging. So we've partnered with Calix and that's what we've announced this morning to help to work together as a team to create this new midstream product. So their expertise in the calcination, our expertise in the chemical conversion and concentration process and those two things combined. And so where we're at in developing that pathway, I guess you'd say there's plenty more to go here. We've moved beyond the concept phase and we're now really into the scoping study phase of which we're planning to have that done and dusted by the end of the calendar year. And from that point, we'll look to take it hopefully straight to a demonstration scale. We'd love to do it at our site at a demonstration scale to what lead to a commercial solution. And that commercial solution, how would we deploy it yet to be decided, but there's multiple avenues. But this type of solution makes a lot of sense, not only for Pilbara, but of course for the industry. So we will the intention is to work with Calix to deploy that more broadly. So, yes, incredibly exciting in concept, the concept grounded and we are grounded in our base operation, our base business and our expansion path. So, we have not taken our eye off the ball in that regard and we see this for what it is, a very, very important value add R and D piece of work, which will continue to move that forward, but 90% of the business focus remains on our core business. I'll also mention that we're absolutely aware we're not the first ones to product and to finish on downstream. Downstream being the further refinement of the lithium products into either hydroxide or carbonate. Our focus here is of course been POSCO, who we've been working with the last couple of years and of late, many of you may have read that POSCO has really, really stepped up the pace there and looking to proceed vigorously forward, which is fantastic. And for Pilbara, we've been knee deep in technical and commercial discussions of late these past few weeks. So there's more to be done and ultimately a major decision to go towards the board here on where we take our engagement with Posco. But we are absolutely positively disposed to that engagement and moving forward. This has been a strategic objective from the outset of Pilbara and yes, we've done a lot of work together working with Posca to get to this point. So and considering other opportunities, we are absolutely keen and open to new downstream opportunities. Given the massive resource, the stepwise scale and production we can move towards, it makes lots and lots of sense for us to continue to do further downstream, further value adding either on our own or in partnership with others. So we're absolutely keen to explore that and Ken will speak a bit later about our offtake position and what potentially could unfold in the coming years. So lastly, to finish, I just wanted to summarize and say, I hope that gave you good insight to where we've come from and where we're heading. As I said at the start, our upstream business, our spodumene concentrator is the key focus and we've got what we think is a very smart, flexible plan around scaling up that side of the business. We then have our midstream R and D project, very, very sensible, looks great, we should continue to pursue that and we will. And we've of course got our downstream initiatives further increasing that value add on a per lithium unit basis. More to come in that space as we move from an outright spodumene concentrate provider further to the right on that value add chain. So incredible asset, incredible team and we do have a fantastic future ahead of us. So thanks for listening to me. Thanks very much, Darwin, and good morning, everyone. We've probably all heard the adage that a year in football is a very, very long time, but what I can tell you is the last eighteen months in the lithium game has been incredibly a long, long period. We've gone through incredibly difficult market conditions. We've all had to work. We've come out the other end, feeling like we're in a very strong financial position and ready to take on what we believe is a growing market and an improving market. There's probably three key messages I'd like to leave with everyone today as part of my presentation. The first is the financial additions and we now look to the future and we see that there's actually some really good signs that we've seen the worst and the best is ahead of us. And we feel like we've got a balance sheet which will actually allow us to take those opportunities in our stride. And the third point is around funding options. So we think we've got a number to fund those options as long as they are sensible for our business. Sometimes it's worth looking back where you've come from to understand where you're going. So I thought it would be worth just reflecting on, I guess, the cash flows that we've experienced over the last eighteen or so months. So this is a waterfall that we've put out in the marketplace before, for the financial year 2020. And if I think about the FY 2020 year for us, I think about it as a year of financial discipline. So if you think about it, we were faced with an incredibly rapid deterioration in the market from about June of twenty nineteen. Demand suddenly evaporated, pricing reactantly came down and we were faced with some fairly difficult business conditions. At the same time, we were trying to or we're still spending money on our plant, we're still working on the plant to improve it and to get it to the nameplate capacity and achieve the recoveries that we believe the plant was capable of and we felt we needed to continue to invest in our plant even though the market had taken a turn. And we also had looming debt repayments under our Nordic bond cash flow as much as we possibly could and we did that in two ways. One was you matched your production to the demand that you're getting from customers. So we made sure we didn't produce tons that we didn't think we could sell. And secondly, and most importantly I thought was that we drew down all of our inventory that we had built up, in anticipation of customers taking product. We made sure we drew that product down first. The result of all that is that, you know, whilst we did make, a lot of cash flow from operations, we actually came pretty close to breakeven. So I think in those trying market conditions, I think that was a reasonably good outcome. We also really, you know, having got some feedback from our customer, we just got the sense that those soft market conditions weren't just a flash in the pan, they were going to be actually something which is going to be with us for a while. So we undertook a pre emptive equity raise. We raised about $111,000,000 back in September 2019 and that was largely around protecting that we wanted to and it also allowed or gave us confidence that we weren't going to be strangled by the Nordic bond facility that, that we had in place at that still with very tough market conditions. We're still in a moderated production strategy. But what we did see is that we had actually made large inroads into how the plant was operating. We were able to get much more clarity on the cost of our production and the combination of all that meant that we could actually generate a positive cash flow from operations. And interestingly, if you take into account the provisional pricing adjustment outcome. Importantly though, with us having confidence in the plant's ability to operate and having re engineered the balance sheet through the equity raise that we did, we felt now we could actually go to market and try and refinance that Nordic bond. The Nordic bond had some looming repayments, which were going to start in June 2020. It was clear to us that the business wasn't generating cash flows, which could actually and we were able to replace what was a very expensive debt facility with one that is much better aligned to our business. We're able to get a cheaper form of debt, and I'll talk a bit more about this in a couple of slides, but it was a cheaper form of debt. But most importantly, we're able to re sculpture the repayment of the debts so that we gave ourselves another two years of runway as we waited for the market to improve. And I think that was very, very important for us. It was a key step in terms of the financial discipline that we demonstrated. So having our operations starting to turn and we saw the price starting to at least start turning north, having done that equity raise, having replaced our debt with a more sensible debt structure, we felt we were in a position where, in fact, we could look for opportunities now. And almost straight after completing the refinance of the debt, the opportunity to acquire Altura came up, and we felt we had the balance sheet where we could actually go ahead and do that buying markets in the very near term. This is really just a pictorial of trying to show the actual quarterly margins that we've actually achieved, during since September quarter of twenty twenty to March. And what you can see is as we were, I guess, working on our plants and moderating productions, we were actually losing margin. But as we got the plant performing better, you can see the gray line, which is our operating cost, that started to flatten out. And then we have seen we started to see a small improvement in pricing in the last couple of quarters. But if you look to the future and you actually look at what some of the independent forecasters are expecting for pricing in the very near term, what you can see is that we should be in a world where the pricing dynamics are going to be much more positive for our business. Now if we can be disciplined about our costs and try and maintain our cash flow, which is returns for shareholders. So we're pretty excited about the next sort of one to two years because we do think that the prices are going to be incredibly healthy. We do think that we have got a very good business, we've got a disciplined business and we think we can actually generate some very good cash flows as a result of that. So again, we think that the financial discipline that we've demonstrated has positioned us well to take advantage of an improving market. So I mentioned the refinance of the Nordic bond before and I thought I just wanted to spend a bit more time on that because I think it was a real key, to a key step for us as a business to take to make sure that we actually could take advantage of the market when it did turn. So I spoke before about the challenges that our business was being faced with looming debt repayments, but we felt that having done the planned improvement work and equity raise, we could go to market and just understand how much appetite there was in the market to replace that debt. And we were quite surprised with the level of interest. We had an interest from a number of different areas, but in the end we felt the most compelling was the offer from BNP and the Clean Energy Finance Corporation. The reason that was compelling for us was not only was it cheaper debt, but these guys were prepared to, as they turned it, to bank the recovery in the lithium sector. So they were quite happy to give us a runway of two years to wait for pricing dynamics to change and to improve, which would therefore support cash flows, which would be available to pay back the debt. So for us, it was quite an easy decision in the end to go after what is quite a conventional finance facility with these two banks. We got a cheaper interest rate, but most importantly, we actually got to re sculpture our debt repayments, so that it matched more closely the period when we expected to actually generate cash flows. So that's obviously provided balance sheet strength for us and what it now allows us to do is think about the funding options for the growth opportunities. So Dale obviously spoke to a number of opportunities we believe our business has in the next little while, and obviously to take advantage of those we need to find funding sources. So if I just step through, you know, the three or four key ones in my view, the first is the Pilgang plant improvement. So this is where we're spending money to take the Pilgang plant from about 330,000 tonnes of concentrate to about 380,000 tonnes. So we've already put in place a prepayment with Yibin Tianyi, one of our customers, for US15 million dollars and that basically will fund the works that are required to complete those plant improvements. Clearly, the Nuggetoo plant restart improvements is front and center for us at the moment. That's, I think, the most important piece of work that we're doing in our business right now, and there will be some money that will need to be spent as part of that. We're obviously going through a fairly detailed analysis of that at the moment, and there will be more to say on that in the very short term, but if we think about, you know, how we're going to fund that, well, we've got $100,000,000 in the bank, so clearly that's going to be a source of funding that work. We've also got the opportunity to increase the debt facility we have now. So we obviously acquired the NOGADU assets through an equity raise, they're unencumbered, those assets can form part of a security pool if needed, and on the back of that, we should be able to access more debt as long as it's sensible. POSCO Downstream Joint Ventures is also another important piece of work that we're currently rounding off on. People may recall when we did the original deal with Posca, we put in place a convertible bond, which they would provide. So, on the assumption that we do proceed with an investment in that joint venture, then that will be the source of funding, to allow us to do that. So we've always spoken about expansion opportunities. We've always spoken about doing that in a disciplined way when we think that the market is actually going to be there. And so when the market is there, we think we've got, the opportunities to either use customer prepayments, existing cash, cash flow from that will generate our operations, and again, you know, the ability to upsize the existing debt facility, and the working capital facility to actually be able to fund those. So in summary, again I just really wanted to go back to the three points I started with. One is around the demonstration of financial discipline in what has been a difficult market. I think as an organization, we've done a good job there. The other is around where we pop out at the other end in terms of balance sheet strength. We've got a strong cash balance, we've got a sensible debt facility in place and that really puts us in a strong position to actually grow our business from here. And then thirdly is around the growth opportunities that might come. We think we've got credible sources of funding to actually take advantage of those growth opportunities. So that's a wrap from me everyone and I'll hand back over to Ken. Okay. Thank you, Dale. Thank you, Brian. Because they're grounded, humble guys, you won't hear them singing their praises, but I'm gonna do it on their behalf. Dale and his team have done an amazing job with our Pilgang plant and we expect that we can overlay our expertise to the Novotube plant in exactly the same light. How good are they? Well, Independence Group disclosed. You don't hear much about the Green Bush's show pony but they disclosed that recoveries at green bushes were between 6575%. We achieved 70 feeding when you consider that we are producing the combination of an SC6 product and they are processing at 2% head grade as compared to our say roughly 1.4% head grade. So Dale and his team have deployed a fantastic layer of skill and hard work to achieve industry leading recoveries. As I said, at a 6% product spec because there are others producing a lesser grade. In the case of Brian, Brian and Alex, the sleepless nights that they deployed to achieve the financing with the CEFC and the BMP facility was extraordinary. Let me remind you, in the period June to September, that was the lowest of the lows in chemical pricing and spodumene pricing. And we took our headline interest rate from 12% to less than five percent. Absolutely unbelievable and a credit to to, to Brian, Alex and their teams and a credit to Dale and his team. Brilliant. Absolutely brilliant. Alright. So moving on, what else are we doing? I'm going to go through and partly summarize and partly flesh out our strategic intent. Here we have our sustainability pillars. We've been a lot more fulsome in our disclosure as of the FY twenty twenty financial reporting period and our intention is to do more of that. We're taking this aspect of our business very, very seriously because of course, it's the right thing to do. But it's also a big part of your value add to the industry. It's critical. So we're giving it due attention and of course you will see more about it from us over time. In FY twenty one, we've continued to get on with it. So some of the sort of key packages of work are already underway that will become part of our reporting for the FY twenty one year and we've listed a few of the sustainability initiatives that are underway. Let me call out a couple. We love going to the Yandere Yara community. We've got a books in schools program running there. The bottom right, Sowa the hulk. Sowa the hulk is a champion MMA fighter and he runs Healthy Minds, fantastic guy and a really good program to get our team into. We also took the opportunity to take Sowa to Yandayarra and we also took him to Port Hedland High School and it was fantastic to see the interaction underway, particularly focused on mental health initiatives. The bottom left photo there, key initiatives around Indigenous enterprise and this particular one was again another important one because it represented the highest value contract that we've awarded to a normal aligned business. Here you have Styx in the middle there, Ian Taylor. Ian's a great guy. He's been very, very entrepreneurial. He's teamed up with Simpeck for the development of the Iron Merge JV. And what they're doing is they're going around winning work in the Pilbara including at Pilbara Minerals for structural mechanical and piping works. Really good effort. So the Simpec JVs doing our Stage one or Pilgan improvement works, traveling really well. We're deep into our climate change strategy as a subset of our sustainability initiatives. You heard Dale talk about the big solar farm that's going in. Of course, our midstream product strategy is also another key initiative there. Let me be a bit more explicit about the benefit in that midstream scheme, particularly as it relates to carbon reduction. Old school is just not going to cut it. Just because we've been shipping spodumene concentrate from green bushes to China for the last twenty five years doesn't mean it's the right solution for the industry. This industry in its current phase is ripe for innovation, new ideas and better ways of doing things. And what Dale and his team have flushed out through the work that's been underway for the best part of about fifteen or sixteen months now is of course the Calix calcination technique which is a beautiful match to our fines flotation concentrate. Absolutely perfect means that we can structurally change the carbon footprint of the spodumene supply chain. Those that called spodumene as high carbon called it way too early. There is heaps more innovation that's going to be deployed to make for a low carbon footprint and Pilbara Minerals is determined to be at the leading edge of that change. Such real growth that's going on in the industry. I'm sure many of you have heard me talk about this infinitum, so I'm not going to dwell on it too much. Apologies if I skip through it quickly, but the key theme is there is, well, fundamentally, Pilbara Minerals and the lithium raw materials industry has been a net beneficiary of the COVID experience because demand has been brought forward. Why has it been brought forward? It's been brought forward because the global picture around new energy investment has been brought forward. As people look to stimulate their economies, they are targeting new energy industries. And of course, batteries are a co commitment to those new energy initiatives, electrification of the transport industry and energy storage. They're kind of the two big stories. And that's what's brought forward demand. That's why we've experienced a spike in demand and of course that's now playing out in respect of pricing. Just to ram the sort of issue home, have a look at what cattle's up to. They're a fantastic partner in our business. We really enjoy working with them. Very, very innovative company and very, very aggressive in their investment strategy. Already the world's largest lithium ion battery manufacturer and continuing to invest at an incredibly rapid pace. Do you know by their estimate, by about the mid-2020s, they will have consumed on their own the global equivalent of production last year. Pretty amazing what's happening in their business. That's why they're happy to work with partners like Pilbara Minerals who can continue to support their growth. Another thing that's often lost and I reflect on it often is just how quickly China's built out the middle section of the lithium ion supply chain, the value added products, the chemical pieces. When we first started in the industry back in 2015, you could literally count on one hand the buyers of spodumene. Now these days, there's over 25. Most of them being primary end users. There is a few traders that have come to the market but most of them being primary new users. And that's important because it links to our strategy as it relates to the battery materials exchange. I'm going to explain that in more detail. There is more buyers now than there was even just a couple of years ago and they are not supported by off take agreements. The opportunity in the Battery Materials Exchange is the creation of a spot market. And I'll explain why that's important in a minute. The statistics here relate to the obvious, I guess that hits the headlines every other day. Growth in EV sales, that's happening in Europe, it's happening in China and there's been a second wave of growth as I alluded to principally as a function of the whole COVID experience. That's motivating in the data here from UBS that's motivating now growth in both lithium hydroxide production, which has a healthy link to this quality in the spodumene supply chain and growth in lithium ion phosphate, cathode materials or carbonate supporting cathode materials. LFPs become a bit of a phenomenon in China because those cells are now so cheap. In China, the LFP cells are about 30%, maybe a third of the cost of a high nickel cell. So that's grown the scale in the market that they can address. So that's what's creating this kind of next wave of lithium raw materials demand supported by growth in hydroxide demand. On the right hand side, it's a reflection of a bit of a longer dated future. And the key behind that particular or those data points is to reflect on how much growth is yet to come in lithium raw materials. So yes, it's huge. By the independent economic agencies assessment, 10 times growth over roughly this decade, but they're 25 times growth by 02/1950. So not many commodities go through that sort of growth. That's basically what we're faced with and that's why Pilgangoora is ultimately going to be such an important project to the industry. And finally, that started to reflect in pricing. The graph on the left is a representation of chemicals price and then spodumene prices, at least in this case by Asian Metals. But each of the price reporting agencies is obviously reporting, I guess what we're experiencing and that's that there is price appreciation going on. It's been a pretty hectic first four or five months of the year. We would argue on the spodumene front, more to come because spodumene markets would typically lag the chemicals by at least a month or two. So a bit more to come. Brian's reflected on that in the way our provisional pricing models work as well. Again, we don't talk about Tandelite much, but I thought I'd include a little bit of data in that regard. And that's to say, it's also been on a bit of a run. And we think that's a function of underlying capacitor demand. During the COVID period, a lot more mobile phones, tablets and also the five gs rollout. They're heavy users of Tantalite capacitors. So a bit of that is starting to be reflected in price appreciation in Tantalite, which is great news. So hit a low of about $55 a pound currently 70 plus. So some healthy appreciation going on there. We love to reflect on the great partners in our business. They are both strategic and they're both off takers. We provided a little bit more detail about what each of our partners is up to and the interplay or the connection to our business. Often they're shareholders, often their off takers or both. But in any case, as much as it's been a tough period, we have been able to maintain all of those key relationships. It hasn't been easy. I'd certainly make that point during the period where the demand's been well off. It's been hard, but I'm pleased to say that each of our partners in their own way and Pilbara has come through the other side with a healthy relationship intact and a swathe of growth in front of us so that we can mutually beneficial outcomes to be derived. Alright, uncommitted offtake. Again, an important representation of the optionality in our business. I know people have thought of us as being sold out, but that's not the right way to think about Filbera Minerals. In the short term, we have 2,000 to 230,000 spodumene concentrate tonnes unallocated. It's not an offtake. That's principally driven by the recent Altura acquisition, but it constitutes one of the key opportunities in the acquisition because we have flexibility to deal on that product. And as I said, it has important links to our online or sales trading platform. And then, at the end of twenty twenty four, another big step up in unallocated spodumene, moving to 400,000 tonnes plus. The combination of available offtake through the Nagaju facility, but also the first round of offtake starting to roll off from our Pilgangoora project. Those tonnes, 400,000 plus tonnes is larger than most mines being proposed. So we have a lot of flexibility and ultimately a lot of optionality and Pilgang plant expansion, Dale's referenced the stepwise approach with which we hope to be able to expand that facility. There is offtake associated with that, but it's all conditional on the completion of a final investment decision as we launch into those subsequent expansions. So that's outside the unallocated offtake that I've already explained is available. Alright. Battery Material Exchange. This is worth a bit more explanation. A key point of value that we are hoping to unlock. So what we're doing is we're basically opening up the pool of unallocated product to a broader buying group than was available historically. In essence, the creation of a spot sales trading platform. It's really slick infrastructure. Believe it or not, developed here in Perth, we've scoured the world looking for something like this and we ended up in our own backyard, which is just fantastic. GEO Lex Digital has done the work here on our behalf and it's very, very cool. The benefit that we get out of it is being able to create buying tension by opening up the pool of available buyers in a convenient and single trading platform. It's very, very cool and valuable. Why? Okay. Here's the why. What I'm going to do is I'm going to paint a picture for you about a couple of key points in time in the market and explain the dynamic between or the link between the headline chemicals price and typically the way that offtake works because there hasn't really been spot trading historically in spodumene. It's typically all been done by offtake and the offtake has a predetermined price outcome where you share the benefit if there's any in the headline price in chemicals versus the contributing cost of mining and a margin and processing and a margin to create the cost base compared to the lowest of the lows. Here we are, September 2020. If you looked up in September 2020, if you looked up Platts, if you looked up Past Markets, you'd see a headline chemicals price of about $5,500 in tonne in China. You'd see based on what we know of the industry, chemical conversion costs for the sake of round numbers, let's say that's $2,500 a tonne, in which case you're left with the cost of raw material supply. There was no margin. In September 2020, basically everyone's margins being compressed to in essence zero. There is no addressable margin. That's the way the market works. I hope I've got everyone with me so far. Let's step forward to today. Now we're here in May 2021. Roughly speaking, the headline price in China for lithium chemicals at a battery grade level is $12,500 US dollars a tonne. The cost of chemical conversion hasn't really changed. It's $2,500 a tonne for the sake of our numbers, which means you're left with $10,000 a tonne to pay for mining miner's margin and the chemical converter's margin. I can tell you that perhaps past markets, let's say roughly, today's price for the spodumene landed in China is $675 a tonne, roughly. What that means is the contributing cost of the miner with our margin is US5000 dollars a tonne implying that there's a gap. This thing I've called the addressable margin is US5000 dollars a tonne. The headline price less the cost of chemical conversion, less the price paid to the minor and his margin. The gap is US5000 dollars a tonne. In bidding for our product, our thesis is that when spodumene is short, there will be more margin applicable to a spodumene tonne on the sales trading platform, I. E. The price can be higher than $675 a tonne and possibly a lot higher depending on how much tension there is in securing that supply. Now I'm not saying this is going to happen, but if we were to win all of that addressable margin, that pushes spodumene well beyond $1,000 a tonne today. I'm not saying that's going to happen, but there is an opportunity there that is well worth exploring. Let me show you one more extreme. In November 2017, the market was close to the highest of its highs. If you went to flats, if you went to fast markets at that time, it's roughly US24000 dollars a tonne, peak of the market back then or the last peak in the market. Cost of chemical conversion hasn't changed, still $2,500 a tonne. At the time, flats, fast markets, your spodumene was worth $950 a tonne. There is still this enormous gap in addressable margin. In this case, I think it was close to $18,000 a tonne implying can spodumene be worth a lot more if there's enough tension in the market to secure the spodumene and of course chemical pricing is high, the answer is categorically yes. It can. It can be higher. I'm not saying that we're gonna get it. I'm just saying there's an opportunity there that absolutely has to be explored and we've created the platform to try and make that happen. Okay. I'm hoping that that's all made sense to to you in the room and everyone online. I'm gonna close with a, we'll call it the strategic plan on a page. This is ultimately where we think the value is added for Pilbara Minerals and our Pilgangora project. The way to think about this plan on a page is to think about our core business on the left hand side, it's pre existing, it's the spodumene concentrate 6% and we're feeding our offtake customers today under agreed pricing mechanisms. And as we step to the right, we're starting to participate in new parts of the business where we're pretty confident we can add more value. The first of those is to feed product down to the battery materials exchange, the BMX platform. And in so doing, we can unlock the opportunity that I described about winning more of the addressable margin. That's an important initiative to us and I think going to be of value over time and especially for the phase in the market that we appear to be heading into. So what goes on to the Battery Material Exchange? Well, in the first instance, it's the 6% product and actually pretty much it's all about the Nuggetjoo plant production. With rats and mice from our Pilgan plant or the combined effect of Pilgan and Nuggetjoo. But over time, we can feed low grade products and that's a facility that we're building into the first round of plant improvement projects. We've called it SC five. X. It's going to be five point something. It's lower grade. Why do you do it? Well, of course, in today's market, everybody's chasing lithium units. The benefit that we get out of that is to be able to recover more lithium product. And if so, win more cash flow as a function of selling that lower grade product on the BMX platform. It just so happens that that SC five. X is perfect feed for the midstream product and the Calix technology. The pilot scale test work that we've done at the Bacchus Marsh facility was tested at these lower grades and it performs. It's fantastic. Really, really good opportunity because of the the smarts that Calix has developed in the technique for dealing with the fine spodumene and in particular being electric fired which ultimately lowers the carbon footprint through renewables. That same product goes down onto the battery materials exchange or it goes into further partnerships downstream where we're working with other key partners globally, Europe, The US, doesn't matter. That product can penetrate the global markets, not just about China and ultimately we create fines chemicals. So battery grade hydroxide or battery grade carbonate. It just so happens that in some of those raw materials that we're exploring in the midstream, they might yet be a good fit for the cathode materials market as well. So more work to be done there. Lastly, bottom right, not meant to be bottom right as in last, not at all. That's the first of the deals that we think about as it relates to linking spodumene production directly to lithium hydroxide and that's via an example, good example, the POSCO relationship which we're looking to deal with in the current quarter. So very detailed discussions underway with them. We're dealing with the last of the due diligence there and our expectation is that we'll get there this quarter. I hope all of that makes sense and ultimately translates to what we think is a much more valuable Pilgangoora project and therefore Pilbara Minerals. Okay. That's it for the formal presentation materials. A couple of key things to share. We have Phil Hodgson, Managing Director and CEO of Calix on standby. So I encourage you to think about questions that you'd like to fire at him. Great guy, fantastic team. I'm sure he can help you with some of his queries today. He's he's in the studio, in Sydney. And I'm gonna hand over to Nicholas and Kate and I'll facilitate the combination of Q and A that we're going to deal with firstly online, via the Chorus Line and then back to the room here. So I hope that all makes sense. Thanks everyone for your attention. Really appreciate your valuable time given it's a long session, but equally looking forward to all those very clever questions, I'm sure. Thank you. Nick, I'll hand over to you. Thanks very much. Ken, good morning, everyone. Welcome to question time. It's my pleasure to facilitate this session. As Ken said, we're going to do this in three phases. So we're going to deal with the online component first. We have had a lot of questions come firing in, in the course of the morning, so we'll do our best to get through them, but we probably won't get through all of them, unfortunately. So we will make a note of those that we don't get to and, David and myself will reach out to you later in the day to address anything that we don't, we don't cover. Before I get into that, for those who are dialed on to the Chorus Call telephone conference line, can I just ask you to log your question by pressing star one on your telephone pad if you'd like to ask a question? We'll start with the online first, so that we give you guys on the phones a chance to form a queue. And then once we've done the telephone questions, we'll move to everyone in the room. We've got two roving mics. So there's going to be no shortage of questions coming thick and fast to the Pilbara team here. And we'll try and keep the responses as sort of quick as possible, so we get through stuff. So Ken, I'll start with a question given you finished on a strategy note there. I've got a question here from Howard Klein from RK Equity. And he says, as the largest independent spodumene producer in a market that looks to be structurally short of independent spodumene for some time to come. Can you explain to us why it's a better move for Pilbara to move downstream or midstream rather than JV and or acquire more WA or international spodumene mines and solidify its dominant spodumene status following for example Fortescue, a new force in spodumene. So in essence, why is spodumene to China or elsewhere different to iron ore to China? Well done, Howard. That's a really good question. And trust all is well in The U. S. The way to think about your line of inquiry is to say, in part, I agree. I agree that our position as a merchant seller of spodumene is really good as it relates to today's market and for the foreseeable future, because we agree there is likely to be a structural deficit. Our response is somewhat nuanced, and I'll give you sort of two reasons why we think about the production base at Pilgangoora as being a portfolio available to the market. We very much like the idea, as you've described, that you can be a merchant seller and maximize the leverage in a short market, and that's why we've created the BMX sales trading platform. Basically, the start or the inception of a genuine spot trading position, for which we can maximize the value in the product while the market is short. But it's also fair to say that we are here for the long haul. Our asset is going to be live for argument's sake, 2,030, who knows, fifty years. And with that as a backdrop, it makes perfect sense to consider the medium and the long term, in which case creating a portfolio that opens up alternate markets, I. E. A global footprint that is sales beyond China is important and participation downstream is important as a function of maximizing margin for every tonne in the ground at Pilgangoora. So agree with the principle you've described, albeit somewhat balanced by our portfolio approach. I hope that makes sense. Thanks very much, Ken. The next question is from Christopher Rob from Rob Commodity Consulting. I think this is possibly for Dale, but I'll leave that up to Ken. Management has been very clear about the timing and restart of the Altura assets. Could management also please give some color about the timing and decision making for the Pilgang plant Phase two expansion? Thanks for the question. The order and the way we're thinking about the expansion as we've outlined is fairly fairly concrete. As it relates to the expansion for our main plant, our Pilgrim plant, we're purposely being nonspecific on that because that's really it's a question of when does it make sense in terms of the market outlook and partnering those tons with the right partner if we choose to do so. So essentially, it's in a bit of a holding pattern, but we're ready to go when that makes sense and we will trigger that when that makes sense. Yes, partly about customers, what their objectives are and the timeframe within which they think about their chemical conversion facilities and we can respond pretty quickly as required. Great, thank you. Next question is from Mitchell Chan from LYGH. Capital cash costs and pricing strategy of the new SC6 product? And could Ken also please elaborate more on the digital platform and Pilbara's ability to realize improved SC6 pricing amidst the currently flat Chinese carbonate pricing environment? Yep. Okay. Well, on the midstream, it's very difficult to be definitive because we still have a lot more study work to be done. We very much like the initial test work and we'll obviously throw to Phil to get him to explain a bit more about how he views his technology. But that has been done at a reasonably significant scale. So the facility at Bacchus Marsh is basically industrial in scale. It's It's already been producing product for the Magna side industry, so it's pretty serious piece of kit. We very much like the test work that's been derived there. That gives us confidence to step down the path now towards commercialization, but very difficult to be definitive around price and margin. Of course, our expectation is you can make more money and lower your carbon footprint by pursuing the midstream strategy, but very difficult to be definitive about it at this stage. These BMX sales trading platform, I'm not sure there's too much more to add other than to say, there is the potential to redress the value in the spodumene versus the value in the chemical conversion depending on the tension in people trying to access product. And what we're looking for in the sales trading platform is to discover that price by making product available in a way that it hasn't been made available historically. So a new initiative, one that we're confident in and of course it represents quite a big step forward for the industry, but we're not being shy about it. We're basically saying we can make that product available to you. We know that there's people that are going to be hungry for it, in which case, put your best foot forward, and we're very pleased with the engagement we've had with the customer group so far. Lots and lots of interest in participation in that platform. Thanks, Ken. Lots of questions about the midstream strategy and this one might be an opportunity to bring Phil Hodgson in from Sydney. The question is from a shareholder, what are the steps to require to commercialize the Calix technology? Yes, Phil, fantastic of you to join, mate. Please have a crack at answering that question. Thank you very much and thanks for the question. The steps to commercialize the technology, well actually the technology is already commercialized as Ken mentioned for Magnesite and also dienamites. We run dienomites and that gets sold commercially as well. Now, there are other various streams that we are commercializing. Lime and cement manufacturing are being commercialized now. And of course, now spodumene which we've been working on as you've seen for nine months now with Pilbara. The steps to commercialize, the scoping study as outlined will be about building looking at building a commercial scale electric calciner. So that will be a bit of a scale up from our current electric calciner. And so that one scale or that one step up will be enough to have a commercial demonstration module. From there to scale to larger volumes throughput for example will just be multiples of that one module. So really the step is one step and that one step, we're looking to do with Gilbert Minerals for the spodumene processing. Yes, thanks Phil. That's well described. It actually raises another good point there, that the solution that Calix have come up with is very modular in nature, and in that respect, it's quite different to conventional calcining technology, where you build one massive device to suit one train. In our case, or in the case of the Calix technology, it's incrementally additive. And the benefit that I see in that is that we can continue to add capacity in a way that's very capital versus market effective as compared to having to build one big 20,000 LCE equivalent calcining device. So I see that as being one of the benefits in accessing the technology as well. Thanks very much both. Next question, I've got here from Andrew Beck. This is for Dale. He says, Hey, Dale, any plan to expand the Ngungagadoo plant in the near future? And also, what do you see total PLS SC6 production being in 02/1930? Thanks, Andrew. Good question. In terms of the Ngungaju plant, it's unlikely that we would look to expand that off that existing base. It's fairly well designed at its limits that Altura previously been running at it. So we don't think it would be money well spent to look to augment that plant too much more in terms of increased expansion. However, in contrast, Pilgan Plant was purpose built with expansion in mind. So that's where we will divert any capital for more tonnage expansion. As to where we're at in 02/1930 for total production, well, you'd have to hazard a guess, we will be at full scale. I think given the demand and the trajectories that we all see, the world needs plenty of lithium and Pilbara is in the box seat to be a major supplier in that. I think the only nuance will be how much have we stepped down that path in terms of increased value add, whether that's midstream or the downstream, but you'd have to think that by 02/1930 would be converted well down that path and be at scale. Thank you, Dale. The next question comes from Andrew Churnside from Canaccord Genuity. Would the aim be to eventually produce all midstream product? He asked. Yes, that is a good question. I didn't really address it directly in our presentation materials, but I can give you a bit of a shape of our thinking. I mentioned that creating a portfolio of offtake positions is really important to us, including those that might serve our own purpose. So in particular, midstream strategy and or participation with further downstream facilities. Given the current offtake position and time, my expectation is that if we were producing at 1,000,000 tonnes plus in spodumene concentrate, approximately 50% would be serving our own supply chain. So it would be part of our vertically integrated business as compared to the other 50% being for the purpose of merchant sales, including obviously looking after our offtake customers who will be there for the medium and the longer term. Excellent. I've got another question this time, I think probably for Brian, from a shareholder. What's your current debt position? Is your strategy to accelerate debt repayment or consider paying a dividend? No. So the current debt position is 110,000,000 US. That's the facility we have in place with BNP and CFC. Look, I think, the way to think about the debt is that we want to try and use that as much as possible, that facility as much as possible to help with any expansion, so I don't think we'd want to necessarily accelerate the repayment of the debt. What we'd probably want to try and do is build up some cash flow, try and use some of that cash flow, to expand the business and then really just expand the debt position as required depending on what opportunities we're chasing and really just have the debt roll off in a timely manner, but certainly not to accelerate the repayment. Thanks very much. Also, I would say we'll do a couple more online questions. Just a reminder to those on the teleconference, if you could, if you would like to ask a question, please press star one on your keypad, to register your Q and A. We'll be getting to those very with China and whether that will impact or has impacted Pilbara Minerals in any shape or form. Ken? Yeah. We've seen no evidence in our relationships with customers to indicate that there's been any any impact as a result of the current diplomatic tension that exists amongst, the key reps in government. Fortunately, the lithium industry, and in particular, actually our customer group, they're all typically private interests, genuinely private or otherwise listed both Hong Kong and within China, in which case they're typically taking a very sort of worldly view about their market and their engagement with key suppliers, and that gives me some comfort. The other key thing to keep in mind is that China's investment in new energy is both extraordinary in its scale and quite deliberate with a view to minimizing their alliance on international energy sources, obviously in particular fossil fuels, and therefore creating some energy self sufficiency. And to do that, they need key raw materials of which clearly spodumene is one in support of the new energy industry. So that also gives us some comfort. Thanks very much. A couple of quick ones. Sean Shivers says, Hi, Ken. Great presentation. What's the estimated mine life as of today? Okay. Well, if it was just the combined effect of today's Pilgan plant and the Nagaju plant, it would be approximately thirty five to forty years. Obviously, it's our intention to continue to keep expanding the operation, For most foreseeable outcomes, that would translate to a mine life of twenty plus years. But my sense is, that there is still plenty of opportunity in the mineral endowment at Pilgangora. It is huge. It's a huge pegmatite system, and, the recent drilling that Dale pointed out, adjacent to the old Altura tenement boundary is a really good example. It's been underexplored historically. It doesn't take too much effort to go in there, drill a few holes and lo and behold, you turn up a whole heap more spodumene. So our expectation is that the combination of both the resource base and the pit inventory will continue to grow over time. That affords us the opportunity to then either extend the mine life or alternatively look to more capacity in spodumene concentrate production and value added products. Fantastic. One final online question from Mark Bogdan from AMZ. This is a question for Ken and or Dale. If recoveries are at approximately 72% today, assuming the Calix development works as designed and you can utilize the SC5 fines to feed this process, what are you expecting overall plant recoveries to be? Great question and we haven't really tested our grade recovery relationship of late with the current mineral feed. So a bit of a technical answer, but if I was to hazard a guess, there would be another 5% at least in terms of increased lithium recovery stepping down that grade curve and that frankly that's been quite conservative. So, yes, the ability to bring in a Calix type technology such that you can stream off and purify a valuable product and effectively increase your outright recovery from lithium ore body. It's a massive value add, but more work to come until we can be more definitive about the quantum of that value add. Nick, before you step on, this is another good one for Phil. Phil, I wonder whether you couldn't just offer a brief explanation about why or how it is that the Calix technology deals with that lower grade. I think technically that's also worth explaining because it's a really important value add to the technique that Calix have developed. Yes, sure. Thanks, Ken. The technology for those who are unfamiliar with it is just a new way to heat stuff up. Traditionally that's done in a rotary kiln when you're processing spodumene and you're trying to convert what's called sort of alpha to beta spodumene. And what that means is you're taking what's effectively a crystal structure inside that ore. And when you heat that up that sort of blows up like a bit of popcorn. And that is then what allows the extraction of the lithium out of the ore. And blowing it up like a bit of popcorn takes heat. The problem is with finer grades, typically there's more contaminants and they sort of when you heat it up move to the outside of the particle. And what then happens is that makes it very hard to extract that lithium or much harder. With our technology, we have a vertical kiln and basically you take a fine powder and you drop that down that vertical kiln and it basically just floats down through the kiln. Now that kiln we heat to 1,000 degrees centigrade and is covered off we could heat that electrically, so we can have renewable energy power in that kiln. But what we can do is get the temperature profile right on that kiln, so that the spodumene ore as it floats down is cooked perfectly. You don't overcook the popcorn and burn it. So as it exits the base of the kiln, you get the maximum conversion without all those contaminants coming to the outside and blocking what will then be your downstream lithium extraction. So that's a brief hopefully explanation of how the technology works in spodumene processing. Well done, Phil. Right. Thank you very much, Phil. While we're in Sydney, I might just throw the line open now to Ashley from Chorus Call. Ashley, are you there? Yes, thank you. We are showing no questions on the phone at this time. Okay. We'll come back and check with you at the end if anyone has popped up, but we're off the hook on the phone questions at least, so we might go straight into the room here in Perth. Ladies and gents, we've got two roving mics and they'll come to you for COVID safe reasons. So we might start over here. Thank you. Mitch Ryan from Jefferies. You've talked to the greener aspect of the MOU with Calix. Can you just flesh out your thinking on this in terms of the fact that the CLX creates a CO2, so that moves into a scope one emission? How have you thought about that process? You've talked about wanting to be greener? Yeah, yeah. No, Mitch, you hit on a good point there. Yeah, in fact, the as Dale, rightly described, you're bringing part of the what was historically the normal chemical facility in this case in China typically, and and you're bringing that to the mine. So you're right, that translates in the world of emissions assessment from scope three to basically scope one at the mine. Now in recognizing that, it's also important to note that the value created is in our view very, very strong because whilst you're taking on the emission, it's a materially lower emission that is otherwise going to be valued by the global buying group as compared to it just being a China story. So yes, we take on more scope one emissions, but we're opening up a global market that is going to value the lower carbon footprint that supply from Pilgangora represents. So to our view, that is a really important initiative and one that we're very much on the front foot with this strategy around midstream products that we've described today. Dale, have you got anything else you think is worthwhile adding there? I'll just add that as we think about the growth markets in Europe and U. S, we think what we're working on here is appealing for the reason Ken mentioned around reduced carbon footprint, but then you've also got this product, which we think will be much more easily handled and concentrated if you're building a facility, a new facility in Europe or U. S. Yes, orders of magnitude in change in terms of dealing with the waste. You're going from having to find a home for 95% of the stuff that we've shipped you to probably less than 5%. It's a really, really big change to the current supply chain. And in our engagement in Europe, we've heard that being incredibly valuable, very difficult to dispose of these products. Two more sort of follow ons from that. One, you've outlined the use of a sold megawatt. Does that provide all of the power required in this process? And then, that's one for now. Thank you. Yes. Doug? The six megawatt solar, the sizing of that is actually relating to our clean energy finance undertakings. So that's actually the background for why we've sized it is because we had so to your question on what is the renewables energy size we need for the demonstration plant, we haven't calculated that yet. That will follow through post the scoping study, which we're working on this year. Sorry, before we go to the next question, could I just ask Darren, is it possible to turn the volume of the roving mics up at all? We just had some feedback that the questions were a little indistinct online. Thanks very much. Sorry, final one for me. Can you just talk us through the CapEx on the calciner? You said it's scalable. How do we think about that? How many units of additional production does each addition to that add? And what does the CapEx look like per additional scale? Yeah, good question, Mitch, and we'll be coming back basically with more information once we've completed I don't want to give people the wrong impression about the scale in the facilities that supports the demonstration plant. It's not as though it's going to blow your socks off as to what we're doing with our balance sheet in support of the demonstration plant. So yes, it's to be measured in tens of millions, not hundreds of millions. Tim Ho from Canaccord. You talked to producing a salt, so I guess, and the next step after roasting is acid leach. So I guess, is there an acid leach stage? And then if you're producing a product with about 16% lithium, that sort of points to it being a chloride rather than sulfate? Or is it some other product altogether? Yes, well done with that line of questioning, Tim. We'll make you a chemical engineer yet. No, so the innovation as it relates to the midstream project relates principally to the unit processes that we bring to the mine, and in particular, the application of the Calix technology to lower the carbon footprint and perfect the conversion of a lower grade fines concentrate. So that's important. And then acid digestion and precipitation is reasonably conventional, and it is via a sulfate path. So we're taking something that looks a bit more like the conventional Chinese approach. Once we've been through the process of calcination, the final midstream product is targeting, as you say, higher lithium units, but not a fine chemical. Let me explain why. That's something that's also quite valuable. In bringing the first half of the chemical conversion facility to the mine, we ultimately create what should be a materially lower CapEx solution, because a lot of what's required in your chemical facility, a la Kwinana or the Kemerton facilities being constructed here in WA, a lot of the CapEx is related to creating a very, very high grade fines chemical product. We don't see that as our area of expertise. So think of us, similar logic is deployed for the POSCO relationship. We're not pretending that we're going to be a fines chemical player that's producing a four nines or a three nines or a two nines product. Our product, its intention is its industrial grade, but material uplift as compared to the spodumene product. I think we Sorry, Trent Barnett, Yours Heartly. I think in the last year, maybe some of your customers breached the offtake agreements. Have you waived those rights or in theory, could you have a much higher proportion go to the spot market? Yep, so it's fair to say that there's been some difficult periods as you quite rightly pointed out Trent. So we have had lots of conversations with customers that relate to this very point. What I've said historically is that we've reminded our customers that they weren't compliant, but at the same time and as a result, we preserved our rights and at the same time, we've continued to maintain the relationship. I feel like that has served us well as we're coming now out of difficult period back into more demand, because we have customers that are the best integrated into the sophisticated kind of Tier one battery supply chain. So our partners are typically aligned with the most important partners in the battery world, Japan, Korea, the big players like CATL in China. There has been some tinkering as it relates to the contractual terms, but I don't want to say that they're wholesale. They relate to things like we previously described, provisional pricing mechanisms, some reset in the underlying terms around timeframes for price, and that's pretty much where we targeted our efforts in those conversations. Thank you. Question down the front. Thanks. Hi, it's Jack Gabbard, Bank of America. Can you talk a little bit more about the potential optimization from producing a midstream product? So what's the potential freight cost saving? Can you push through higher iron oxide grades into the concentrate or the salt? And in terms of sort of crush size, because you can maybe recover more fine material, can you lower crush size as well or recover more of the sort of sub one millimeter type material? Thanks. Yes, good question, Jack. So going backwards, last point first, you're right, but it's actually the reverse. So what Calix brings to the table is the opportunity to deal with a finer grade concentrate in calcination at a lower grade. By implication, and Phil mentioned the same thing, by implication it means there's more impurities in there. The really strong benefit that Calix brings to the table is those impurities don't necessarily penalize the conversion and the recovery of the lithium. So the answer to your question is yes, you can handle more impurities in the spines concentrate as dealt with by Calix, and as a result at a mine level, we can recover more spodumene. The fine, it's a really healthy match between the technology as envisaged by Calix and the fine concentrate, and in particular, the fine fraction of the fine concentrate, which means we can optimize our flotation circuit and fundamentally push through more product, and as a result recover more product. Second one, shipping. A big benefit that comes out of the midstream strategy is to rationalize the freight task. You basically move from being spodumene in bulk to being so by bulk, it means tipped into a ship's hold, to it becoming much more conventional in lithium terms, I. E. A bagged product. So you move from being bulk shipping to a bagged product, For reference, say, two ton bulk of bags, that type of thing. That also means you can ship smaller lots, you can target containerized vessels. It's quite a different freight task, and as a result, gives you a lot more flexibility, and ultimately, we'd hope lowers the cost. The good news is that Port Hedland Harbor is moving in the direction of regular container freight and break bulk freight, which means more service as compared to today. So by the time we get to a commercial product, we'd expect to be able to have a reasonable service out of Port Headland. Was there three? Was there a third one, Jack? No. Oh, grind size. Oh, grind size. Yeah. Well, well actually on that particular one, I'll hand over to Dale. Okay. Good. Increasing iron content, another. And where you end up will be a function of unit costs to recovery. So we haven't done the work yet, but it may well make more sense to do more grinding to get more finer particles that therefore can convert through the Calix technology. That may well make sense, particularly if the impurities are higher because certainly the test work we've seen to date, Calix versus traditional for fines concentrate, it wins hands down. That's very, very clear and that's not even considering the downtime events that the chemical plants have, shipping out the kiln, all of those types of eutectic challenges. We think we're onto something far superior for fines concentrate, but plenty more work to be done to bed all that down. Trent Vanek, Yours Hartley again. Just so do you think the midstream product, is that going to be competitive on a carbon basis with North American hydro spodumene into Europe? Does that make sense? Yeah. No, that makes sense to me. Mid strength, mate, I think you've just branded something there. Well done. Yeah, I like it. Yes, between Ramsey Street, the BMX platform and now mid strength, I reckon you're under something. I made the point during the presentation that those that called the hard rock supply chain as being overly carbon intensive called it way too early. There is a lot more innovation to come to the table because we are a relatively young industry, and it's only now that people are seriously thinking about how to change the supply chain. We'd like to think that we're at the leading edge of that, in which case I would argue, yes, absolutely. The Pilbara, don't forget that the Pilbara is one of the world's great renewables resources. That's why, FMG are targeting Fortescue new industries, and it's to take advantage of what is one of the world's great solar resources. And in our particular part of the woods, we also think wind resources. So there is a huge opportunity to change the game. And yes, the combination of new technology, rationalizing the supply chain and in particular, our proximity to the port, basically 100 kilometers as the crow flies is absolutely globally competitive, I would argue. And, as I said, those that are calling it too high, they're calling it way too early. I think we're going to do well. Question on the left. Yes, Ken from Drummond Knight. The BMX platform seems to be a potential How much of your production do you intend to allocate to that platform? Yes, so in the first instance, it's principally described by what's available via the Nuggethu plant. Now sorry, I single out the Nuggethu plant, but basically we think about the entire portfolio of production, but it just so happens that that's the piece that's new, additive and uncommitted in offtake. There is a little bit that's freed up, as it relates to original Pilgan plant production. Our intention would be to take advantage of that on the BMX platform, and the leverage that we feel should emerge as a result of that production. So 200,000 to 230,000 spodumene tons in the short and the medium term as compared to a total portfolio of about 580,000 tonnes once we've commissioned and ramped up the Nagaju plant. In the medium term, we free up more capacity from the original offtake agreements from the inception of the Pilgangoora project, and it translates to 400,000 tonnes plus. Now we say plus because there might yet be other flexibility about the allocated product in the original stage two project development. So as a minimum 400,000 tonnes, but could very well be higher in the medium term. Any other questions down here in the front? Two in the front. Yes. Al Harvey from JPMorgan. Just wondering with more downstream you mentioned beyond the POSCO JV. How do you weigh that up now with this potential for midstream? Where do you see potential for more value coming from downstream or with the midstream? And do you think that will be the way forward for you guys with that 50% you're potentially targeting going forward? Yep. Good question. Al, the good news is they're complimentary, I think, because the effect you get with a midstream product is you can you can rationalize the supply chain in the way that we've described. We think that's very valuable, but equally you can use that product to participate downstream with a partner who's producing fine chemicals. And we think about that as being very similar to the relationship that we've described with POSCO, except that in the first instance, it's POSCO with spodumene. It could be a downstream player producing a fine chemical. It could be with spodumene, but perhaps even more importantly, it could be with a midstream product because we think that's going to ultimately be the best value in the supply chain and bring more margin back to Pilgangora project. Hey, Ken, so on the mid strength product like that name is quite good. I mean, is that with the BMX platform, was that really the key to the spodumene has always struggled to get unlocked from 5%, six % of the carbonate price? I mean, is that selling this stuff at a much higher percentage of the base LCU price really the key to sort of unlocking that or getting some of the margins from the converters, do you think? Yeah, it's a really good question, Haydn. In essence, yes. Now to get there, there is ultimately going to be a bit of trial and error, but in the same way we think about spodumene being placed on a sales trading platform and and improving the price discovery process, we would argue exactly the same mechanism could be deployed for a midstream product. You could test the market with demonstration plant capacity and find out what the product's worth, Because we would suspect there is people that are hankering for a product like that that we're describing. It hasn't historically been available in the market, but that doesn't mean people don't want it. It was just never available. So the idea that we can commercially test a sales regime via what we think is a bit more of a sophisticated sales trading platform than the usual norm in the lithium raw materials industry is ideal and represents one of the channels that we can use to penetrate the market with new products. Hello, Preston. Just on the other downstream stuff, I think you spoke earlier about being sort of fiftyfifty spot versus downstream with the Posco JV that's a favorite spot tons anyway. So what do you see your ultimate equity ownership of some downstream capacity? Because at the moment that would be less than 25%, I guess, of the total. And then also, can you just confirm with that Posco JV whether all the original agreements with the fiftyfifty debt equity and the convertible note to help fund your share of that equity, is that all still in place or is it all being re cut now? Yes. Okay. So yes, when I think about the portfolio being weighted fifty-fifty, I'm actually thinking about it principally in comparative terms to spodumene supply. So spodumene supply is either 50% to the merchant market, which would include people like our existing offtake customers. The other 50% is where we have material vertical integration downstream in a spodumene sense, but it could equally be already be converted to a midstream product. Have I got you there? It made sense. Yep. So for example, that would include like that the relationship with Posco. Posco has a hope that they do a lot more over time, and we like the idea that we can help them and others with things like a midstream product as well. So it remains to be seen where all that lands. As to the commercial mechanics, well, our expectation is we'll have more to say about that in the coming short period. But actually on the face of it, we don't expect material change. There is still going to be support from Posco in our investment in downstream facilities. And there's also sort of a piece of that that relates to our subsequent expansion in Plant 1, which broadly speaking, Brian alluded to when we think about working with our customers around the subsequent expansion of the Pilgrim Plant. Great. Any more from the room here in Perth? No questions? Going, going, gone. Fantastic. And we not show any questions on the teleconference, so Ken, we might wrap up now. I think you wanted to end about 10:30, so fantastic. I'll hand back to Ken to close. Thank you. Well done, Nick and Kate, magnificent host for question times. A quick round of thank yous for everyone's participation. Of course, everyone here in the room at the Melbourne Hotel, those who participated on the Chorus Line and those that participated via the webcast. I know we've taken up a lot of everyone's time, but we think well worthwhile to explain the future of our Pilgangoora project and ultimately where Pilbara Minerals is heading to. Angela, David, Linda, thank you very much for your contributions and organizing today's event and Nicholas and Kate, we really appreciate the help of Reid corporate, and the support that you've continued to provide to our business. Thanks everyone for your time. Look forward to a quick chat and morning tea. Thanks everyone. Appreciate your participation.

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