Today, and thank you for standing by. Welcome to PLS 2025 quarterly activities report. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a questio- and- answer session. To ask a question during the session, you'll need to press star one one on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, PLS Managing Director and CEO, Dale Henderson. Please go ahead.
Thank you, Maggie. Good morning and good evening. Thank you for joining us today. I'd like to begin by acknowledging the traditional owners on the lands on which PLS operates. Here in Perth, we acknowledge the Whadjuk people of the Noongar Nation. We also recognize the Ngarluma and Kariyarra peoples on whose land our Australian operation is located in the Pilbara region. We pay our respects to their elders, past and present. Joining me today is Flavio Garofalo, our CFO, and Brett McFadgen, our Chief Operating Officer. We're also joined by other members of the senior team. This call will run for approximately an hour. We'll begin with a presentation on our June quarter performance, then move through our FY 2026 guidance and market commentary before finishing with Q&A. We'll address questions submitted via the webcast at the end of the session.
The June quarter marked a pivotal milestone for PLS as we completed our major capital investment cycle and transitioned into a new phase of operational excellence and performance underpinned by our industry-leading technology. We delivered on several critical objectives, with the key achievement being the successful optimization of the Pilgan plant following the completion of the P1000 expansion, delivering significantly higher production volumes and enabling lower cost performance. Importantly, we achieved these outcomes while maintaining our fortress balance sheet, closing the quarter with approximately AUD 1 billion in cash, providing us with the strength and flexibility to lead through the cycle as the market rebalances. The June quarter caps off what has been a landmark year for PLS . FY 2025 was truly transformational, and we look forward to sharing more detail in our full-year results release this August.
Since the quarter's close, we've seen renewed market volatility, this time moving in our favor. I'll speak more to that later in the presentation. Please turn to slide two. PLS is the world's largest independent hard rock lithium producer. Our independence provides agility and responsiveness in a fast-changing global market. The foundation of our business is the high-quality, long-life Pilbara operation in Western Australia. The P680 and P1000 expansions have created a leading process platform with increased capacity and lower operating costs, strengthening our position on the global cost curve. We're also building a globally diversified platform with downstream exposure through POSCO JV in South Korea and early-stage optionality in Brazil through the Kalina project. Importantly, our balance sheet with AUD 1 billion in cash and AUD 655 million in undrawn credit facilities gives us the flexibility to invest and lead through this period of the cycle.
Turning to slide three for the quarter outcomes, some key highlights from the quarter include record production of 221,000 tonnes produced, up 77%, demonstrating the operational leverage of the optimized Pilgan plant. Unit costs reduced by 10% to AUD 619 per tonne, delivering tangible cost leadership in a low-priced environment. This cost improvement is key to optimization of the larger operation, which is now complete. Brett will offer some comments on this in a moment. We had a 28% uplift in revenue and strong cash generation despite soft prevailing pricing, with AUD 98 million in operational margin. This improvement is due in part to timing, but also our significantly higher sales volumes. Importantly, we achieved or exceeded all FY 2025 guidance metrics. This is a testament to execution discipline and team capability. We have also released, as I mentioned, our FY 2026 guidance today.
This result affirms our operational excellence and reinforces our position as a sector benchmark for execution, scale, and efficiency. Now, with that, to offer a bit more detail on the operation, I'll now hand over to Brett.
Thank you, Dale. Moving now to slide four. Starting with safety, I'm pleased to report that the June quarter saw continued strong performance, with our 12-month rolling TRIFR improving to 2.79, an excellent result. This outcome reflects more than just a number. It's a testament to the ongoing work we're doing to build and strengthen our safety culture. We continue to strengthen our systems, processes, and leadership engagement to ensure every team member goes home safely every day. My thanks to the entire operational and projects workforce for their commitment to safety excellence. Moving now to slide five. The June quarter marked a significant operational milestone as we progressed the P1000 expansion, setting the stage for steady state operations in FY 2026. Production reached 221,300 tonnes for the quarter, a strong result enabled by improved plant throughput supported by the expanded Pilgan plant.
Unit operating costs decreased quarter on quarter, reflecting early benefits from scale and cost leverage care of the expanding operating platform. The ore sorting facility continues to be a key enabler, allowing greater use of contact ore, increasing lithium units recovered from the pit, and lifting overall resource utilization. Lithium recovery averaged 71.6% in the quarter, in line with expectations given the higher proportion of contact ore in the feed blend. We shipped 216,000 tonnes of product at a 5.1% grade. While the grade was temporarily lower during the quarter due to ongoing commissioning and ramp-up, we expect product grade to return to target specifications in FY 2026. With the completion of both the P680 and the P1000 projects, the Pilgan operation has been fundamentally transformed. We've added 420,000 tonnes of production capacity, improved operational flexibility, and delivered a lower cost, scalable platform.
Most importantly, this transformation positions us to capture margin through the cycle, enabled by improved efficiency, stronger resource utilization, and greater adaptability to market conditions. Thank you. I'll now hand back to Dale.
Thanks, Brett. I'd also like to just acknowledge the operating team, projects team, and the full team at PLS. It's an absolutely cracking quarter, which marks a huge year, and it was a ramp-up year. Ramp-up years are incredibly difficult. It all came together: increased scale, new tech, cyclones, building in the Pilbara region, you name it. It had it all, and it all got navigated. We're just delighted to have facilitated a step change in the operating platform, but it's key to our great people and working through just a sea of challenges to deliver, as I say, a cracking result. Well done to the PLS team. Moving to slide six, FY 2026 guidance was achieved. FY 2025, of course, sorry, FY 2025 guidance achieved. FY 2025 was a very strong year, and we're delighted to have achieved or exceeded guidance across each of the key metrics.
It's key to this very robust quarter where production volumes of 755,000 exceeded the top end of market guidance. Unit operating costs reduced to AUD 627 per tonne for the year, with further improvements in the final quarter as P1000 scale and efficiencies took hold. As it relates to capital, capital expenditure was well managed, coming in at AUD 569 million, reflecting disciplined execution despite a high activity year. I'm proud of what the team has delivered against a very challenging market backdrop during a ramp-up year. It was a year where we had a number of very important strategic firsts, including the Latin Resources acquisition and graduating to a lithium hydroxide producer, [POSCO] JV in South Korea. These results represent a standout finish to what has been a transformational year for the company. From that, PLS is incredibly well positioned.
We're not only a well-run lithium producer, but a cost-smart and technology-enabled operator. We are uniquely positioned to thrive as the cycle ultimately turns. Moving to slide seven, PLS has built a platform of strategic growth options designed to drive long-term value through flexibility, diversification, and market responsiveness. In Australia, construction of the midstream demonstration plant progressed during the June quarter, with completion targeted for the December quarter 2025. This project remains central to our downstream value strategy. The Ngungaju processing facility remains in care and maintenance for FY 2026. It provides immediate low-capital restart potential when market conditions improve, a unique optionality advantage. Our POSCO JV, or PPLS, continues to advance. Train 1 has secured another certified customer, while Train Two production has temporarily moderated at lower throughput to preserve cash ahead of completion of customer certification.
During the quarter, PLS participated in a PPLS rights issue, contributing approximately AUD 40 million for first equity injection into the JV since its formation in 2022. In Brazil, drilling activity and technical studies progressed to support the Kalina project, which, of course, is a key pillar of our future supply diversification strategy. Together, these initiatives reflect a portfolio approach to growth, combining tier one assets, global reach, and optionality across the lithium value chain. With that, I'll now hand over to Flavio to take us through the financial performance.
Thank you, Dale. Please turn to slide nine of the presentation for a summary of the key financial metrics for the June quarter. The June quarter demonstrated the operational leverage of our optimized Pilgan plant following the successful completion of the P1000 expansion. Group revenue AUD 193 million was 28% higher than the prior quarter, driven by a 72% increase in sales volume, partially offset by a 20% decline in the average realized price to US AUD 599 a tonne for SC 5.1 product grade. Production volume of 221,000 tonnes was 77% higher than the prior quarter, driven by increased output from the optimized Pilgan plant following completion of the P1000 expansion. Unit operating cost, FOB, reduced to AUD 619 a tonne, a 10% improvement quarter on quarter.
This reduction reflects the benefits of higher production volume, as well as efficiencies delivered through the P850 operating model and our continued focus on cost disciplines. Unit operating cost, CIF, also decreased to AUD 721 a tonne, a 9% reduction in line with our lower FOB cost. Cash balance remains strong at approximately AUD 1 billion as at 30th of June 2025. This underscores our ability to maintain financial strength despite lower pricing and the capital investment in the now completed P1000 expansion. Turning to slide ten, slide ten shows a cash flow bridge for the June quarter FY 2025. During the June quarter, our cash balance declined by AUD 88 million from AUD 1.1 billion to AUD 1 billion. This reduction was primarily driven by the completion of the P1000 expansion and infrastructure capital expenditure.
Cash margin from operations of AUD 98 million was supported by higher sales volume, lower costs from the P850 operating model, and favorable cash timing. Cash margin from operations, less mine development, and sustaining CapEx was positive at AUD 63 million, reflecting a strong operational performance and reduced capital expenditure in the second half. Total capital expenditure of AUD 116 million on a cash basis was largely attributable to infrastructure and project investments, including the finalization of the P1000 project. Additionally, we made a AUD 40 million equity contribution to the PPLS joint venture, reflecting our pro-rata 18% interest. This was the first equity investment since the joint venture formation in 2022, aimed at providing additional working capital during the ramp-up phase and navigating the current low lithium pricing environment. Turning to slide 11, slide 11 provides a summary of the group's key financial metrics for the FY 2025 period.
Production volume of 755,000 tonnes was up 4% year on year, driven by volume expansions enabled by the P680 and P1000 projects. Group revenue for FY 2025 was AUD 769 million, representing a 39% decline compared to prior year. This was primarily due to a 43% drop in the average realized price, partially offset by a 7% increase in sales volume. Unit cost FOB of AUD 627 a tonne was 4% lower than the prior year. This reflects higher sales volume and lower operating costs, supported by ongoing operating efficiencies underpinned by the transition of the P850 operating model. These results demonstrate that our strategic investments in production and process optimization are delivering tangible benefits, keeping us lean, competitive, and future-ready. Turning to slide 12, our closing cash balance remains strong at AUD 1 billion, despite a challenging price environment.
Cash margin from operations of AUD 192 million reflected strong cash generation at a low average realized price of US AUD 672 a tonne. Cash margin from operations, less mine development costs, and sustaining CapEx remained positive at AUD 28 million. The AUD 653 million in capital expenditure represents the completion of our major investment cycle, positioning us for enhanced returns in FY 2026 and beyond. Turning to slide 13, over the last two years, we've proactively executed a suite of cost and cash flow reduction initiatives that have delivered measurable benefits and fortified our balance sheet. These initiatives include the suspension of dividends, securing a AUD 1 billion credit facility, reduced capital expenditure, workforce optimization, the implementation of the P850 operating model, and launch of our Cost Smart program, an ongoing initiative to build a culture of efficiency.
With the completion of P1000 and ongoing plant optimization, FY 2026 presents a clear opportunity to unlock further value for the business and embed a cost-conscious culture across the business. We remain highly committed to balance sheet preservation. Our financial position is strong, with AUD 1 billion in cash, a billion-dollar loan facility of which AUD 375 million is currently drawn down, and total liquidity of AUD 1.6 billion. This positions the group well to navigate current conditions and capitalize on the market recovery ahead. I will now hand back to Dale.
Thanks, Flavio. Turning to slide 15, as we enter FY 2026, our focus sharpens around operational excellence, disciplined cost control, and capital efficiency. Following several years of investment across the Pilgan plant and broader Pilbara asset base, we can now flex the strength of this new operating platform. Now, to touch on each of our pillars of our strategy, as it relates to the operation, we're looking to realize the full value of our recent capital investment by driving performance uplift at Pilbara. We're looking also to expand and further embed our Cost Smart program for FY 2025, that Flavio just touched on. We'll be targeting continuous improvement and cost reduction opportunities across the operations, procurement, maintenance, and other support functions. As it relates to growth, we're looking to maintain optionality with targeted investment and studies to position for the next phase of the cycle.
As it relates to chemicals, we were looking to advance the certification of Train 2 of our PPLS JV, a chemical plant in South Korea, enabling commercial sales while prudently managing ramp-up to pace and to preserve cash. As it relates to diversification, we're looking to continue with measured investment in the Kalina project in Brazil through targeted exploration and study activities, positioning PLS to accelerate development as market conditions improve further. Together, these priorities reflect a disciplined, resilient, and opportunity-ready approach, ensuring PLS remains well positioned to lead through the cycle. Now, moving to slide 16, I wanted to offer just a little bit of deeper insight into our ore sorting technology. Now, because in FY 2026, we will be building on the P850 operating model by increasing the application of this ore sorting technology. Put simply, we are aiming to maximize this lever to achieve lower unit costs.
Our core focus will be the progressive utilization of contact ore feed. This is a blended material from the ore host rock boundary that you can see in the hatched area on the photo. This shift unlocks multiple operational benefits. Firstly, lowering mining costs by reducing total material movement and increasing the proportion of mined material that is processed. Secondly, improved mine flexibility and resource utilization through reduced dependency on clean ore, enabling more efficient extraction sequencing and longer-term optionality. Now, while these changes deliver meaningful unit cost reductions, they are expected to result in a modest decrease in lithium recovery due to the characteristics of the blended ore feed. For FY 2026, we are targeting an average recovery of approximately 72%. This optimization reflects our focus on applying smart technology to unlock greater value, drive down costs, and strengthen resilience through the cycle.
Now, turning to slide 17, as it relates to FY 2026 guidance, I'm pleased to share that this reflects a step change achieved through several years of investment of the Pilgan plant and a continued focus on disciplined cost management. As it relates to production, it's forecast at 820,000- 870,000, with steady quarter-on-quarter volumes as we maintain strong plant utilization. As it relates to unit costs, FOB is guided at AUD 560 to AUD 600 per tonne, underpinned by increased throughput, ore sorting optimization, and improved operational efficiency. As it relates to capital, capital expenditure is forecast AUD 300 million - AUD 330 million, following a robust review to prioritize critical spend, optimize timing, and preserve balance sheet flexibility.
Lastly, as it relates to Brazil, the Kalina project costs are estimated AUD 40 million - AUD 45 million, largely related to targeted exploration to extend resources, progression of project studies, and other operational activities, which will be largely expensed, hence are not included within the capital guidance. Now, moving to slide 18 to offer some comments on the market. Stepping forward to slide 19, there are signs the lithium winter may be lifting, but it's early in this change. Volatility remains high, and as ever, market fundamentals are difficult to see with clarity. The lithium market has long been marked by volatility, with prices prone to sharp and sometimes counterintuitive swings. Over recent years, it has cycled through periods of unsustainably high pricing, followed by corrections to levels well below the cost curve, disconnected from long-run fundamentals, as witnessed over the past year. This volatility is not incidental.
It reflects a still nascent market with limited liquidity, few futures mechanisms, and undeveloped trading infrastructure. Pricing remains inefficient. In this environment, short-term moves are often driven by sentiment, policy signals, or speculative flows, rather than durable shifts in supply and demand. The pricing pattern over the last 12 months is a clear example. Spot spodumene prices fell to levels that rendered much of the global LC production loss-making, a point clearly illustrated in the forthcoming slide. This was not the result of a fundamental oversupply alone, but an immature market that remains in development. The recent price rally, which began late in the June quarter and accelerated into July, follows this pattern: a sentiment-led rebound triggered by perceived supply risks. In this case, Chinese regulatory reviews of brine and lepidolite operations and the suspension of a major project fueled renewed price momentum.
Now, we remain cautiously optimistic, but continue to monitor whether the flagged supply-side adjustments will eventuate. Now, moving to slide 20, this graphic shown here underscores a critical reality. Despite the recent rally, spodumene pricing remains well below the levels required to incentivize new investment and falls well short of the long-run price expectations. From PLS's perspective, several key market dynamics are worth highlighting here. Firstly, pricing remains structurally inefficient and prone to sentiment-driven swings. Secondly, the recent uplift represents a partial correction only, not a full recovery. Lastly, long-run sustainability will require materially higher prices to support our future supply, as you can see in the graph. For PLS, our strategy remains unchanged. The business has been built to navigate this volatility, and we're positioned to capitalize as market conditions improve.
A low-cost operating platform, strong balance sheet, and diversified growth pipeline provide the resilience needed to navigate current conditions and capitalize as the market cycle changes. Now, moving to slide 21. While near-term pricing is volatile, the long-term demand picture remains robust and continues to strengthen. Global EV sales reached 5 million units in the June quarter, a 27% year-on-year increase. In China, EV penetration hit 50% in June, while global EV market share reached 25%. For calendar year 2025, EV sales are forecast to grow 23% year-on-year, with a CAGR of 14% expected through to 2030. As it relates to energy storage, this is also accelerating. Global ESS installations hit 65 GW in Q2 calendar year 2025, up 36% year-on-year, with 116 GWh installed year to date, being a 46% increase. Forecasts indicate 40% year-on-year growth for ESS in this calendar year alone.
Together, EVs and ESS are expected to account for something like 90% of lithium demand by 2030, highlighting a powerful and durable and structural demand trend. As noted earlier, current pricing does not support the investment required to build the next wave of supply. This disconnect, as illustrated in the prior slide, presents a long-term risk to supply security and likely a source of future volatility, but it also creates an opportunity. PLS is strategically positioned to lead through this cycle as a scale independent operator with a strong balance sheet and low-cost platform. We offer a rare combination of flexibility, resilience, and growth optionality, including the Ngungaju restart, the Kalina project, and P2000. This portfolio approach enables PLS to adapt as conditions evolve and to capture value as demand continues to accelerate across global battery markets.
Now, before we move to questions, I'd like to leave you with a few final reflections. The June quarter marked a defining moment for PLS, with the successful completion of our expansion and the shift into the next phase of our journey, characterized by scale, efficiency, and discipline. We delivered against all FY 2025 guidance metrics, a clear demonstration of our team's execution capability, and our FY 2026 targets reflect the strength of the platform we've built: cost-optimized, capital-efficient, and margin-resilient. With a scalable, technology-enabled operating base, a fortress balance sheet, a globally diversified growth portfolio, PLS is uniquely positioned to lead through the cycle and to capture value as market conditions improve. While near-term pricing remains volatile, the long-term demand story is unchanged. Structural drivers, from electric vehicles to ESS, continue to grow, yet current pricing does not support the investment needed for future supply, signaling potential future tightness ahead.
Our confidence is anchored in what we can control: disciplined execution, operational excellence, and strategic agility. These are the hallmarks that differentiate PLS, making us a partner of choice in global supply chains and a company well positioned to capitalize on the lithium recovery. Now, with that, I'll hand back to Maggie to open the floor for questions. Thank you, Maggie.
Thank you, Dale. We will now conduct the question and answer session. As a reminder, to ask a question, please press star one and one on your telephone keypad and wait for your name to be announced. Please stand by while we compile the Q&A roster. Our first question comes from Austin Yun from Macquarie. Your line is now open.
Morning, Dan, team. Great results and strong finish to the year. Just a question on the production plan. Can see the guidance already, as you commented, the market is quite volatile, but you remain constructive to the medium to longer term. Just wanted to get your take on the plan of Ngungaju . What's the maintenance cost you plan to sink in, or do you see that plan to be offline for a period of time before restarting? Thank you.
Yeah, g'day, Austin. Thank you for your question. We've assumed that Ngungaju stays off for the year. However, if market conditions improve, we can easily bring that back online. We've previously guided that we need a four-month window from decision to bring that online and ramped up. It sits waiting in the wings, but there's no cost there. It just sits in the wings, as I say, ready to be deployed as and when market conditions improve.
Thank you, Pass it on.
Thanks, Austin.
Thank you. Just a moment for our next question, please. Next, we have Jon Sharp from CLSA . Your line is now open.
Yeah, hi, Dale and team. Just a quick question from me. What do you see as the key risks in achieving the lower end of cost guidance of next year? Is it, you know, labor strip ratio, feed variability? Just curious on your thoughts there. Thanks.
Yeah, I'll offer a quick comment and then speaking one for Brett to touch on as well. I think in the context of the year we've just moved through being around construction, ramp-up, optimization, relatively this is we've got a much higher level of confidence stepping into this year, given that we're looking at a steady state platform. That being said, these large operations obviously contend with a whole bunch of variables. With an open pit with multiple open pits, we're relatively de-risked there. We've got a very stable, consistent operating team who's continued to perfect their know-how as it relates to the plan. A lot of the trouble areas you see in many operations, on a relative basis, we're in pretty good shape. Brett, why don't you touch on?
Yeah, thanks, Dale. The last couple of years have been where we've introduced new capital projects, the P680, the P1000, so always difficult to manage those costs down as you're introducing new variables. This year is really around the steady state operation after the optimization phase of P1000, and our Cost Smart program that we've been rolling out into its second year now is really starting to bear some great fruit through the initiatives of our people as we start to see some great cost-saving initiatives and innovation. I think there's plenty of innovation left in the mine, and now it's really around that steady state operation and bedding down some of that new technology in the plant. I think from a cost viewpoint, I think we're well positioned to manage any of the impacts coming in from other variables like suppliers or supply chains.
I think FY 2026 will be a very good year for PLS.
Okay, thanks. I'll leave it there and pass it on.
Thanks, John.
Thank you. Our next question comes from the line of Rahul Anand from Morgan Stanley. Your line is now open.
Hi, morning, team. Thanks for the call. Two from me, both related to, actually one related to mining, one related to pricing perhaps. With regards to the mining side, just noted that 5.1% is your product grade this period, and recoveries were yet 71.6%. You flagged 72% for next year. Could we just revisit that one more time, Dale, in terms of why the lower recoveries, what the strategy changes? I also noted in your physicals that the mine volumes are significantly higher at 1.5 million tonnes and you've stockpiled a bit of ore. Is that selective processing happening or what exactly is happening there? That's the mining question. I'll come back with one on pricing. Thanks.
Sure. Thanks, Rahul. There's a few parts to that. Firstly, just in terms of the look back and the quarter, which was the grade of 5.1, it was a function of the optimization impacts of the quarter. March quarter was about ramp-up. June quarter was about optimization, so slightly lower on produced product grade. However, those levels have returned to the normal levels around 5.2, so certainly no concerns in that regard. As it relates to the operating shift that we've described here and the commencement recovery, just to offer a bit more description around that, what that's all about is capturing a mixed ore feed from the mine. Not only the clean ore, we used to have a clean ore only strategy historically because we did not have ore sorting capability, which we do now.
What the ore sorting capability enables us to do is to capture all of the ore right up to the boundary, the host rock boundary. The host rock boundary is a co-mingled combination, the host rock plus the actual ore. The opportunity here is to capture all of that and effectively increase the volume coming from the mine. That's essentially the key benefit. The impact which comes with that is you're placing reliance on the ore sorting capability to clean that ore up. In the main, it does clean it up to a significant degree, but it does entail a very small level of impurities which carry through into the operation, hence a small impact to lithium recovery. We've guided that being a target recovery of 72%, which you may recall historically, we've always talked about an average of 75%. That's really the basis for that.
As it relates to mine volumes, nothing peculiar going on there. It's just a function of where we're at in the mine plant at this time. For the ore, just for the avoidance of doubt, we're certainly not high grading.
Sure. No, I understand that. Thanks for the color. Just a quick follow-up on that. In terms of the ore sorting strategy, I think that hasn't changed necessarily. What is different, I guess, is what's confusing me in terms of why the recoveries are expected lower.
Sure. The key impact, Rahul, is we are looking to maximize the proportion of the contact ore at the boundary to a much higher level for the purpose of lower unit costs. Moving to a volume higher than we had originally set out to do for the ore sorting facility. Brett, anything to add?
Got it. Okay, that's very clear.
Yeah, I think that's the key, this is a step change in the amount of contact ore that we're adding. The ore sorters, you know, we've optimized those through the previous quarter. Now we're actually unleashing them a little bit more, and we're actually adding a lot more of that material coming out of the mine. With that comes the higher levels of iron and other contaminants, so that impacts the recovery. We're really optimizing it for the lowest cost right through that value chain.
Got it. Okay. Look, I've asked a detailed question. I'll make sure the second one's very quick. Pricing is the question. Obviously, the pricing is a bit weaker in terms of if I compare it to some of the peers in the market. My understanding was end of last year, you renegotiated a contract. You ended deliveries on one of your off-takes. What are we missing? Is this purely timing? Is it something else that's playing in the pricing you've achieved? Anything to call out there?
Yeah, thanks on that one, Rahul. Firstly, as it relates to the March quarter, we did outperform our Australian peers in terms of realized pricing. As it relates to the June quarter, it looks like we might be in the middle, some below, some above us. Fundamentally, what's behind that is the pricing for the June quarter has become quite volatile again. We've seen a range from low AUD 600s to mid AUD 800s during the June quarter. Of course, that's going to have an impact across the producer set, depending whether they've done spot sales or whatever their pricing formulas may be based on. I think that's probably the underlying reason for any variances you're seeing across the set at this time. As it relates to our off-take agreements, it's very much business as usual there. There's nothing, there's no recent interesting activities there. It's just very much BAU.
Got it. Okay, thank you. That's all from me. I'll pass it on.
Thanks.
Thank you. Our next question comes from Hugo Nicolaci from Goldman Sachs. Your line is now open.
Morning, Dale and team. Congrats on completing FY 2025 and exceeding guidance. First one for me, just some clarifications around CapEx. Can you just confirm what the split of sustaining in mine development in the quarter just gone was? For the full year CapEx, is that difference between your AUD 569 million versus guidance and the AUD 653 million in your cash flow purely cash versus accrual, or are some other spends on Kalina and studies and other things in that number that we should consider?
Yeah, thanks for the question, Hugo. In terms of Kalina, starting with the back end, we expense our costs on Kalina, so there's no capital expenditure there. We do capitalize acquisition costs only, but expenditure on Kalina is expensed. In terms of the split on capital expenditure, it was a split between mine development, P1000, and sustaining CapEx to the tune of around AUD 20 million - AUD 26 million on each part. That's a summary on those parts.
Got it. Thanks. That's helpful. Just digging more into the POSCO JV and the equity raise there, if I go back to FY 2024, the JV had drawn down more debt that was supposed to see both trains through construction and ramp up. Your raise implies that the JVs had to tip in another AUD 220 million, give or take. Are you able to just give us a bit more color in terms of what the unit costs are running at there and what the CapEx requirements are so that we can better understand what that JV cash flow outlook looks like and, as a flow-on impact, what the value of your option to buy more of that stake is?
Sure. Thanks, Hugo. A few pieces there. Starting with the build, looking back, the build was as expected. Of course, this has been coincident with the price decline of the market. It's a tough time to be bringing on a new hydroxide facility. That really gives rise to the equity injection that we've provided to the team there. In terms of unit costs, we haven't provided any guidance on that, given that obviously that facility is still very much in ramp-up mode, as indicated by our releases. We're looking to see that prove itself in time, and we're certainly very happy with the progress there. Does that answer your question?
Yeah, I guess the kind of implication of the question, should we expect more equity to need to be tipped into that JV, and when, if prices stay where they are?
Yeah, it's too early to say on that, Hugo. Obviously, the key variable with all of this is what happens with pricing. The recent appreciation, everyone's buoyed by that, and we're all waiting to see how sustained that is, as per my earlier market sort of comments. That is really the key variable. Meanwhile, we are watching and observing that the team get on with the job of ramping up that operation, which they're doing very successfully. The recent certifications and the more certifications they're getting with Tier 1 customers speaks to that good progress. It's yet to be determined if any requirements are needed in the future. As I say, pricing is really the key determinant.
Got it. If I can, one more just while I've got the floor, just P2000, no mention of that in the release today. It was sort of study timing.
Sorry, Hugo. This is Operator. Please re-queue for your next question.
Yeah, no news on P2000 now, Hugo. That's a thanks, mate.
Thank you. Just a moment for our next question. Next, we have Mitch Ryan from Jefferies. Your line is now open.
Thanks, Dale and team. Just a quick question with regards to the ore sorting facility and the utilization of that going forward. With your new cost guidance for FY 2026, how much of that is sort of amortization of, I guess, your contact ore zone stockpiles? What % of the feed do you think will be contact ore zone, whether it be from the stockpiles or straight from the pit?
In terms of the proportion of contact ore, we haven't disclosed that level of detail. I can't offer you too much insight at that. As I mentioned earlier, we are looking to move to volumes above the design criteria that we initially set ourselves, which obviously supports the improved cost performance. As to the amortization, do you want to take that?
Yeah, thanks. Yeah, we'll amortize that during the course of the mine plan over the coming FY 2026 period and beyond.
Will there be a component of that sitting inside your unit operating costs? I guess, will your cash flows be slightly improved by that?
There will be some slight improvements through blending some of that contact ore, yes.
Okay. You're not able to quantify that at this point in time?
Not at this point, no.
That's it for me. I'll pass it on. Thank you.
Thanks, Mitch.
Thank you. Next, we have Kate McCutcheon from Citi. Your line is now open.
Hi, good morning, Dale and team. I have an exciting accounting question this morning. You've noted that you expect another net loss from the POSCO JV to go through your stat accounts. Similar to last task, can you just remind me what that was? Secondly, given that you've just come out of that P1000 spend, is there anything you can tell us around depreciation or D&A expenses for the next FY?
Yeah, hi, Kate. Thanks for the question. In terms of POSCO, we equity account our 18% interest in that joint venture, as we've done since inception, and we'll continue to do that for the period for FY 2025.
You've flagged a net loss to go through the P&L for this half. You said you expect it to be similar to last half. Can you remind me what that was?
Last half was approximately AUD 20 million. We expect a similar result for this period of the second half.
Okay, cool. Okay. Any comments on depreciation? I assume there's a step up now that P1000's finished.
Yeah, depreciation will increase slightly as a result of the capitalisation of the P1000 expansion, and that will be amortized on a units of production basis over the life of mine.
Okay, thank you.
Thank you. Next, we have Al Harvey from JPMorgan . Your line is now open.
Yeah, morning, team. Just on stripping in FY 2026, I think through FY 2025, we're hovering around 4 to 5. Can you just remind us of your long number and I suppose levers that you have to pull in 2026 and its impact on costs on your cost guidance this year?
Let me offer a quick comment there, Alan, and then Brett can weigh in on this one. As it relates to levers to pull, obviously, we've talked about the ore sorting elements, the key one we're looking to maximize. Outside of that, just stepping back into the mine, we are partway on a sort of a multi-year maturity journey there with a continued transition to owner-operate. We're partway through that. During the course of the year, we took on drill and blast. There's more to come in that category, and there's more straightforward productivity improvements to come in that space. As it relates to the processing, the mission will always be further recovery improvements. We've got the team working on waves of new programs around that, which is all about chasing incremental improvements. We'll do that.
Of course, outside of that, you've got what I'd call the bread and butter stuff around bulk procurement and doing trials around spheres, longer-lasting materials, etc. The guys have got a bunch of programs underway, which fall under the Cost Smart umbrella, which is our continuous improvement initiative within the business. Brett, have you got?
Yeah, Al, the main issue there is that, you know, we can reduce the amount of stripping in FY 2026, not through high grading, but from really leveraging the ore sorters to take all of the contact ore material, which kind of allows us to limit the amount of time spent in the waste stripping areas to uncover just the clean ore mixture. As we move into future years, you know, we do get into some of the larger cutbacks. Our strip ratio for FY 2026 is basically a function of using all of that contact ore, and then it steps up marginally in FY 2027 and thereafter as we get into some of our planned cutbacks and out of the mine plan.
Yeah, thanks, James. Just another one. The CapEx deferral from stage two of the power strategy, if you're able to elaborate on the quantum of the saving there, and does that have any go-forward impact on OpEx, and maybe just how you think about, you know, what kind of market conditions you'd be looking for to bring that back into the plan?
Yeah, I can answer that. It's approximately about AUD 5 million on the deferral.
The market conditions?
Yeah, the operating benefit was going to be pretty marginal on that one. We've looked to sort of the mentality we took to FY 2026 was one of just critical CapEx only. As such, some of those sorts of incremental investments, which have got a longer payback, we've deferred that till later. We don't have a sort of a macro market price in mind. We will bring that one back online, but ultimately, we will.
Sure. Thanks, Dale. Thanks, team.
Thanks, Al.
Thank you. Our last question from Glyn Lawcock from Barrenjoey . Your line is now open.
Hey, morning, Dale. Best till last. Just wanted to talk a little bit about FY 2026 guidance. You've given us cost. You've given us Brazil. Just wondering if you could maybe just provide some color around SG&A, any other exploration and study costs on P2000, and then leasing spend as well for the year ahead. Thanks.
Sure. I'll touch on, yeah, Glyn, I'll touch on studies and Flavio can speak to leasing costs. As it relates to studies, very small dollars being spent in the studies category, but we are, of course, progressing those required studies for both P2000 and the Kalina project. In the scheme of things, they're not huge dollars. Flavio?
Yeah, good day, Glyn. Thanks for the question. On the leasing spend on slide 12, in terms of the cash flow split of AUD 95 million that we've got there, the split of leasing there is about AUD 68 million. We expect that to be similar for the next financial year FY 2026 as well.
SG&A at the head office, because I believe that's outside the cost guidance of AUD 560 million- AUD 600 million. Is that running another AUD 70 million outside of the cost guidance?
Yeah, we expect that to be slightly less, Glyn. Through our Cost Smart initiatives, we've taken on some reductions there as well. We expect that to be slightly lower for FY 2026.
If we sort of said AUD 70 million on leasing, AUD 60 million on SG&A, and another, what, AUD 10 million -AUD 20 million exploration and studies outside of the Brazil guidance would probably capture everything, you think?
Yeah, I think that would capture it quite well.
All right. Thanks very much. Appreciate it.
Thanks, Glen.
Thank you. Now we will move on to the web questions. I will pass the line to James Fuller.
Okay, thanks, Mi. We have some questions on the webcast. First question, what project will be put into production first, P2000 or Kalina?
Yeah, thanks for the question on that one. As it relates to P2000 or Kalina, several variables sort of come together which inform that decision. It's about approvals, studies, and the actual investment case itself. Each of those projects are in different states of maturity. I suspect that when the time comes, it will be quite obvious which makes most sense to progress first based on one of those variables.
Okay, thanks, Dale. Any update on the Gangfeng joint downstream partner study still slated for CY 2025 release?
Yeah, as it relates to the Ganf eng study, we're working together on that, continues to march forward, and both parties are very much enjoying working together and progressing that. That's underway and on track. Of course, will we look to be pursuing that in this market? Unlikely, yet there's discussions to be had with Ganf eng on that. Ultimately, in time, we like the idea of continuing to explore this in time.
Okay. Next question, how rapidly could you bring Ngungaju back online when prices come back? How long would it take to ramp?
We've guided four months being from sort of decision point to ramp up. I suspect in practice there'll be some optimisation to follow that four-month period to bring it back to full nameplate, but the bulk of the ramp-up would occur in that sort of four-month period.
Okay, thank you. Next question, will a dividend be paid this financial year to FY 2020?
Ultimately, that's in the hands of the board to take a decision on that. I suspect that if pricing remains, as we've seen recently, the board probably will not do a dividend. Ultimately, that's for the board to consider in accordance with our capital management framework.
Okay. Moving forward, do you think you'd make any further acquisitions in Australia or abroad whilst we're in a cyclical low in the lithium cycle?
Yeah, the core focus for the business is the base operation. As we've outlined in the call today, we're looking to demonstrate the strength of the new platform we've built and the knowledge we've had a heavy investment cycle. That said, of course, our strategy contemplates an organic growth, and that's unchanged, but it's not a focus. It's not a key focus for us at this time.
Okay. Next question. We've seen some recent low pricing for SD6, but recent news has seen an uptick in prices in the last few weeks. Why?
Thank you for the pricing question. Hopefully, my market commentary went some way to answering that. It's principally through the news in China about potential supply of procurements, care of approvals, and other reviews by China. It seems to be the principal reason that's catalyzed this price improvement. However, as I did mention in the call, pricing has been well below a sort of a sustainable level required in the industry. This has catalyzed a part correction, but there's definitely much more to go, I think, in order to achieve a more sustainable market.
Okay. Last question from webcast. Is the BMX platform now being utilized given the recent uptick in prices?
Not at this stage. Yeah, spot sales have been few and far between given we've pulled the operation back to Pilgan only, which satisfies our core off-take. We're not doing a large volume of spot sales. It's the BMX platform itself that we have there. It's sitting under the dust covers, ready to be utilized if we think that makes sense for the market. I think that completes our webcast questions. Lastly, thank you all for dialing in today. It's been a huge quarter capping off an incredible year for the business, and we look forward to updating again at the full year results in a few weeks' time. Thank you very much.
This concludes today's conference call. Thank you for participating. You may now disconnect.