Thank you, Michelle. Good morning and good evening, and thank you all for joining us for PLS's FY 2025 full year results. I'd like to begin by acknowledging the Whadjuk people of the Noongar Nation here in Perth, as well as the Nyamal and Kariyarra peoples on whose lands our PLS's operations are located. We pay our respects to their elders, past and present. Joining me today is Flavio Garofalo, our Interim CFO, and Sandra McInnes, our Chief People and Sustainability Officer, along with other members of the Senior team. Today's session will run for approximately an hour. We'll begin with an overview of our FY 2025 results and then delivery against our commitments, followed by an update on our strategy. We'll then recap on our FY 2026 outlook, provide commentary on the lithium market, and then move to questions. Now, starting with our opening commentary, FY 2025 was a transformational year for PLS.
It was one that tested the sector but also demonstrated our resilience and ability to deliver. We executed major growth projects, lowered costs, and strengthened our balance sheet, all while expanding our portfolio internationally. Importantly, against a backdrop of softer pricing, we used the stage of the cycle strategically, embedding efficiency, building scale, and preserving flexibility. This positions PLS to capture value as conditions improve. Looking ahead to FY 2026, our focus is clear: operational excellence, disciplined cost control, and capital efficiency, leveraging the strong platform we've built to drive stronger margins and long-term returns. Moving now to slide 2, FY 2025 exemplified our ability to execute in a challenging market while continuing to build for the future.
I won't go through every item on the slide, but it was a standout year operationally, delivering record annual production of 755,000 tons, implementing the P850 operating model, and commissioning the world's largest lithium ore sorting facility. These achievements reflect both disciplined execution and strategic foresight, positioning PLS strongly for the next phase of growth. Now, moving to slide 3. Turning to our financial highlights, FY 2025 was a challenging year from a pricing perspective, yet our results demonstrate resilience and discipline. We delivered a step change in reduction in unit costs to $627 per ton. Even in what was a ramp-up year, this improvement was critical in supporting a positive EBITDA outcome despite the low-priced environment. Importantly, we preserved our fortress balance sheet underpinned by scale improvements, innovation, and our Cost Smart program.
This saw us close the year with approximately $1 billion in cash, $1.6 billion in total liquidity, giving Pilbara Minerals sector-leading balance sheet flexibility. The combination of lower costs and balance sheet positions us to capture stronger margin as the cycle improves. Together, these results underscore our evolution into a resilient, cost-competitive operator well positioned to create value as market conditions improve. Now moving to slide 4. Sustainability is integral to our purpose and central to creating enduring value. FY 2025 was no exception. Our commitment to valuing people delivered tangible results. With the TRIFR improving to 2.79 for our Australian operations, demonstrating continued progress in safety performance, we also achieved a 7% reduction in Scope 1 and 2 emissions, supported by completing stage one of our power strategy. This includes the new high-speed gas generators and on-site battery energy storage.
Together, these achievements highlight how we are advancing safely plus efficiency and decarbonization, all in line with our purpose whilst creating shared value for our stakeholders. With that, I'll now hand over to Flavio to take a deeper look at our financial performance for the year. Over to you.
Thank you, Dale. Good morning and good evening to everyone joining us today. Please turn to Slide 6 of the presentation for a summary of the group's key financial metrics for the full year ended 30 June 2025 or FY 2025. Our FY 2025 results reflect strong operational performance and sustained cost discipline. Despite pricing headwinds, we maintained positive EBITDA and cash margins, and our robust balance sheet positions us well to capitalize on future opportunities. Our financial performance was materially impacted by commodity pricing. The average realized price for SC5.3 grade declined 43% to $672 per ton, reflecting challenging market conditions across the sector. Sector revenue came in at $769 million, down 39% year- on- year, primarily due to lower pricing, though partially offset by higher sales volumes. Underlying EBITDA was $97 million, down 83% from prior year.
Importantly, it remained positive despite significant pricing pressure, demonstrating our strong cost discipline and operational efficiency. The underlying loss after tax of $88 million reflects this lower EBITDA combined with increased depreciation from our expanded asset base. Statutory loss after tax was $196 million, which includes construction costs for the midstream demonstration plant project on schedule to be completed by December, as well as non-cash impacts from our investment in the POSCO JV. Despite the impact of lower pricing, our balance sheet remains robust. We closed the year with a cash balance of $1 billion and liquidity of $1.6 billion, underscoring our financial strength and positioning us to capitalize on future opportunities as the markets improve. Turning to Slide 7, our operational cost performance highlights the benefits of scale and operational efficiency.
The FOB costs increased 3% to $476 million while supporting a 4% lift in production volumes, demonstrating positive operating leverage and disciplined cost management. Unit costs declined across the board. FOB unit costs dropped 4% to $627 per tonne, driven by higher volumes, P850 efficiencies, and ongoing cost reductions through our Cost Smart program. Unit costs on a CIF basis performed even better, falling 10% to $735 per ton, reflecting these operational gains plus lower shipping and royalty expenses. Turning to Slide 8, our profit and loss waterfall illustrates how we maintain positive margins despite pricing pressure. Revenue for the year was $769 million, offset by operating costs of $559 million, resulting in a gross margin of $2,210 million. This outcome reflects continued success of our P850 operating model in driving cost efficiencies.
General and admin expenses came in at $64 million, a 3% reduction year- on- year, highlighting our disciplined approach to managing overheads and maintaining lean operations. We invested $38 million in exploration and feasibility activities, including targeting drilling at Colina. Underlying EBITDA remained positive at $97 million. After accounting for depreciation of $221 million, net income of $9 million, and income tax benefit of $28 million, we reported an underlying loss after tax of $88 million. Turning to Slide 9, our cash flow bridge demonstrates disciplined capital management during a period of significant investment. Cash declined from $1.6 billion to $1 billion, primarily reflecting $653 million in CapEx. As we completed our major capital investment cycle, cash margin from operations was $192 million, demonstrating strong cash generation at low average realized prices of $672 per ton.
Cash margin from operations less mine development and sustaining CapEx remained positive at $28 million, validating our operational resilience in the current market. Having completed our major investments, we are well positioned to capitalise on improving market conditions through stronger margins and increased cash generation in FY 2026 and beyond. Turning to Slide 10, our balance sheet remains strong, reflecting disciplined capital management and a continued focus on value creation. On the asset side, we ended the period with $974 million in cash. While this is lower than the prior year, it continues to provide substantial liquidity supported by $625 million in undrawn capacity from our $1 billion revolving credit facility. Inventory increased 29%, mainly due to higher stockpiles resulting from reduced ore processed under the P850 model and expanded holdings due to P1000. Additionally, consumables increased to support broader operational requirements and a transition to an owner operator model.
Financial assets declined 61% to $25 million, primarily due to a $40 million reduction in the fair value of the PLS call option. The increase in other assets during the period primarily reflects the acquisition of the Colina project. On the liabilities side, borrowings remain broadly unchanged, while lease liabilities increase due to new finance leases, primarily for drills, excavators, and other supporting equipment under phase one of the HME strategy as announced in Q1 FY 2025. This disciplined approach to managing both assets and liabilities supports our robust equity base of $3.5 billion, providing a strong platform for future investment and growth. I will now hand over to Sandra to take you through the next section.
Thank you Flavio. Turning to slide 12, sustainability remains central to our strategy, built on three core pillars that guide our approach: valuing our people and communities, sustainable operations, and responsible and ethical actions. These pillars are not just aspirational, they drive meaningful actions and measurable outcomes across our business. Turning to slide 13, our performance in FY25 demonstrates continuous improvement in safety, culture, and workforce development. Safety remains our top priority and we outperformed our targets, achieving a TRIFR of 2.79 and achieving 2.71 for our quality safety interaction, highlighting our strong leadership engagement in safety conversations. Female representation for FY 2025 is at 21.1% and, pleasingly, we increased our First Nations employment to 3.1%. We also increased our community investment spend to $2.2 million, which includes 12 multi-year partnerships.
Turning to slide 14, in FY25 we delivered real emissions reductions with our absolute Scope 1 and 2 emissions dropping by 7.1% and we reduced our power-related greenhouse gas emissions intensities by 20%. Through delivery of stage one of our power strategy, we maintained zero major environmental incidents, all while processing record volumes. We also surveyed more than 44,000 hectares of flora and fauna, supporting our commitment to biodiversity. Turning to slide 15 , responsible and ethical actions underpin our long-term success. We directed $1.2 billion, or 95% of our spend, to Australian businesses, supporting local economic development. We rolled out our Supplier Code of Conduct in four languages and invested over $30 million in 16 First Nations businesses, demonstrating our commitment to Indigenous economic participation for the year. We also contributed over $41 million in royalty payments to government, traditional landowners, and other parties.
Turning to slide 16, transparency remains a cornerstone of our approach with comprehensive sustainability reporting available through our annual report and sustainability data book. Our disclosures cover all aspects of environmental, social, and governance performance. We're delivering on our sustainability commitments while navigating challenging market conditions, demonstrating that responsible operations and commercial success can go hand in hand. I'll now pass over to Dale.
Thanks very much Sandra. As you've just heard, FY 2025 was another huge year for sustainability. A big thank you to the full organization for the efforts in this regard, but in particular Sandra and her team for stewarding those efforts and achieving those great outcomes in what's been a tough market backdrop. Of course, that adds to all the other things which we've touched on in terms of the incredible year that FY 2025 has been. Now moving to our strategy, FY 2025 represented a significant step for executing our strategy and making it timely to reflect on its core elements that have progressed and been delivered. Our strategy rests on four key pillars. Firstly, operating with excellence to meet performance commitments. Secondly, realizing the full potential of our global asset base. Thirdly, creating additional value through participation in battery materials supply chains, and lastly, diversifying our revenue base beyond Pilgangoora.
These pillars shape our decisions throughout FY 2025, driving record production, lowering costs, international expansion, and downstream progress, and they remain central as we navigate the cycle and create sustainable long-term value. FY 2025 represented a major step forward in delivering our strategy, so we called it timely to briefly reflect on each of these core elements and highlight those achievements. Looking at slide 19, Pilgangoora's transformation is now complete. With this major investment cycle behind us, P680 delivered a new crushing and ore sorting facility, unlocking whole of ore processing and enabling higher proportion of contact ore processing, improving overall resource utilization and lithium recoveries. P1000 expanded processing capacity, supporting higher production volumes and underpinning lower unit operating costs.
In parallel, the move to the P850 operating model supported by the turn off of the Ngajju facility has delivered a lower cost operating platform reflecting a disciplined value over volume approach tailored to current market conditions. With construction complete, our focus now turns to optimizing performance, maximizing throughput, improving recoveries, and driving additional cost efficiencies and reliability across the asset. This shift from investment to returns strengthens our leverage to margins and cash generation as market conditions improve. Turning now to slide 20. In FY 2025 we rolled out our Cost Smart program, which is already delivering sustained cost savings and operational improvements across mining and processing. On the mining side, we transitioned drilling and blasting and heavy equipment to an owner operate model. This has increased workforce flexibility, improved knowledge retention, and lowered mining costs.
In processing, reviews of consumption patterns secured better contracting rates for reagents while targeting plant modifications, lifted recoveries, and improved throughput. These initiatives highlight the benefits of combining disciplined cost management with scale and processing improvements, strengthening our long run cost advantage. Moving to slide 21, our measured investments are designed to provide diversification and future growth optionality across the value chain. The Ngajju facility has been retained as latent capacity, giving us the flexibility to rapidly scale production when market conditions support nearer term. The midstream demonstration plant is on track for completion in December 2025, while the P2000 study and joint downstream work with POSCO provide future expansion and integration opportunities. Collectively, these initiatives establish multiple pathways to scale plus flexibility and downstream participation, positioning Pilbara Minerals to capture disproportionate value as the cycle recovers.
Turning to slide 22, our 18% equity interest in the Gwangyang Lithium Hydroxide facility in South Korea positions Pilbara Minerals within one of the world's most advanced battery and EV ecosystems, with 43,000 tonne nameplate capacity. Both Train 1 and Train 2 have successfully produced battery grade lithium hydroxide, with Train 2 progressing through customer certifications. The facility strengthens our downstream participation, diversifies our geographic footprint beyond China, and connects Pilbara Minerals directly to leading global battery and EV manufacturers. This JV is central to our strategy to capture greater value along the battery material supply chain while building long term supply chain resilience. Turning to slide 23, the Colina project is a key pillar of our diversification strategy, extending Pilbara Minerals' portfolio beyond Asia and Australia into the Atlantic markets of North America and Europe.
This 100% owned hard rock project benefits from strong government and community support, providing a stable foundation for long term growth. Earlier today we published our Mineral Resource Statement for Colina. Consistent with the outcomes disclosed by Latin Resources, drilling under PLS ownership is now targeting extensions to this resource study. Optimization is underway with outcomes due later in FY 2026. In the meantime, exploration and evaluation activity continues to advance, positioning Colina as a meaningful future growth option for PLS. Turning to Slide 24, discipline and capital management has been central to protecting and strengthening our balance sheet over the past three years. We've taken tough but necessary steps, delivering approximately $230 million in cash flow improvements in FY 2025 alone. This has been driven by initiatives such as the P850 operating model shift and our Cost Smart program, embedding lower costs and leaner operations.
Looking forward, discipline remains our compass, lowering unit costs post P1000, keeping capital expenditure tight, and sustaining a culture of cost focus. This approach has built a balance sheet capable of weathering the cycle, underpinned by a billion dollars of cash, a billion dollar RCF which is $375 million drawn, and a total liquidity of $1.6 billion. Turning to Slide 25, capital allocation discipline has enabled us to work with the cycle, strengthening the business, rewarding shareholders, and reinforcing the balance sheet. In the FY 2022 and FY 2023 pricing period, PLS generated $3.1 billion in cash. Of this, 24% was returned to shareholders by $800 million in dividends, 63% reinvested into growth projects including the P680 and P1000 which have completed this past year, and 12% was retained to strengthen the balance sheet which I touched on a moment ago.
These disciplined choices have left us with greater scale, lower costs, and the flexibility to capture value as the lithium cycle resets. Moving to Slide 26, through disciplined capital management, PLS has built a robust balance sheet with $600 million in net cash. We hold one of the strongest financial positions among ASX and North American lithium producers. By contrast, many peers carry significant net debt, constraining their flexibility. This financial strength is a strategic differentiator, providing resilience through volatility and flexibility as the cycle turns. Moving now to Slide 28, if we look forward in FY 2026, our focus is clear. We are sharpening our efforts around operational excellence, disciplined cost control and capital efficiency, ensuring PLS delivers strong performance today whilst preserving flexibility. For tomorrow at Pilgangoora, the priority is to unlock the full value of our foundation asset through reliability, efficiency and cost discipline.
This is the engine room of value creation. At the same time, we will maintain readiness for growth through targeted studies and modest investment, preserving the ability to scale quickly as market conditions improve in chemicals. We'll progress our strategy selectively, moving forward where it makes long term sense while preserving cash in the near term and exploration. Our approach remains disciplined and targeted. At Colina, we are investing modestly to prepare future growth options while maintaining strict capital discipline. Taken together, these priorities reflect a balanced and disciplined approach, maximizing value from our current platform, protecting cash and preserving the strategic optionality that will position us strongly for the next cycle. Turning now to slide 29, FY 226 guidance, first disclosed in the June quarter results, sets out our delivery priorities. Production is guided at 820,000 tons- 870,000 tons, reflecting the benefits of Pilgangoora's new expanded scale.
Unit operating costs are expected in the range of $560- $600 per ton, highlighting the cost leverage we've embedded through the P1000 and Cost Smart programs, and capital expenditures set between $300 million and $330 million, a sharp reduction from the prior year reflecting the completion of our major investment cycle and our commitment to capital discipline. This guidance illustrates how PLS is positioned for scale and margin expansion in FY 2026, delivering stronger cash margins, preserving flexibility and ensuring resilience through the cycle. Turning now to slide 30. Slide 30 brings these guidance metrics to life in the context of a long run performance trend. FY 2026 is the next stepping stone in this journey. Capital expenditure steps down sharply, falling to around $350 million in FY 2026, reflecting disciplined delivery and the end of our major growth projects.
At the same time, unit operating costs are reducing to around $580 per tonne and the benefits of scale and efficiency gains coming through, and production continues to rise with the output guided to around 850,000 tons. Together this combination of lower CapEx, lower costs, and higher output strengthens margins and cash generation. It demonstrates how PLS has transitioned from an investment-led phase into a return-driven phase, positioning us with resilience today and leverage as the cycle improves. Moving now to slide 32 for the markets, the lithium market remains volatile and evolving, still prone to sharp sentiment-driven swings as highlighted on our prior calls. This volatility is characteristic of an emerging market where liquidity is thin, contracts are short-dated, and momentum trading can amplify moves beyond fundamentals.
A recent example is the well-publicized potential for supply disruption across several Chinese lithium producers, which acted as a catalyst for recent price moves and may well signal the start of a broader upward trend. Time will tell. To support price discovery, PLS has continued periodic spot sales, most recently completing an August sale of FC6 pricing at $1,050 per ton CIF China. That pricing was around 10% higher than the prevailing reported market average at that time, so that delta underscores the disconnect that can occur between published indices and realized market outcomes. This reflects the direct dynamics between producers and consumers. I should also add this cargo attracted very strong bidding interest, again another sign of the market that we're in at the moment. Also, as another market insight, several major chemical converters have recently approached PLS seeking additional tonnage for next year.
This may also be an early signal of tightening supply expectations. Time will tell. Separate from volatility, prices—prevailing price levels remain below what is required to sustain a healthy industry and incentivize the substantial new mine development needed to meet the expected future demand. These two dynamics, volatility and unsustainably low prices, combine to discourage investment just as demand continues to grow. The result is a tightening supply outlook and the conditions for potentially significant recovery. Now, while short-term volatility will persist, the long-term demand trajectory is clear. Electrification is accelerating, reinforcing lithium's critical role in the global economy and positioning PLS to benefit disproportionately as the cycle changes. Turning to slide 33, electrification is reshaping the lithium market. EVs and energy storage now account for the vast majority of demand, a dramatic shift from 2018 when industrials consumed around half of all lithium. EV adoption continues to accelerate.
In June, every second car sold in China was an EV, while global market share reached 25%. Energy storage is also expanding at pace. Installations in the June quarter rose 36% year- on- year with 117 GWh installed year to date, up 46%. This growth is underpinned by record investment in the energy transition, which exceeded $2 trillion in 2024, led by electrified transport at $757 billion. While short term pricing remains volatile, the demand trajectory is clear and strengthening, reinforcing the long term fundamentals for lithium. For PLS, this mega trend underscores the value of the scale and optionality we've built, positioning us to grow with the market and turn the cycle into leverage rather than a constraint. Turning to slide 34, the structural drivers for lithium demand are enduring, underpinned by energy transition policies, consumer adoption, and rapid technology advancement.
Global EV penetration is projected to climb from approximately 20% today to over 70% by 2040, a transformative shift. Battery energy storage is scaling even faster at this time, with demand forecast to quadruple by 2040. Together, EVs and battery energy storage are expected to represent around 90% of lithium demand from 2030 onwards. On the supply side, demand growth of 10% CAGR highlights the scale of expansion required, but matching this trajectory will be challenging and requires significant investment, new projects, and reliable operators. This context reinforces PLS's advantaged position with scale, balance sheet strength, and growth pipeline. We are well positioned to supply into these structural trends. Now, before we move to questions, let me leave you with a final reflection on what FY 2025 represents for PLS.
PLS today stands as the world's largest independent hard rock lithium producer, built on a cost competitive technology enabled platform that gives us real competitive advantage. Our fortress balance sheet provides unmatched flexibility to lead through the cycle. FY 2025 was a year of delivery and positioning. We met guidance, we completed major expansions, we strengthened our portfolio, and continue to invest in our people, embedding the discipline required to deliver consistently. While near term pricing remains volatile, the long term demand story is clear. Current prices do not support the supply investment needed. This creates the conditions for tighter markets and recovery opportunities ahead. Our confidence is anchored in three key areas: operational excellence, financial strength, and strategic positioning. Together these make PLS a partner of choice in global supply chains and uniquely placed to capture value as the cycle turns.
Finally, I'd like to thank our shareholders for their continued support and confidence in PLS. We recognize many of you have shared the ups and downs of the lithium cycle with us, and your backing enables us to invest with discipline, deliver on our commitments, and position the company for long-term success. With that, I'd like to hand back to Michelle to open the floor for questions.
Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In fairness to all, we ask that you please limit yourself to one question and one follow up. Please stand by while we compile our Q A roster. Our first question is going to come from the line of Kaan Peker with RBC Capital Markets. Your line is open. Please go ahead.
Good morning, Dale.
One question on the spot as well. Great outcome.
Just wondering, just wanted to check how much of FY 2026 production guidance is committed and how much is available for spot transactions.
I'll follow up with a second.
Yeah, thanks Kaan. As it relates to FY 2026, there's some movement between offtake and spot. We're considering that allocation at the moment. We'll provide some more visibility on that later when that's firmed up. We have a strong base case position that if we choose to, largely the whole amount of FY 2026 could be placed as offtake if we choose to. You might recall we did some offtake extensions going back at the start of last year which are at PLS's election if we choose to place offtake with some customers. We're in the throes of evaluating that now and we'll update in the future on that. Not a clear answer there, but base case largely all offtake. As I say, we might open up a wider spectrum of spot because potentially that might be to our advantage next year.
Sure. Thank you and then maybe the size of the spot transaction.
If I can also ask if there's any sort of additional detail what your customers are actually telling you.
What you're seeing with the spodumene market and lepidolite production in China. Some views around this.. Thanks.
Sure. The spot sale was quite small. It was about 5,000 tons, typical of other spot sales we've done historically. As it relates to customer engagement, I have to say over the last few weeks, it would be no surprise to anyone. They're broadly very positive, and as I mentioned in the notes, a couple of major chemical converters are pressing us for larger volumes for next year. That's all very positive as it relates to lepidolite mines specifically. Some confusion, I'd say, around those changes with no insights which frankly deviate from what we've read and the sort of publicized materials. Taking them as ready, it's about facilitating approvals for those mines, and if that doesn't come through or those mines get turned off, as we understand, there's no other insights coming from our customers on that space there.
Thank you, Dale Henderson .
Thanks, Kaan.
Thank you. One moment as we move on to our next question. Our next question is going to come from the line of Rahul Anand with Morgan Stanley. Your line is open. Please go ahead.
Oh, hi team. Good morning. Thanks for the call. I wanted to start with perhaps your investment and strategy just on the Colina project. Obviously you've got a $40- $45 million spend in 2026. Just wanted to understand how you're thinking about that versus P2000. If you've got a kind of a sequence in your mind and what you want to prioritize prior. That's the first one.
Thanks. Sure. Thanks, Rahul. As per guidance in terms of furthering these growth options, we've very much minimized the spend in these areas, but we are progressing them. Very much targeted as Colina, very much targeted drilling to extend resource and all going well near term tonnes and parallel studies in parallel. There's a number of obligations we have to meet in terms of approvals and other requirements dealing with our licensing there. That's really the investment around that P2000, it's progressing the studies as well. The way we think about these both is this is about preparing these options, but ultimately when the market is ready to your question of how do we think about the prioritization one over the other, we don't have the information yet to really make a call on that.
Given that the sort of parameters of each of those decisions relates to approvals, timeline, and the raw economic returns. Of course, in both cases where we've got study outcomes to come which will obviously inform that. In the meantime, we'll progress both and once they've matured and as the market continues to change, we'll take a view later around which one over which.
Got it.
Again, fill the gaps, Rahul.
Sure. Thank you. The second one's a quick one on the lease liabilities. Obviously understand the increase this time, but just wanted to get a feel for how we should think about them going forward. Have we kind of got everything related to P1000 in the numbers now and related to the exploratory drills, et cetera, or is there more to come in the following years? Just trying to square the thinking on that. Thanks.
Yeah, I can take that.
Yeah. Look, in terms of the lease liabilities, it's fairly reflective in terms of the amounts we have this year moving forward. The transition really is in relation to the move to the owner operator model, and there will be some more items coming through over the next couple of years, but we expect the same sort of levels to continue.
Okay, that's clear. Thank you very much.
Thanks Rahul..
Thank you. One moment for our next question. Our next question will come from the line of Levi Spry with UBS. Your line is open, please go ahead.
Good morning Dale and team, thanks for your time. Just sticking to the growth options, when it comes to the Ngajju facility, I've tried to get a price out of you when you might restart that, but can you just talk through what actually is involved? CapEx that would be required, how long it would take, and then potentially, I guess, impact on the cost, overall cost profile, and maybe what you would need to see from offtakers.
Sure. Thanks, Levi. As it relates to how long is sort of the most rapid startup, that would be in the order of four months, which we've guided previously. As to what are the requirements around facilitating that, there'll be some nominal CapEx to ready the facility, but not material as it relates to the processing plant or the mine. Depending where we're at in the mine plan, we've obviously got to bring forward volume to support two processing plants. It depends where we're at in the mine plan whether we would need some additional fleet or not. We would consider that at the time. As it relates to what are the sort of the threshold levels to trigger the decision, of course it's all about pricing, but not just hitting a price level. It's about confidence around a sustained price level.
We haven't given a number around that, but we're cognizant of the fact that historically the industry has had a propensity to have some spikes and can be volatile. What we wouldn't want to have is we wouldn't want to go through the investment of restarting that operation to find that it's short lived. Ensuring that as best we can get confidence that the price improvement is enduring will be a key part of that decision.
Thank you. How could the off takers be involved in that? Would that mean a full price or something like that?
It's possible, yes. We have had no shortage of interest around the noted Ngajju facility, which is great. We've gone straight back to them saying we're open for business. The full price sounds good, but we'll believe it when we see it in terms of a full price. As it relates to confidence around the ability to place those tons that we're bringing on, we've got very high level of confidence, no issues with them.
Okay, thank you. Just a quick one for Flavio. So DNA stepped up materially with P1000. Is that a good number in the second half going forward? Can you just give us a bit of a guide there please, Flavio?
Yeah. DNA increased as a result of the completion of the CapEx on P1000. We expect that sort of level to be maintained through FY 2026 as the investment cycle is completed on that capital infrastructure.
Good one. Thank you.
Thank you. One moment for our next question. Our next question will come from the line of Hugo Nicolaci with Goldman Sachs. Your line is open. Please go ahead.
Morning Dale and team. Congrats again on a productive year of milestones at Pilgangoora. First one from me please. I think you've previously said that the upgraded resource earlier in the year isn't expected to change the near term mine plan. Can you just remind us when the next cutback in the central pit is due and the rough magnitude of that stripping cost relative to the $120 million being spent this year?
Thanks. Here you go. We've upgraded the resource. A revisit of the reserve is yet to come. We haven't guided around that component as it relates to the next cutback in the mine plan that's slated for next year. We haven't guided, of course, for next year, so still mine plan refinements to come. I can say that although it will be a step up in waste movement, it will still be less than our long run average of 7 to 1. Brett and Tang are still optimizing the mine plan for next year, so I don't want to preempt what that level is. I'd also add that although we might have a little bit of waste movement step up next year, we're also anticipating further cost out through mine fleet.
You might recall from our site trip, we spoke about bringing in a larger fleet for that waste movement, which will help offset any additional waste movement.
Got it. Thanks for clarifying, Dale. Maybe just picking up on Levi's question around the Ngajju, do you restart. Just noting you got environmental approval for additional mobile crushing there earlier in the year. Are you able to just give us a little bit more detail around what is required at the plant to be able to bring that one back on and what level of ROM stockpiles you think you need to run both plants sustainably?
As it relates to the plant, you put it in the category of maintenance and refurbishment works. You recall it was steady state operations and a cadence of normal maintenance regime. There is a little bit of maintenance debt to work through, so it's not a case of investing anything new or different there. As it relates to ROM stocks, I can't recall offhand what those volumes need to be, but they're inconsequential really in terms of feeding that operation.
Thank you. One moment for our next question. Our next question will come from the line of Matthew Frydman with MST Financial Services Pty . Your line is open. Please go ahead.
Sure. Thanks. Morning Dale and team. Apologies for putting the financial result a little bit in the rearview mirror already, but I had a question on FY 2026 guidance and you've already spoken, I guess in prior questions around maybe the biggest decision around restarting Ngajju. My sense is that you probably do have some levers to push even within the P850 operating model to produce some incremental tonnes. Can you remind us what the drivers are for getting to the top end of your guidance range and maybe meeting some of those customer requests for additional tonnes and what that might look like? Thanks.
Yeah, thanks, Matthew. Yes, as it relates to the ability to push to the top end of production volumes, it's essentially all about the processing plant for the year ahead. Obviously, last year was all about building out the production capacity, but installing a whole bunch of new processing levers, care of the ore sorting facility, we've got enlarged WIMs, we've got online analyzers, there's a whole bunch of new tools for the processing team. This year that we're in is really around trying to maximize each of those to full extent. If that goes well, that will enable us to move to the top end of those production volumes, which of course unlocks further volumes for allocation and also plays through to reduce unit costs. This year in the main, it's about the processing plant.
Okay, thanks, Dale. Maybe just following up on that in terms of how you potentially place some of those additional volumes, you know, maybe without being specific to the spot sale that you talked about in August. More generally, in terms of how you approach those cargoes, is there anything to call out there in terms of timing of delivery or payment or potential provisional pricing adjustment windows or kind of any other terms that are relevant for that spot sale or port sales of that nature that are different to your usual contracted volumes? I guess why is it preferable to conduct sales like that rather than using the auction platform? Thanks.
Yeah, that's a big question that one. Maybe stepping back, the way we think about our sales profile being one of the major operators globally is we look to have a large baseload allocated to the strongest in the supply chain. That's what we've done. As it relates to unallocated tonnage, we like a level to be important to the spot market because we think that's healthy for the industry with price discovery. As noted in my narrative a moment ago, to your question on what are the specific terms that we look to pursue, the long and short of it is it's all up for grabs and really we will chase anything which equals a higher return for our shareholders and a de-risk outcome for our shareholders. We did touch on floors. That would be nice. As I said, believe it when we see it.
As it relates to prepayments for nugget, that's possible. As it relates to more preferable pricing mechanisms, that is always something we're chasing. All of the above is what we pursue. If we're looking at offtakes and as it relates to spot sales, it's all about highest price wings essentially, provided we've got confidence they can follow through with the transaction.
Okay, that's helpful. Thanks, Dale.
Thanks.
Thank you. One moment for our next question. Our next question will come from the line of Austin Yun with Macquarie. Your line is open. Please go ahead.
Morning Dan. Tim, just one question on the additional volume. A lot of interest or attention on the Ngajju. My question is around for your Pilgan plant. How much upside do you see after, you know, been running that plant for a while before you really need to turn to restart the other facility? Any color will be appreciated.
Thank you. Yeah, great question, Austin. I'm looking in Brett's direction. He's going to make sure we maximize the plant to full extent. How far can we extend it further? That is the job of Brett's processing team to continue to see what we can do to eke out more tonnes at a lower cost. Obviously, we put a range to make sure we can try and capture that upper end in the years ahead. Of course, we'll continue to pursue even further improvements. That's the name of the game. As we've talked about historically, there's more to be done in terms of recovery tools and other sophistication in terms of time mineralogy to higher recoveries.
There's more to come in that regard and separate to all of that there's more very sensible cost out initiatives which we've touched on around power and in the mine, et cetera, which obviously helps on the unit cost side. It's all in the category of operations 101 and we will continue to focus on that. Does that answer your question, Austin?
Yeah, thank you, Dale. Just a quick follow-up if I may. Given the volatile market, you mentioned that there's a lot of interest from the customers. Does that give you upper hand in price negotiation? How should they think about the realization, any opportunity to lock in a higher price?
Thank you. Yeah, I think we're well set up in that regard, Austin. As it relates to our offtakes themselves, most of those pricing mechanisms, some are a little bit forward dated, which means that if we're now into a price rising cycle, we'll enjoy the benefit of that. You might recall that as pricing sort of came off as a function of our forward leaning price structures, we realize lower prices relative to our peers, so hopefully the shoe should be on the other foot on the return cycle. As it relates to on the spot side and why we sort of sought to share that recent spot sale, there's some good enthusiasm there, and it seems sort of typical of what we saw in the last price rise cycle where some of the enthusiasm is really starting to come back to the fray.
Who knows whether that persists, but if we think it's to our advantage, of course we'll look to try and auction more tonnes through that avenue.
Thank you, Dale [Pacho] .
Thanks Autin.
Thank you. One moment for our next question. Our next question is going to come from the line of Jonathan Sharp with CLSA . Your line is open. Please go ahead.
Yeah, morning, Dale and team. Just a question on the ore sorters. During the site visit, it was quite impressive to see those. It appears there's quite a bit of potential there, and I would say, you know, maybe some quiet confidence from the management team when we were on the site visit. Can you just give us some detail on what you expect to see from the ore sorters and what potential in recoveries we could see? Thanks.
Yeah, thanks, John. Too early to provide a steer on that as it relates to our production volume guidance for the year. That upper end is predicated on the expectation of those ore sorters going well and moving to a new level of performance. The team is so far very happy with what they've seen and can see a level of upside. That being said, there's a lot to integrate and coordinate, as you saw on site. Although the team's optimistic, we need to really prove it and we can maximize the clean ore processing through that facility. That actually helps mainly through mining costs. The key advantage there is that's sort of benefit number one. Benefit number two, of course, is the clean ore coming into the operation which plays through to the higher recovery.
Those are the dual benefits we're chasing, and look forward to all going well, offering more insight into that space in the coming quarters as we get more runs on the board.
You would expect recoveries to slightly increase as the year goes on.
Depends how we go. We indicated as part of the guidance around 72% level, low 70s, depending how we go. Look, if things really come together, yes, there's potential to go higher and ultimately of course that's the name of the game and what the team's focused on, but proof's in the pudding. We'll wait until we've proved off what we can achieve and provide that insight into course.
Okay. Just a quick question on capital management. What conditions would you see a change in capital management approach? Whether that's dividends, buybacks, resume, what do you want to see before that changes?
Yeah, since it relates to the capital management framework, the Board's not considering any changes in the near term around that. We think it's appropriate for the business and where we're at in the market. Within that, of course, that contemplates the bevy of levers inclusive of, like, share buybacks. That's touched on. We'll just continue to run the ruler on each of those and take a view depending where we're at for the market. We don't have sort of a set of conditions in mind around deploying any of those particular mechanisms at this point. Hopefully that clarified Jon.
Thank you. One moment for our next question. Our next question is going to come from the line of Ben Lyons with Jarden. Your line is open. Please go ahead.
Thank you.
G'day Dale. Apologies for a reasonably detailed question.
It might actually be one for Flavio.
Just wading through the notes too.
The accounts, it actually appears that your lease payments reduced year- on- year down to $95 million versus $115 million in 2024.
However, the liabilities have more than doubled.
Year on year, obviously, as you transition.
To that owner-operated mining kit.
am just trying to reconcile that apparent discrepancy. You know, maybe there was a shift.
To a longer amortization schedule or something.
Similar that you can possibly help with. Thanks.
Yeah, good day Ben. Thanks for your question. You've hit the nail on the head there. Longer term is the key in terms of moving to the finance leases. They're longer tenor in terms of duration, and the spread is there, and that will obviously be spread over a longer period with an interest reflection as well. I hope that answered that.
Yep. Cool.
Okay.
Thank you, Flavio.
Appreciate that.
Thank you. One moment as we move on to our next question. Our next question will come from the line of Al Harvey with JPMorgan. Your line is open. Please go ahead.
Yeah.
Morning team.
Just one on the pipeline. Obviously got the Colina resource estimate out today. Don't think it incorporates any of your new drilling, but you've got that update coming in June quarter 2026. Just wanted to get a sense if the team are seeing anything in.
The geology or anything that's surprising in.
Terms of what was different to what.
You expected in due diligence.
I suppose maybe just as a follow up, what you're kind of hoping to spend at Colina this year will get you in terms of resource expansions or reserve conversion to come with the study?
Yeah. As it relates to the drilling, no particular insight we can offer yet. We're sort of early into that. However, one of the attractions for that asset acquisition was the fact that in our view a bunch of the tenure is not yet drilled and we think it's quite prospective. We're really drawn to that. We thought Latin Resources did a cracking job getting underway, sort of the base asset, but that was very much concentrated work. We do see potential in the other tenure and we'll look to develop that in time.
I would add that a lot of the drilling that we are doing is very much targeted around infill drilling and building up near the base asset because of course we want to support and improve reserve and play that through to improved economics. Long run, I think it's a great area. It shows fantastic prospectivity and we look forward to proving that up in time. Does that answer that?
Yeah. Thanks Dale.
I feel for me.
Thanks Mate.
Thank you. One moment for our next question. Our next question is going to come from the line of Glyn Lawcock with Barrenjoey . Your line is open. Please go ahead.
Morning Dale. Just a point of clarification, just so I'm clear. With the lease spend in the DNA, the second half was $132,000 DNA and $24 million on the lease spend. Should we double that or is the full year just gone more a reflection of the future? Thanks,
I think. G'day Glyn. Thanks for your question. I think the full year is probably more a reflection is what you should be taking.
Okay. For both D&A and lease.
Okay. Dale, just a question for you.
You use the words many times, fortress, balance sheet and then you talk a little bit about the demand. I mean I know it's like your demand projections, it's benchmark, but that implies about 250,000 odd tons of LC demand every year for the next 15 years, which is roughly 5 Kathleen Valleys. Given your balance sheet and the demand outlook, why wouldn't you not progress your projects fast such that when the market turns you can actually bring them on quickly rather than not be ready when the market turns?
Yeah. So Glyn, for us the strategy has sort of outlined been we've continued to grow with the market as you've seen. The FY 2025 was really the completion of what was being incredibly heavy level of investment. We've tried to sort of capture that and as we think about growing with the market, it's more of the same.
In this part of the cycle it's about minimizing cash but sensibly spending to ready those options, but of course not moving forward with big spend until such time that we have high level of confidence around the market positioning because of course the market is so volatile. That's sort of the rationale there. Glyn.
I appreciate that, Dale, but I mean we're talking about money for projects, not to build it but just to get it into a ready to execute phase. That wouldn't put a dent in your fortress balance sheet, I wouldn't have thought if you're just getting them to a FID phase.
That's pretty much what we're doing. Care of the, you know, the targeted studies as we've called it and targeted drilling where we've minimized spend. We are progressing those projects to be ready.
Okay, thanks Dale.
Thanks, Glyn.
Okay, so we're going to move to some questions on the webcast Q&A. The first question is when would the.
When do we anticipate the Colina project in Brazil will bear fruit?
I think the first signs of that all going well will come through the drill bit and seeing what we can achieve there. The second part will be a refresh study, which will incorporate hopefully more tonnes and hopefully a new perspective on processing care or transferring out our know-how from Australia to that asset. Look out for the resource updates, reserve updates, and study updates.
Okay, thank you. Next question is as our sales pricing i s based on indices, market reported pricing, should PLS engage in more regular price.
Discovery to ensure we maximize revenues given. he gap in disconnect in reporters' pricing?
Yeah, great question and yes, that's the short answer. As we sort of outlined on the call today, we are doing our bit as it relates to spot sales to help improve price discovery, given the way in which that feeds through to those industries. We'll look to do a level of that as best we can moving forward.
Okay, thank you.
Regarding an earlier question on pricing on the offtake, the spot sale, regarding the.
Terms of the potential offtake for most of the volumes in FY 2026, how are t hey priced at a premium or discount to spot sales seen in the market?
Yeah. Across our offtakes, I can only talk in general terms. The headline principle is that we achieve the market pricing for those offtakes, so neither a discount nor a premium. That's what we seek to achieve with our long term offtake partners.
Okay, thank you.
Next question, if new taxes or royalties are introduced in your key jurisdictions, how?
Would that impact your cost curve?
Of course that's a function of what's the scale of those taxes, royalties. Yes, I can't really comment on what that would be.
Okay, last question.
What kind of yearly tonnes from Colina when operating are we expecting to produce?
We'll provide some insight on that as part of the next study. Output all going well, we'll look to increase from what Latin has originally designed, but we don't know that yet. We need to complete more drilling and complete the studies to see what we can do there. Okay, with that, that completes FY 2025 full year results call. Thank you all for your attention. We look forward to updating again in due course. Thank you all.
This concludes today's conference call. Thank you for participating and you may now disconnect.