Kaya, which is Indigenous for hello. Thank you. Kaya. Welcome everyone to the 2022 Annual General Meeting of Pilbara Minerals. It's lovely to see so many people here. A lot of old friends. Oh, sorry, a lot of friends and there's older people, of course, and that sort of stuff. Thank you for that. I know many people here have been on the journey for Pilbara for quite a while, so thank you for that. My name is Anthony Kiernan, Chairman of the company. Before I get underway, I'd like to welcome Robyn Collard, Whadjuk Noongar, and Traditional Owner of the land on which we meet today to provide a Welcome to Country. Robyn, thank you.
I bring the message stick of peace. For Aboriginal people, when we travel between one country to another, we normally carry this message stick, and each message stick is unique to the person who carries it. I come in peace. Good afternoon. My name is Robyn Collard, and I'm a Whadjuk Noongar of the Noongar nation. I'm one of many Traditional Owners and custodians of this land, and I'm truly honored to perform this Welcome to Country for you this afternoon at your AGM. Kaya marmin moorniss. Hello, our men and brothers. Kaya djukun yorgas. Hello to our women and sisters. Of course, we mustn't forget our boorias. Boorias in Noongar is leaders. Kaya. In our gathering, we must acknowledge our ancestors who for many years have walked this land before us. We stand on their shoulders.
Our knowledge, our language, our stories still continue on, even with challenges. Kaya. Wandja, wandja ngan nidja djurapin nidja noonoockin dank nyiny-nyik nyinang waangkaniny nidja kooroo kooroo djina boori nidja. Whadjuk boodja. There are three things that are really important to Noongar people, our connection to land, our connection to family, and our knowledge. Ngala boodja, ngala moort, ngala kaardijin. Nidja nyinang maama waakil waak. Kaardijin waangkaniny wirreen boodja boorna waangkaniny baal koort kaart moorditc wiinyan. Welcome to the sacred ground and home of the rainbow serpent. Here in Noongar country, the waakil is a part of our Noongar creation story, just as there are creation stories across other lands and across the world for those people who are connected to that land. I bring the message stick of peace, nidja boorna waangkaniny moorditc waak. Ngala nyik waangkaniny boorla baadup. We listen to the many stories of the land.
They guide us. We listen. We see. Nidja boorla baadup noonoockin Kambarang nidja. Djiljit ngaaning booyi. Samia kooyila nidja nyinyit mira yaangit. Maamas waak. Noonoockin Kambarang. Kambarang is the time of year here in Noongar country that is transformational. We've come out of winter, and we are now in this season of birth, a new beginning, which is what you will be talking about today. Nidja noonoockin waangkaniny nyik nyiny. You will also be listening. I'm sure there'll be plenty of respect for robust discussion in the presentations this afternoon. One of the plants that you will be seeing whilst down here in Noongar country, because we are coming into the seasons of Birak and then Bunuru, our first summer and then our second summer. You will see the boodja boorna waangkaniny nyik.
This is the Christmas tree, the bright yellow flowers that tell us that Christmas is coming. It's also a very special tree for Noongars here, particularly when our loved ones pass on. Because under Noongar story, our soul rests underneath the leaves and the flowers of the Christmas tree or the boodja tree before going on to Koruna, the place of forever. Nidja coolbaroos waak noonoockin koolanga. Djidi djidi nyik. Waarrong. All of these birds tell us that this too is Kambarang, and of course, coolbardi, the magpie, is cheeky at this time of year because it's protecting its young in the nests. Don't forget that little cheeky djidi djidi, that willie wagtail. When you see all of these birds and waarrong, the crow, interacting, it's the djidi djidi that is the one that leads and is the boss or the booria.
Moorditj koort moorditj wirreen moorditj ngart nyeny-nyin noonoock maarn nidja. Strong heart, strong spirits, as you all bring your life-giving skills to this land. Today and in the future, there will be times when we will be humbled, just as we have been through COVID. We are strong and solid, and if not for the mining industry to get us through in terms of our economy, where would we be? There you go. We are resilient, and you are strong and solid. We ask that the good spirits be here today, and we ask that you also travel safely. Now, safely, the word in Noongar is ngabaalng moonda. I never had to really think about that before until just recently. For our children, ngabaalng moonda nidja noonukan jenabidi Whadjuk boodja.
We should all be wanting to travel safely, our families, our children, in this space that we call home. I would also like to give a special welcome to Nyamal people and also Karriyarra, because this is where your projects are, and hello from Whadjuk Noongar boodja. Yoongka. Thank you.
Thank you very much, Robyn. Thank you very much for the message of peace. We note that this is the season of birth, and your comment on the mining industry was greatly appreciated, so thank you very much. Thank you very much. I also would like to acknowledge the traditional custodians of the land on which we stand, the Whadjuk Noongar people, and pay my respects to their elders, past, present, and emerging. I'd also like to pay my respects to the Nyamal people that Robyn referred to and the Karriyarra people that she also referred to, the traditional owners of Pilbara region in which the Pilgangoora Project is located and with whom we enjoy a strong and enduring partnership. I note that a quorum is present and we've been advised, and I declare the meeting open.
I'll just introduce some of the leaders, as Robyn called them. On the table here immediately closer to me, Alex Eastwood, our Company Secretary, General Counsel, and Commercial Manager, and general dogsbody. Next to him, Dale Henderson, who was our Chief Operating Officer until July this year. Dale is now the Chief Executive and Managing Director following on from Ken Brinsden. Next to him is Steve Scudamore, who's been a Director for a number of years. Sally-Anne Layman, who've been Director for a number of years. I think that's Nick. Yes, Nick Cernotta. I've sat on a number of boards with Nick over the years. At the end, Miriam Stanborough, who was appointed a Director in November, I think last year, or certainly towards the end of last year.
Also in attendance, I'd like to acknowledge Brian Lynn down the front. He's the waving man. Brian, as you would've been aware, Brian announced that he would be retiring in the not too distant months. Brian has been with the company for a long time, so I certainly appreciate your contribution, Brian. Unfortunately, our newly appointed Chief Operating Officer, Vince De Carolis, was unable to attend today, as he's doing what Chief Operating Officers do, that is being up on site. I also acknowledge the Computershare reg, represented by Rod, sat down the back there. Those of you who go to AGMs will see this bloke many, many a times, and I've probably seen him over the last 10 or 15 years.
There's obviously some formalities to go through and that will include an address from me as well as the items of business. This morning I couldn't help but reflect on the journey of this company. We started in a very small office in Fremantle probably seven or eight years ago. Brian was in that very small office in Fremantle. Alex was in that very small office in Fremantle. I think with them, we're down to John Holmes, who's not with us today, but John's our longest-serving employee. Jason Cross and Ken Brinsden, I think that was about it.
We had our first board meeting down, or my first board meeting down there, and it was Steve Scudamore's first board meeting down there, and to which he said, "What in the hell have I got into?" It was a very little office. We looked like we didn't have too much money and that sort of stuff. If you reflect on the journey of this company, and many people in this room have been with the company for a long time, you'll be aware of some of the trials and tribulations we faced, and you'll be blatantly aware of the very strong market we're at the moment. If I look back on the journey, I mean, I can remember when we made a positive decision to put Pilgangoora into operation.
We needed to go and raise money, and Brian and Alex would be well aware of that. Of course, that was a time in which the conventional banks wouldn't talk to you. They wouldn't even know what lithium was. They didn't even know where we were on the periodic table. We raised some equity, but we had to, as Brian would know, go and raise money through debt. We raised it through what we called Nordic bonds, and we paid the outrageous interest price of 12%. At that time, where were we gonna get the money from? I can remember having a discussion with Brian. One of the directors leaned over the table to me and said it was Neil Biddle who started this company.
He said, "Tony, why are we gonna pay 12% debt interest?" I said, "Well, we're gonna raise some equity." I think the stock was about AUD 0.33 or AUD 0.34 at the time, Brian. I said to Brian, "What is the NPV stock?" He worked it out, and it was gonna be substantial in excess of the 30%, the AUD 0.30-odd that we were. We made a decision, as a lot of people know, sometimes that debt is cheaper than equity. We made a decision to go the equity route with these horrendous Nordic bonds. Luckily, we were able to get rid of those a couple of years later. That certainly allowed us to get into operation. From running point of view, you'll be aware that we've had our challenges.
Obviously the processing of lithium is not particularly easy. In the early days, we had recovery issues and was very much Dale Henderson's focus there for a number of years. When you talk about recovery, what you're doing is you're talking about the value of the mineral you're extracting from the ore. I think our recovery levels in our feasibility studies were around about 70%-73%. For a while, we struggled around that 50%. Luckily now, not luckily now, through a lot of hard work, we certainly got it up. You might remember when the market was pretty tough. Sorry to rabbit on, but these things do come to my mind. Steve, yes, I do rabbit on. Sorry, mate.
He said, "Don't do that, Tony." As you know, the market got pretty flat there for a while. A number of the lithium companies were struggling. We made a conscious decision to remain in operation. We went onto what we call our moderated production, but unfortunately, that required us to moderate some of the staffing levels. The reason we did that is we had a belief in the market, and we also wanted to be able to concentrate on our processing facilities and that sort of stuff. As Dale and Ken Brinsden at the time said, "Tony, if we close down, we're gonna lose all those learnings that we've made." We stuck it out, and we had faith in the market, and luckily it did return.
I mean, you may recall a couple of years ago, we bought the neighboring property, we bought Altura, which went into administration. One of the benefits of that is not only to give it access to another processing plant, but it removed the boundary which existed between our property and the Altura property, which certainly allowed us to be able to increase our exploration. At the moment, we've got quite an aggressive exploration program going on, which should see a substantial increase in our resources and in our reserve. That Altura acquisition has proven to be very fortunate for the company. I certainly got pilloried a little bit by people when it took place, suggesting that we paid too much for it.
I think from memory, I think we probably paid AUD 240 million, that sort of stuff, Brian. If you look at the market capitalization of the company today, you'll see that there's a lot more put on the Altura acquisition than the AUD 240 million. That was an aggressive step to take, and it was difficult, 'cause we had to negotiate with the administrator, and we had to be in a position to make an unconditional offer. We had to have the financial capacity to meet the price.
We got terrific support from AustralianSuper, RCF, and Macquarie, who were prepared to, as you say, put it on the line to underwrite a capital raising for us, which enabled us to be able to raise the money in conjunction with some debt we took on to be able to proceed with the Altura acquisition. Now we are where we are today. We're in a very fortunate position. The market is very strong. As I said to the staff this morning, you need to be at the game on game day with the ball in your hand to get the benefit of good operating conditions and good market conditions. Yes, certainly we're getting tremendous prices for our product, and you'll appreciate the very substantial cash generation in the company.
I think over the years, we've had terrific leadership, very strong management, who believed in the project. When I get round to my formal address, I'm sorry about that. The tea won't go cold, I can assure you of that. The biscuits will remain. Where's the biscuit eater? Over there. They'll still be there for you. I will make comment. I can remember we had an AGM in, I think it was the Duxton in town a couple of years ago, in which the market was pretty crook. I think there were a lot of long faces in the room. I can remember standing there. Thank goodness I said it. I said, "Don't lose faith. Don't lose faith." This market was going.
Luckily enough, a lot of the shareholders kept the faith, we kept the faith, and we are where we are today. That's just me reflecting a little bit on life. Certainly a lot of our senior management have been with us over the journey, Brian particularly, and Alex and Dale and Ken Brinsden. The Board, which is up on the table there, have been with us as a very close-knit unit, a very functioning unit, and a Board that makes terrific contributions. It's had to make some hard decisions, but I think in hindsight, most of the decisions we've made have been correct and to the advantage of the company.
That's a bit of me running off of the mouth. I apologize for that. Okay. Getting back to the formalities, I'll now deliver a formal address which will be filed at the stock exchange. The past year has been a remarkable period for Pilbara Minerals, characterized by growing demand and pricing for lithium raw materials and strong production at the Pilgangoora operation in Western Australia. This combination of factors saw the company post a significant increase in revenue to AUD 1.2 billion, underpinning a maiden net profit after tax of AUD 561.8 million for the 12 months to 30 June 2022. Shipments of spodumene, which is our product we sell.
Shipments of spodumene concentrate increased by 28% year-over-year, supported by strong performance from the Pilgangoora plant and the successful commissioning and ramping up of the Ngungaju plant. The Ngungaju plant is the old Altura plant. This is what I just said about the 2020 AGM. I recorded our 2020 AGM, urging shareholders to keep the faith when the lithium industry was experiencing a very difficult period. At the time, I said with promises that better times lay ahead. It is gratifying to see that those who stayed the course and heeded the advice have been rewarded with the company's market capitalization surging to over AUD 15 billion and a share price of over AUD 5.
Today, it's a tad below that, but it's still a very healthy price. It has also been pleasing to see Pilbara Minerals' strong performance continue in 2023 financial year, with production and sales in the September quarter generating AUD 783 million increase in the company's cash position to AUD 1.375 billion at quarter's end, which is a substantial amount of money. The lithium demand has been driven by the growing use of lithium-ion batteries and clean energy technologies, in particular electric vehicles. This is a trend that is continuing to gather pace, supported by strong investment and decarbonization targets set by governments across the world, and also many industrial companies setting decarbonization targets.
Pilbara Minerals is exceptionally well placed to capitalize on this thematic, with key investments made over the past 12 months aligned to production growth and diversification, such as the company's downstream participation with POSCO, a Korean company, and the demonstration plant being developed in joint venture with Calix to produce a midstream product. The P680 expansion project, as we call it, is well underway, which is expected to increase annual production at the Pilgangoora plant by 100,000 dry metric tons to deliver total production capacity of between 640,000 and 680,000 dry metric tons per annum across the combined Pilgangoora project. The company is also working towards making a final investment decision on what we call the P1000 project, which if approved, will increase production capacity to up to 1 million tons per annum.
All the while continuing to make progress to diversify the business and revenue stream by moving up the value curve of the battery supply chain. That's something that Dale will talk about when he delivers his address at the conclusion of the proceedings. During the year, the company formalized a joint venture with longstanding partner POSCO and construction commenced of the 43,000 ton per annum lithium hydroxide chemical facility in South Korea. Dale and myself were guests of POSCO about a week and a half ago. Not only at their Green Technologies Conference, we also went down to Gwangyang, where this plant is being built, and it was very heartening to see the progress which has been made and our joint venture partner.
Study work with the project partner Calix continued, with Pilbara Minerals and Calix well advanced and expecting to formally enter a joint venture to progress the exciting project. A final investment decision for the development of a demonstration-scale lithium salt facility at the Pilgangoora project using Calix's calcination technology is expected by January quarter of 2023. That is what we refer to as our midstream product. Once again, Dale will refer to that when he gets onto his bit. Both of these projects provide the opportunity for Pilbara Minerals to produce or to participate in value-added lithium materials, therefore diversifying Pilbara Minerals' product offering and enabling further participation in the supply chain.
At this point in the process, we are simply a mining company, but as you'll pick up, the theme is we want to be able to move further down the supply chain. The positive cash generation puts Pilbara Minerals in a strong position and provides optionality in terms of growth and diversification, capital management and importantly, shareholder return. It was pleasing this week to present Pilbara Minerals' capital management framework and dividend policy to the market. Applying a prudent approach to capital management, operating cash flow will first be utilized to sustain safe and reliable operations, invest in sustainability commitments, and subject always to prevailing market conditions, pay a sustainable dividend to shareholders.
In the near term, and in line with the company's strategy of growth and diversification, capital will be considered for deployment towards organic and inorganic growth opportunities that are expected to deliver the greatest long-term value for shareholders. It won't surprise you that one of the most common questions Dale and myself get with the cash buildup in this company is, "What are you gonna do with the money?" Hence Brian and his team working very, very heavily on what we call the capital management and dividend policy, which was released yesterday. Yesterday, I think. Okay. With Pilbara Minerals about to commence paying tax. You got it. The company's expected to apply its dividend policy for the first time in the 2023 financial year in the form of a fully franked dividend.
It will be a great source of pride for the Board and Management to be able to return value to Pilbara Minerals shareholders, some of whom have stuck by the company during the recent highs and lows. On other fronts, strong progress in respect of sustainability initiatives, including towards the company's goal of targeting net zero carbon emissions in the decade commencing 2040, with the construction of the 6 MW solar farm at the Pilgangoora Project now complete, with commissioning underway and a life cycle assessment to identify Scope 3 emissions undertaken. At Pilbara, one of our Board subcommittees is our Sustainability Subcommittee, which is chaired by Sally-Anne Layman. I'd like to thank Sally-Anne for the great contribution that she makes in relation to that.
The company continued to improve safety performance as measured by both leading and lagging indicators with a strong focus on building a positive safety culture and a safe and respectful workplace, as well as fostering a close and collaborative relationship with the area's traditional owners, the Nyamal people, and other stakeholders. Obviously, the spot-driven market has been good to Pilbara Minerals. However, the strength of the company's position is also clearly due to the efforts of Pilbara Minerals' employees and leadership team. The company has seen some significant change to that team over the past year with the departure of Ken Brinsden as Managing Director and the formal appointment of Dale Henderson as his successor in July this year. Many of you in the room would know Ken and know that he was with the company for a period of seven years.
His contribution over those 7 years has been absolutely outstanding. He remains a very good friend of the company and a good friend of mine. As I said at the time, at his farewell dinner, I said, "Between Chairman and Managing Director, the Managing Director is never your friend, but when he leaves, he then becomes your friend." Remember that, Dale. We are friends, sometimes. As I said, I'd like to acknowledge the contribution efforts of Brian Lynn, Pilbara Minerals' Chief Financial Officer. As I said, he was stepping down. Brian's had a pretty tough gig. I mean, one of the problems with chief financial officers, they have to rely upon what production staff tell them about targets and that sort of stuff.
It gets a little bit tough when you have difficulties up on site and the assumptions that the production staff are using are not materializing to cash flows, and the cranky old Chairman wants to know why. Brian can just say, "Well, I just did what the guys told me to." Brian, thanks very much. We certainly wish you well in all your endeavors. As I mentioned, we've recently appointed Vince De Carolis as the Chief Operating Officer, assuming the role previously held by Dale. As I said, Vince is now on site. Coming to Dale, I'd like to acknowledge Dale, who stepped up assuredly in his new role as Managing Director, delivering a seamless leadership transition and a steady hand to continue to drive forward.
Just to make it clear, a number of people spoke about the process we went through when Ken advised he was stepping down. Being a public company, we went through our process. We went through a formal external process. Dale put his hand up, and I can tell you on his own merits, he got there at the end of the day. He was clearly the unanimous choice of the board. To be able to promote from within is a wonderful thing. It's a testament to Dale, but I think it's a testament to the quality of a lot of our individuals. We do, where we can, endeavor to promote from within.
In closing, I would like to sincerely thank the broader Pilbara Minerals team for their efforts, recognizing that many of these people have stuck with us through thick and thin, including the travails of the market downturn. We are fortunate indeed to have such a dedicated and loyal group of people, and we greatly appreciate their exceptional efforts. I'd like to thank shareholders for their, and partners for ongoing support. I took the liberty this morning of sending a bulletin to all members of staff advising and just reminding them that it was our Annual General Meeting, but pointing out that this company has got to where it is because of its dedicated, mature, and staff. That includes those that were with us and those that are currently with us.
Because one of the things we try to do at Pilbara, I think we do it successfully, is to build a very strong culture. As you know, it's not just money that drives people to wanna work for you. It's recognition. It's understanding their level of accountability and the way they discharge their job. It was important for me just to remind employees that each and every one of them, whether they're on reception or they're operating the processing plant, is equally important and have a very important role to play within the company. Okay, now getting on to meeting procedures. We've released our notice of meeting, which can be viewed on the ASX and Pilbara's website, as well as the company's Computershare meeting platform. The AGM today has been conducted as a hybrid meeting.
It's being physically here at the University Club of Western Australia, as well as online via the Computershare meeting platform, and we are online at the moment. We've encouraged shareholders to use either of these platforms to be able to participate in the meeting. We welcome shareholders, proxy holders, and corporate representatives attending in person or online to ask questions. There are two ways to ask questions. Obviously, if you're attending, you raise your hand and using a microphone in the auditorium, or if attending virtually, by typing and submitting a question on the online platform. For those online, to ask a question, you select the Q&A icon and type your question in the text box. Alternatively, if you wish to ask a question verbally, please follow the instructions written below the broadcast.
Further information about the submission of questions via the online platform is set out in the online meeting guide available on our website or as an attachment within the meeting platform. From now, people can start submitting their questions online, particularly those that may not be here for the balance of the meeting. As to those questions, I'll not address them or they will not be addressed, I should say, till the relevant time at the meeting. If we receive multiple questions on a topic, we'll moderate those and amalgamate them together.
If those online, if your question relates to a specific item of business, it would make life a lot easier if you refer to that item of business when you submit your question. We'll get there eventually. Okay. Voting by poll. All voting today will be conducted by way of a poll on all resolutions. In order to provide you with enough time and cast, in case you're not to stay for the full meeting, I'll shortly open voting on all resolutions. You don't have to wait for the resolution before you can cast your vote. If you're eligible to vote, there are two ways you may cast your vote, in person or via the online platform. For those in attendance, you may vote using the voting card which you were handed when you entered the auditorium.
When called upon to vote, please do so by marking your slip either for, against, or abstain. Your voting slips will be collected prior to the end of the meeting. Any question on voting procedures and that sort of stuff, please raise your right hand and Rod and the troops from Computershare will help you out. I assume everyone has their voting slips and a pen if they need them. For those online, once voting opens, press the Vote icon and all resolution will be activated on the screen with voting options. To cast your vote, you simply select all options. There's no need to hit a Submit. There's no need, sorry, to hit a Submit or Enter button as the vote is automatically recorded, and you'll receive a vote confirmation notification on your screen.
You can change your vote up until the time I declare voting closed. If you require any assistance during the meeting, as I mentioned, there's an online meeting guide which you'll find online. With regard to proxies, these numbers will be displayed on the screen for each resolution. Please note that the number of open proxies have been received at the Chairman's discretion, and I advise that I, as Chairman, will be directing those in favor of each resolution. Folks, I now turn to the formal matters to be considered today and declare voting open. If you're online or in here, voting online, you can start that if you want, and you can fill in your card if you'd like to. I'll give you a warning before I close voting.
Rod Same from Computershare has agreed to be the Returning Officer today, and following confirmation by Computershare, the final results of the poll will be announced on the ASX platform later today. As I mentioned, at the conclusion of the meeting, Dale Henderson will make a presentation. There'll be an opportunity to ask questions of Dale and the Board at the end of that presentation. In relation to the Notice of Meeting, I'll take that as read unless anyone wants to read it. Okay. Objections, I'll take that motion as carried. I now move to the business of the meeting. The first item of business is to receive and table for consideration the Annual Report, which includes the Financial Report, the Sustainability Report, the Directors' Report, and the Auditors' Report for the financial year ended 30 June 2022.
Members should note that the reports are tabled for approval, not for approval, I should say, but simply for discussion and comment. Our representatives of the company's auditors, Derek Meaks and Glenn Dieper, are down here and are available to answer any questions from members in relation to the conduct of the audit. I'll now pause to allow any shareholder to ask any questions or make any comments in relation to the financial report, reports of the directors and auditors. One day someone will ask you a question, Derek. One day in your life. Okay. No questions from the floor. Alex, any questions online?
No, Tony. No. No questions.
Okay. Thank you. I will now proceed to the specific resolutions of the Notice of Meeting. I thank the auditors for their contribution over the year. Thank you very much, guys. It's a different company than it was a couple of years ago. Resolution one relates to the Remuneration Report, which is included as part of the Directors' Report that can be found on page 116 of the company's Annual Report. Voting on the adoption of the Remuneration Report is for advisory purposes only. Proxy votes received on this resolution are displayed on the screen, as is the resolution itself. I don't propose to read the resolution in full, but give you sufficient time to take it in. Obviously, it was included in the Notice of Meeting, and it's there on the screen.
I now invite any shareholders, whether in person or online, to ask any questions they may have in relation to Resolution 1. Any comment or questions in relation to the Rem Report? Anything online, Alex?
No questions concerning this resolution, Tony. No.
Sorry?
No. No.
Okay. Thanks, mate. Okay. I now move on to the next item of business, and a reminder that there's a poll related to the resolutions. Resolution two relates to my re-election as a director. Obviously, I have an interest in this proceeding, so Steve Scudamore will handle that.
Thank you, Tony. Before I go to the resolution, I'd just like to say a few words if I may. Get my own back, perhaps. As noted in the explanatory statement, the board is fully supportive of Tony's reappointment. I have been on the board with Tony since we were in the shack down in Fremantle in 2016. I've had an opportunity to work with Tony over a number of years. It's fair to say I think he's an excellent Chairman. He works very hard for your company. Spends a lot of time on the company business and supports the team.
He went up to POSCO recently, which is quite a time-consuming exercise to see our joint venture partners, and they really appreciate the involvement of the Chairman in those sort of events. Amongst other things, he has a good working relationship with the past CEO, who's now a friend, but that was a working relationship in those days, and the new CEO and the executives. I think you now can see on the screen the proxies that support the reappointment and also the resolution. I don't intend to read the resolution either. It's in the Notice of Meeting. I'll let you just have a quick read of that. I now invite shareholders to comment on any questions they may have on this resolution. Alex, do you have any questions on the resolution?
No, Steve.
On that note, I'll leave it for you to vote. Thank you.
Thanks, Dave. Thanks, Steve. Okay. Now go to resolution number three, and that, uh, relates to the re-election of Nick Cernotta, um, who retires by rotation, um, and offers himself for re-election. Nick's details are set out in the explanatory memorandum and the annual report. Proxy votes received on this resolution are displayed on the screen, as is the resolution itself, which I don't intend to read. As you know, Nick, as I mentioned, Nick's been on the board for a, for a considerable period of time too. Any comments or questions on, um, on the resolution or on, or on Nick? Thank you. Anything online, Alex?
No, Tony. Nothing online.
Okay. Thank you. There being no questions or comments in relation to that resolution, it'll be included in the poll, and I move on to resolution number four. Resolution number four of the notice of meeting relates to the ratification of the prior issue of what we call convertible bonds to POS-LT Pty Ltd, which is a wholly owned subsidiary. In fact, no, it's a jointly owned subsidiary now between us and POSCO. This is for the lithium hydroxide plant being built in Gwangyang in South Korea, which as Zed Dalham himself wrote recently. We currently have an 18% interest in that with an option to go to 30% not necessarily on our terms and condition, but in timing, up to when we wish to.
To finance our initial 18% interest, they came by way of convertible bonds. In other words, that's debt, which was given to us by POSCO in the nature of convertible bonds, which we can at any time, at our call, convert that into equity, into shares. What we're seeking here is shareholder approval to the issue of the bonds. If they are converted into shares, it comes within the exceptions within the listing rules, as explained in the notice of meeting. The proxy votes in relation to that are on the screen. Very strong for, which there should be. Excuse me, the resolution itself is on the screen, which I don't intend to read. Are there any questions or comments from the floor in relation to that resolution? Yes.
What's the premium on the bonds or interest rate?
Oh, it's pretty low, Brian, isn't it?
Yeah, it's not very low.
Oh, yeah, it would just be that, I think. The terms are pretty favorable, and us having the right to keep the debt there or to say, "No, we want to get rid of the debt," we can issue shares. It's not at their call, which is quite often in these situations, but it's our option. They're quite favorable. Any further questions or any comment from the floor? Anything online, Alex?
No, nothing online, Tony.
Okay. Resolution number 5. The Notice of Meeting relates to the approval of the issue of employee performance rights to Dale Henderson under the Employee Award Plan. Full details of these are set out in the Explanatory Memorandum, including the performance hurdles that apply to these performance rights. Approval of this resolution, as such, does not mean the performance rights will automatically convert to shares. Conversion into shares depends entirely on the meeting the performance hurdles and vesting conditions within the three-year period. The performance vesting conditions of the employee performance rights are weighted 70% to what we call relative total shareholder return. In other words, you compare our total shareholder return as to a basket of other companies, and 30% towards two specified sustainability targets.
It's interesting that these days, if you went back four or five years ago, a lot of these long-term incentives, most of the conditions were always financial. Now with things like ESG and that sort of stuff, we're getting non-financial metrics coming into these things. As I said, 30% of those on dials relate to two specified sustainability targets. There's also a service condition that Mr. Henderson remains employed within the company for the three-year period. As you can see, these are what we call stretch targets, and they're not automatically given for doing his day job. The proxy votes received in this resolution are displayed on the screen, as is the resolution itself. Any questions, comments, or clarification from the floor? Anything online, Alex?
No questions, Tony.
Are we online, mate?
Yeah, we are.
Oh
We're getting a few questions on more general business.
Oh, today's presentation.
Yeah, that's fine.
Okay. All right. Well, they might have a go at this one. Resolution 6. I refer to Resolution 6, the Notice of Meeting, which relates to an increase in the aggregate fee pool for Non-Executive Directors. I obviously have an interest in this resolution, so I'll get Alex to run that.
Thanks, Tony. The proxy votes received for this resolution are displayed on the screen. Like my colleagues here, I don't propose to read the resolution, but obviously the resolution's about increasing the aggregate director fee pool, and that's not necessarily about increasing fees today, but it's giving the company flexibility for the future to attract new directors or to adjust remuneration over the years as the company grows. I now invite shareholders to comment or ask any questions that they may have on Resolution six, and I'll read any online questions raised. Are there any questions on Resolution six? Okay. I can't read the questions 'cause I'm not in front of the screen, but Danny can. There are no questions on Resolution six online either. If there are no more questions, I'll put the resolution to the meeting.
If you haven't already done so, please now cast your vote on resolution six. I'll now hand back to the Chair, Tony.
Thanks, Alex. Okay, folks, that concludes all the resolutions to be put to the meeting. I ask all shareholders to complete their voting before I close the poll, which remains open until I close it. Did you get yours in? I'll check it first. Any outstanding green cards? White cards or blue cards? There's some over here, Rod. Thanks. Alex, you've got ours on there?
I do, yeah.
Thanks, mate. Thank you, Rod. Okay. Okay. I declare the poll closed. Thank you for your attendance, and thank you for participating in it. I'd also like to thank Robyn Collard. Robyn's left, and I thank you, Linda, for organizing the Welcome to Country. I thought it was very moving. Having finished the formal notice of business, I close the meeting. I invite Dale Henderson up on to deliver address, and feel free to ask him any questions that you wish. Thank you very much for attending.
Okay. Thanks, Tony. Good afternoon, everyone, and good afternoon to those online. What 12 months it's been. Pilbara is absolutely thriving, and that looks set to continue. A bit like Tony, I was reflecting a little bit this morning on the journey. Just to give you a couple of numbers which I think really paint the picture of what's transpired the last year are the following. Going from September quarter a year ago to the September quarter we've just had, production has increased by 70%. The average realized price over that 12-month period has increased by 450%, and that's translated through to a balance sheet that has increased by over 1,200%.
More than a 13-factor increase to the balance sheet as a function of strong production and strong pricing. You know, the year we've had has been absolutely transformational, and Pilbara has moved through what I think has been an inflection point and absolutely gone from what's been a survivor to a thriver. It's hard to believe we're only in third gear. We've got a multi-year expansion program ahead of us for a multi-decade Tier 1 asset, which is unbelievable. Pilbara is positioned like no other to capitalize on this market. Now before I get into the presentation, I did also want to reflect a little bit on the people connected to this business. A bit like as Tony has done.
We've been stewarding an incredible asset in an incredible time of the birth of this industry, but it's all been through a huge network of people. First and foremost is our shareholders, whom if it wasn't for supporting the business, we would not be here. Particularly those shareholders who had the fortitude to stay with us during the downturn, who believed in the asset, who believed in the team, and believed where the lithium market was heading. A big thank you to those, and your support during those dark days of the downturn is absolutely remembered, so thank you. As it relates to the community, Nyamal has always been a big supporter of the project, and we continue to build on that relationship. To our customers.
Our customers, through their offtake agreements, enabled the original funding that occurred, which underwrote the kickoff of the project. Again, this was at a time when, you know, lithium was not sexy, when the guys were hanging out in the shed in Freo. Those customers backed the team and backed the project and gave it life. There's our contracting partners through the journey. Our builders, Primero, DRA, RCR, unfortunately who went by the wayside. Our operating contracting partners, MACA, Cube, and CSI to name but a few. Our financiers, Clean Energy Finance Corporation, who was the cornerstone, who actually helped get the Nordic bond financing abroad kicked off. There's the team ourselves. You know, the team has just been incredible.
Whether it be our corporate team, our site operating team, our projects team. Those who were with us previously who have since left or those carrying it forward. Massive, massive efforts over the last few years. To the execs, Tony mentioned rightly about the great work that Ken had done. Absolute champion who stewarded the business through such a tumultuous period. Of course, Brian, who has been an absolute stalwart and chief architect of what's been a very challenging financial journey. From giving, breathing life into the project and then navigating that downturn. Brian led the charge and, yeah, well done, Brian. If you're looking for Brian later, he's wearing the pink shirt or angry salmon, as he calls it. Feel free to have a chat to him a little bit later.
The sum of these efforts, as you can appreciate when you reel off all of these different groups, it's through the people connected to this business who have brought it to life, and the sum of that's played through to those outstanding results I mentioned a moment ago. For myself, transitioning into the role of CEO and having been COO back in 2017 when I started, it's an absolute privilege to be carrying the baton forward for the next few laps. My fuel tank of determination, I can assure you, is absolutely brimming. Fueled by that proud journey that we have and fueled by the excitement about what lies ahead. We are truly building a great Australian company, and it's gonna be amazing to see what we can get done in the years which fold ahead.
With that, I'll step into the presentation. I'm assuming most of you have seen most of this before. What I'll do is I'll dwell on some of the more recent updates, which I think are a bit more pertinent, which most people would like to hear about. In particular, I'll offer a couple of comments on the market because I know that's front of mind for many of you, particularly given some of the news this week. Which I would say some of it is fake news, just to reference Trump, given that he's back. I'd like to give our perspective on the market as one of the major participants in the lithium-ion supply chain. You can digest that and consider that against some of what you're reading in the paper.
In terms of the high-level numbers, this is where we finished at the end of the financial year. ASX 100, healthy bank balance, and production was going well. The strategy which we've been pursuing as a business has not changed really since the inception. That's been about, first and foremost, the operating platform. Ensuring we're delivering on those production commitments. Two, expanding that operating platform and making sure we're getting maximum value out of this incredible asset that we're developing. Number three, more value per lithium unit, i.e., adding more value through downstream participation. Fourth, diversification as the fourth sort of priority. All of those four things serving our purpose of being a leader in the sustainable battery mineral products provision. From a production perspective, last quarter was a big step up.
Credit to the Ngungaju operation really starting to hit its straps. It was really, really brilliant to see. I note that 70% production leap that we've had is principally due to bringing on that operation. Delighted to see how they, the operating team, has been going there. It was slightly later than we probably hoped. In the year we had, we definitely had our challenges. We had unfortunately missed our guidance, had to re-rate our guidance twice as a function of some delays around Ngungaju. We had our challenges. Of course, there was COVID. That was part of the year we had. Pleased to say, we've caught up and that's now behind us and the operation's performing really, really well. I think most will know where we're located.
Southeast of Port Hedland. Incredible Tier 1 asset, 26-year mine life, assuming we've expanded to the million tons per annum, and currently operating at a 580,000 ton per annum run rate. By the way, that 26-year mine life, that assumes we don't drill any more, which of course we're going to do. In fact, John Holmes, which Anthony Kiernan mentioned, he's busy mobilizing rigs as we speak to look what we can do to expand that resource further. The journey to date, yeah, incredible journey from that shed in Freo to where we are today. Probably the most recent update on that timeline is the recent AUD 250 million government funding package, which was announced the other day.
There's more to come to offer some more detail on that. That's an absolute coup for Pilbara. It's significant in that it's very attractive terms, will be very attractive terms. It offers more strength to the balance sheet and more flexibility for the balance sheet, such that we can weather any storms in the future if they are to come, plus enable us to pursue more growth vigorously. Further, having government backing is really, really powerful. As we look to do other things, to say that Pilbara is backed by the Australian Government with low cost, very competitive debt, long 10-year debt, is very, very powerful endorsement of the project we have and represents also from the Australian Government's perspective, their prioritization of backing key critical minerals projects, of which of course we're one.
Well done to Brian and the finance team for landing that one, and we look forward to offering a bit more detail later once those terms are finalized. Moving to the market. The market's been good, despite what some think about them. What we're seeing is continued strong pricing support around that AUD 70,000 per ton per chemicals price. We've been seeing that being maintained, and particularly the most recent data points, of which absolutely the most recent was our latest BMX sale last night, was a new record. We think that just reflects the strength in the market. We continue to get inquiries around can we provide product, can we increase the volumes that we're sending, et cetera, et cetera. That continues.
Some of the recent rhetoric around markets shifted. It's now changing. We certainly don't see that at this point in time. I would note the Platts weekly pricing report, which was delivered last Friday, spoke of new records for lithium chemicals pricing. You might say, "Well, gee, that's at complete odds with some of what I've read recently." We would agree with you. It is at complete odds. What guides our focus is, A, what our customers are telling us, and B, those pricing outcomes that we're seeing. We don't see any cause for concern in the short term. As to the medium and long term, of course, that gets harder.
There's many different macro market pressures, whether they might be inflation, wars, U.S. elections being flagged. You name it's an uncertain macro environment. You can't be completely certain. As to our standing, our cost position, I think we're really well-placed to weather the storm regardless of those market movements. No cause for concern in the short term from our perspective. As to the supply-demand expectations, you would have seen these curves before or similar curves by others. Everything points to a deficit.
In our case, and the estimate we have here from Benchmark, they've predicted that by 2040, the equivalent of 18 Pilgangooras or 18 of our operations would be required to plug the gap, the deficit gap by 2040, or nine of our equivalent size operation by 2030. That's an enormous volume. That also assumes that all of the known projects are coming online, and yet despite that, you still see that gap. As one of the very few lithium producers globally, we're very well placed for what we think should be a long time ahead. Certainly, that's what the forecasts suggest to us. In terms of our standing in the current lithium market, we're a big player. We're, again, referencing Benchmark's data, we're approximately 10% of the global lithium supply this year.
Within hard rock, that's a larger slice again. Of course, as we move forward with our expansion, depending how rapidly we can go relative to the other suppliers, we'll obviously be looking to increase that share of the pie, subject to how quickly we can go. We are absolutely a material player for lithium raw material supply on the global scene. Moving to the operation, it's all green arrows. Yeah, big step up in the cash balance. A CFO's delight. Production volumes are strong. It's been happy days. By the way, it wasn't always this way. Tony mentioned this. I caused Brian absolute grief. Well, me and the operations team, not hitting our targets. We got through that. Now Brian smiles all the time.
It's in this environment, there's a lot to smile about. Those production volumes, a 75% increase on the year which has passed. I'd just like to make comment that type of volumetric increase is really tough. To the operating team on site, absolutely champion effort which has been completed. That 76% increase equals huge amount more of mining movement, more triples heading out the gate carrying that product, more sales, more people, you name it. It all goes up geometrically. It's a big curve and a very steep curve. It's been some enormous efforts, not only on site, but from our functional groups as well who have supported that effort. I just wanna mention a well done to the team.
It's great to see these results coming through, but it was only made possible from enormous amount of teamwork and effort. Well done to the team. Moving to pricing. We've updated our BMX sales graph and delighted to add that record price which got delivered last night on the right-hand side. As I mentioned earlier, that just speaks to the strength in the market. That price for 5,000 tons, you need over $30 million to secure that. It's no small indicator of the strength of the market.
I'd ask you to consider that when you read some of the articles and drill into the detail when they talk about a price movement, look at the volumes and times the price, weigh that up, would be my suggestion as you start to consider some of these alternate points of view that you might be reading out there. Moving to the capital management framework that it got announced this week, it's come sooner than we thought we needed to. It's a good thing as a function of that strong balance sheet, strong pricing, strong performance. What we've deployed here is a very, what we think is pragmatic, sensible, and prudent approach to our capital management with prioritization about the defense and strength of the business and supporting the operation, sustaining capital and whatnot.
The delivery avenues to support growth, whether that might be inorganic strategy, share buybacks, or debt reduction or other sorts of investment. What we think is a pragmatic approach. We think this is appropriate for where the business is at. Of course, we will revisit this in time as we monitor the macro market and of course, how we're traveling within that market. Of course, within that framework, we've flagged those first dividends time for the end of the financial year. Beyond the capital framework and moving now to the expansion plan. Next step up to a million tons per annum. Well, we're well on the way, of course. We're at a 580,000 ton run rate at the moment.
The P680 project, as we call it, which bolts on another 100,000 tons, is deep into execution by our projects team. When I say it's deep into execution, the civils are done, holes are being dug, long lead equipment's been procured, and we're aiming for a ramp-up of that in the September quarter next year. Beyond that, P680 is the step up to P1000, delivering 1 million tons per annum. The FID for that project is due this quarter, and we're looking to put that to the board and get that approved, and get on with that next leg of expansion. Of course, with the aim of, as per that original strategy, expanding the operating base and making the most of this fantastic market, this insatiable appetite which is out there for more lithium units.
A couple of pictorials there of what those projects look like. This is the P680 which was approved some time back. On the left-hand side is the processing equipment which is responsible for the 100,000 ton step-up. On the right-hand side is the large integrated crushing ore sorter which is sized for the P1000 or the 1,000,000 tons per annum. This project here is approved and underway for the projects team. Plenty more expansion runway ahead to increase those tons and hopefully enjoy that strong pricing for more years to come. Now, beyond expanding the base asset and moving into our diversification strategy, essentially this is all about creating more value through chemicals participation. Principally two pathways, hydroxide production or lithium carbonate production through fine chemicals through an upstream or midstream.
Midstream chemicals, which I'll speak about in a second, but which is essentially a lower bar in terms of chemicals production and a carrier of lithium units. Starting with our upstream participation with POSCO. Tony mentioned that he and I were in South Korea a couple of weeks back, and it was a dual visit of participating in POSCO's Green Materials Forum, and also going and visiting Gwangyang and observing the progress of the demonstration plant. The Green Materials Forum was an absolutely fantastic event to be part of. Pilbara was invited to present, and in Tony's case, he was invited to be part of a key ceremony, which you actually see a photo there with Chairman Choi.
Yeah, Pilbara was there center stage with POSCO, and it's just amazing to see the bold steps POSCO is making around their moves into not only green materials, but in particular as it relates to battery materials, of which lithium is just one subset. We are an absolute key partner. Their joint venture partner, of course, for lithium hydroxide participation. Tony and I went to enter the conference, and then we went south to Gwangyang to look at the progress of the plant. It's well and truly underway. Holes are being dug, steel's in the air, pipes are going in the ground, and POSCO have got a burning focus to meet their scheduled target of construction complete for train one in October next year.
From that point, there will be a ramp-up and commissioning period. It was great to see works underway on that site and the POSCO machine is absolutely well and truly underway to bring that project to life. Delighted that we are a part of it and for our shareholders get the benefit of that uplift through the selling of those hydroxide products. It's product sold to the joint venture, so that's clip of the ticket number 1. Clip of the ticket number 2 comes through the economic participation through the sale of the hydroxide products coming from that plant. This achieves our aim of being further downstream and creating more value and more margin through a lithium unit.
We couldn't think of a better partner than POSCO to be in joint venture with for a lithium hydroxide plant. South Korea is already an existing hub for battery materials production. You've got all of the key brands established there. LG, Samsung, POSCO Chemical itself is a subsidiary of POSCO. Korean cathode materials, which by the way, Tony and I got to visit that plant the other week. You've got a number of major Korean car companies who of course undertaking EV manufacturing. We think this is an absolute coup for Pilbara and our shareholders to be involved with POSCO. They are taking giant strides and where this facility is being built is a very smart strategic location.
Established industry, established know-how, free trade agreements with the U.S., by the way, which for those who are familiar with the Inflation Reduction Act, should provide benefit. For Pilbara, it's also diversification. We're starting to split out our allocation of product such that it's not all channeled via China. We've got now in time, some heading via South Korea. Great to see that progress and we look forward to updating on the build as that progresses. The midstream project, and for those who are not familiar with this is about producing essentially a chemicals product at the mine site and taking the front of what would be our customer's plant, bringing it to the mine site, but using some different processing technology to produce a superior product. Superior to spodumene concentrate and superior on three metrics.
1, lower carbon intensity. 2, lower waste. In fact, leaving all of the alumina silicate at the mine site, so not shipping that anymore. Lastly, materially lowering the impurities and instead delivering what would be a very high-grade lithium product in the form of lithium salts, potentially lithium phosphate or lithium sulfate, and then delivering that out the gate to our fine chemicals customers. Like POSCO, who would take that product and then further upgrade it to lithium hydroxide or lithium carbonate or other battery materials products. Now where we're at with this project is it's still very much R&D. We're busy progressing the final terms of the joint venture, and we're busy undertaking the next levels of study heading towards an investment decision for a demonstration plant.
All going well, we'll be approving that investment decision in the first half of next year. Hopefully, quarter one next year. That will be to build a demonstration plant at the mine site and be testing the process steps at scale and demonstrating unit cost, producing volume at a decent-sized volume that we can test for pricing in the market. If that all goes well, we'll look to go to scale. I'd stress it is R&D, but we feel very positive and optimistic, and it could have a great future for the company and, in fact, for the industry. Moving to sustainability and the last section of my presentation, and starting with culture. The way we think about culture, it's our foundation.
You heard me talk about people at the start of this session. Everything which has been achieved to date has been through our people, and culture is the foundation of our people. Now in this category, we've been busy on a couple of fronts. A safe and respectful behaviors training has been progressively rolled out. Our Unmute Yourself campaign is essentially a speak up campaign encouraging empowerment across the workforce and making sure that if anyone's feeling that there's antisocial behaviors, they feel supported to speak up such that it gets addressed. We've been rolling that out. Lastly, in terms of cultural survey, Mining Leaders who are a consultant in this space have been guiding us in this front. We've completed a cultural survey.
In fact, as recent as last week, we had 87% participation, which is a very strong participation for a first survey. Having done that survey, what that's gonna enable us to do is to work on the things we need to improve and double down on the things which are really working well. Great to get that survey kicked off and as we look to expand the operation and then recruit more people, we're really conscious that we wanna continue to build on the great culture that we have at Pilbara and make sure we don't in any way dilute that or come off the rails, so to speak, as we look to employ and recruit more people.
From a safety perspective, TRIFR slightly increased up from where we finished last year, but still at a modest level of 4.2. The safety interaction rate, what that is is the lead indicator which essentially measures in-field safety conversations. We've got both lag and lead indicators. That safety interaction rate is well above our target of two, so we're happy with that. This is all feeding through to building on and reinforcing our safety culture. From a community perspective, quite a few things have been happening in this front. We've had cross-cultural awareness training with our Nyamal traditional landowners. Also with Nyamal, we've been running some cultural overnight camps. There's been two female-only cultural camps.
This is going out on country, spending the night and spending time with the Nyamal elders. Two of those have been run so far, of which Miriam Stanborough, one of our directors, joined one of those. Feel free to ask Miriam about what she thought after the break. From all reports, it has been really well received from our staff and those Nyamal elders. The community school battery project, what that's about is putting a battery solar solution to a remote school, not far from our mine site, the Yandeyarra School. Terry Butler, who's the main guy out there, approached us some time back and said, "Gee, we spend a lot on diesel fuel, running the power for the school.
It'd be great if you could provide some solar. We said, "Well, let's do one better, and why don't we get some batteries and see if we can get rid of the gen sets outright?" We've done that. We've partnered with our power provider, Contract Power, to deliver a solar battery solution for that school. That should save the school a lot of money, which of course, those funds can go back to the kids and other support for the school. That's pretty neat, and we're looking forward to seeing how that goes. Potentially, this might be a model that Pilbara will take forward elsewhere.
Also in the sustainability front, our six megawatt solar farm, it's really our first step to decarbonize the operation in a material fashion, displacing over 9,900 tons of CO2 per annum. It's built. It's ready to be commissioned and tied in as a function of when the shutdowns are. Yeah, really happy to see that in place, and we will look to expand that in time. To conclude, yeah, what an amazing journey Pilbara's had. We have absolutely moved through an inflection point and find ourselves now in just an incredible position, an operating platform which is shooting the lights out with an expansion pathway, frankly, second to none, which is gonna be doubling our production output in the 12-18 months from here.
We've got mature solutions to create more value per lithium unit through downstream participation. We're looking forward to doing more of that with at least 40% of our available production profile is unallocated of the future million tons. We're also forging a path around sustainability initiatives. That midstream project being a key one. Decarbonization of our mine site with solar. It's a very exciting time ahead for Pilbara. Thank you all for your time and looking forward to taking questions. Any questions from the floor? We might just get a mic. Okay.
Last week we announced that we get AUD 250 million government financial support. I don't know why it's like we have enough cash on hand. We still borrow some money. Is that the government, the AUD 250 million is interest free or?
Sure. No, it won't be interest-free. It will be very competitive terms. A little bit of gearing for the balance sheet is seen as prudent, and it does strengthen our balance sheet. That certainly provides more flexibility such that more of the available cash can be used for other things. Those other things will be as per the capital framework. That could be growth, it could be dividends, it could be other things. Further, the government debt offers what we think is an endorsement, which is very valuable in that as we look to do other things potentially globally, to be able to say the Australian government has backed our project, we think is powerful and a really strong endorsement, which we think could be valuable in the future.
This is both commercial and strategic reasons for pursuing the debt financing with the government.
Okay. Another question that is, I noticed that last quarter our grade is 5.4, 5.3. The June quarter is 5.4. It's like we are drop.
Yes.
Is that any relation to our production and the grade? Does that mean we produce a low-grade product, we can produce more? Is that right?
That's correct. Broadly with mineral concentration, as you drop product grade, the volume produced, the yield increases. We've made a decision to tweak down our product grade in order to increase the total produced tons. We've been doing that incrementally, and we're down to approximately 5.3 or thereabout. All to increase our tonnage output from the mine site. Which therefore enables more sales and more returns or a more improved economic outcome for our shareholders.
Like, our capacity is like we are P580.
Yeah.
Of P680. Is that grade SC6 or SC?
SC6. Yes.
SC6.
Great progression. Yes. The extension of that would be it can move beyond that.
Sorry. Another question. Is about our royalty. I know the royalties are 5% of our sale price. I also hear that it's Western Australia Government, they have set a price. Is that, you know that, not. You know the Greenbushes mine, they sell very cheap.
Yeah.
Price. Their royalty is not linked 5% of their sale price. Because our lease condition is that offtake is about AUD 4,700 and auction the, oh, yeah, AUD 8,000. Is that?
Do I take from it you think we're getting a bad deal because others are selling their product for cheaper?
No, is all 5% for the sale price?
Yes, it's on sales price.
Oh.
That's correct. Pardon?
Sales price.
Yeah. Yeah.
Okay.
Okay. Oop.
I have two questions, one technical. How much lithium hydroxide does one ton of spodumene make?
It's approximately 7 parts of spodumene concentrate to 1 part hydroxide.
Okay. It takes 7 tons of spodumene to make 1 ton of Korean Chemical. Okay. That's the first one. The second question is.
Use this one.
Hello.
That's better.
The second question is, the company's obviously awash with cash at the moment. Very good NPAT. How do you control expenditure?
To ensure that you get the best value for money when it's so tempting and easy to spend money.
Well, it's a great question. We have the benefit of a board who keeps a very close eye on exactly that question and within resources in the commodity cycle, it's well-known that when times are good, the eye can come off the ball in terms of cost base, and sometimes that's justified by higher returns. Inevitably, when down cycles come, the sea goes out and the high-cost operators get called out. We're absolutely sensitive to that factor, and we monitor it very closely.
The Board know enough about the details to be able to curtail?
Sure. Yeah, no. The monthly reporting to the Board is very detailed. I'd also add that the short-term incentives are tied to cost outcomes and production outcomes, so it's seen as absolutely integral to keep costs controlled.
Stuart Days my name. It's gratifying to see that you're investing in a lithium hydroxide plant. My concern is that you are mining pegmatite which contains spodumene. It's only 2%. You increase it to 5.5%. Have you got any plans, say, for using the enormous amount of waste, 90%, 93% or 94% of alumina silicate?
Yeah. We don't have any plans for it yet. We watch with interest as others have tried to find ways to utilize that alumina silicate. We haven't seen any smart solutions as yet for using that. If we can, I think it would make good sense to do in time. Let's not forget that alumina silicate for the current operation, it all goes onto the vessel. It all goes offshore currently. For our customers, essentially do that separation, so they're the ones left with the alumina silicate under the current model. If midstream works, and we think it will, the demonstration plant is successful and we think we've got a strong economic possibility there, well, that would bring the alumina silicate.
It would leave it at the mine site, which could potentially, if there's a use for that alumina silicate, be made into another product or worst case, treated as waste at the mine site where it could be more readily handled. Of course, midstream needs to earn its stripes as an R&D project.
One more question. You are a single element mine, lithium. Are you concerned about the development in the future of, say, the aluminum-ion battery system or chemistry which looks like it might be a real contender?
Sure. We're not that concerned and the reason being, yes, we keep an eye on what technical developments are occurring in battery technology. What gives us a lot of comfort is for all of the technologies, there's a very long gestation period required in order for a competitive solution to be commercially competitive. We ask your question to the groups that really know this area. In the case of when Tony and I went to South Korea, I queried the LG team battery guy about what do they worry about. CATL, who's one of the world's largest battery makers and in fact the largest, depending which year, is a customer of ours. We ask them this question, and we ask them where they're investing, and they haven't been looking as, to my knowledge, in that area.
What they've been doing is doubling down on lithium-based projects, including asking Pilbara for more support.
I've got an LG Chem 100 kW battery system.
Great.
I hope some of your lithium in it.
Maybe. I'm not sure. Yeah. Okay. Thank you.
Ben Grummels. I'm a former Senior Technician at WASM in the Department of Minerals Engineering and Extractive Metallurgy. I've got a question about your research and development. Where might be the research being done? Where is the laboratory and pilot plant?
On which topic?
You're talking about research and development.
For the Midstream Project.
Yes.
Yeah, sure. When it comes to the R&D approach for the midstream project, there's a combination of efforts to progress that, which has included test work with Calix, whom are our joint venture partner. They've got facilities which we've been using for the calcination step. We've also been doing lab work at Nagrom, and we've also been doing lab work, I forget the name, at another lab locally in Perth. I'd also add that we have dedicated chemical engineers employed from our side who are stewarding the work and are very central to guiding and collating the work. Further, we do have some different engineering consultancies engaged as well with different subsets. It's the sum of those things are contributing to the full R&D path.
It's not a case of it's all sort of sitting with one particular lab or entity. Yeah. Okay. Thank you.
With respect to the POSCO joint venture, 18% currently, when is Pilbara looking to actually contribute to the construction, et cetera?
It's quite long-dated, but I might get Alex to answer that. Commercially, we're in no rush, and it's at our option. Alex, why don't you speak to that?
Sure. Thanks, Dale. We've already contributed our 18% share of the capital. We can obviously contribute more to move up to a 30% interest in the joint venture, and we can do that at any time. You know, leading up to, I think it's nearly three or four years into the project. There's no real incentive yet for us to put more capital in right now because there's no returns being made. It's in construction.
I mean, this is already accounted.
That's already accounted. That was the convertible bond that we talked about earlier in one of the resolutions that funded that contribution.
Sure.
Yeah.
Thank you.
My question relates to the amount of manipulation in the share price that's being done by a big financial institution and others. The question I've got is the board or yourselves as managers able to control or regulate the amount of short selling done on the Australian Stock Exchange?
No. The short answer is no. I mean, we can't control the exchange of those securities. What we do do is be transparent about what we can be, about our observation of the market dynamics and what's occurring with our business. We think that's one of the best things we can do to help inform shareholders and more broadly, the broader market around truly what we see and think is happening. It is unfortunate, and it's very annoying to see such a strong response, which has happened from time to time. It's very unfortunate and very damaging. We've still got one last question, then we might go online.
We've got a few online.
Okay. Okay, one last question. We've got one here, and then we'll go online. Just one. It's you.
Sorry about that. My last question is that I hear that from next year, we will have more production that outside the offtake agreement. What plan the existing as extra production? Have you consider to subcontract to let other company to help us to produce these hydroxide or with your auction? You know that as Mineral Resources, they have stopped sell the raw material.
Yes. Yes. No, I understand. Tolling. Yes, we're exploring tolling. The way we think about the available production, which is not committed to offtake, is from January onwards. Essentially, there'll be approximately 200,000 tons uncommitted until such time we step up again with P680, which adds another 100,000 tons. We have principally three pathways for that product. It's about either, A, more spot sales, you know, through BMX, B, tolling. The construct you just mentioned that Mineral Resources has pursued. We are investigating that, but no decisions. Thirdly would be to work with one of our customers in some sort of construct. Those three pathways remain available to us, and what we will do is consider what's best for Pilbara and its shareholders.
Yes, it's an option, but no decision around pursuing that at this point. Okay, let's move online.
Okay, thanks, Dale. I'm pleased to say the online facility is working, and you've created a frenzy of questions here. We'll try and get through them as efficiently as possible. They range from a few things, from when are we gonna get a dividend, to the general market and some questions about our projects, whether it be P680, P1000 and our POSCO Downstream joint venture. I think I'm gonna consolidate all the dividend questions because I've read them all, and essentially they're asking the question as to when will it be and how much will it be?
Sure. So the when we've indicated at the end of, once the financial, the end of the financial year, but it's still at the option, um, for the board to consider something earlier. But at this stage, we've flagged at the end of the financial, uh, year. As to how much, the guidance of twenty to thirty percent free cash flow is, uh, indicated under the capital management framework. And what that equals to is a function of what actually transpires in terms of pricing and volumes, et cetera. Okay.
Okay, thanks. We might move over to the market. There was a slide 29 on your presentation, which I think was talking about the deficit. We have a question here just asking about whether the demand is simply factoring in EV demand or is it also taking into account demand from ESS, electronics or anything else that needs lithium?
I'll need to take that one on notice, Alex. We'd have to go back to Benchmark to confirm. My expectation would be both EV and the energy storage. We'll need to go back and validate that.
Okay. Next question. Sorry, it's just the system's a bit slow. Can you give any indication of when you believe P1000 will be constructed?
We haven't guided on the timeframe for when P1000 will be constructed. However, we will with the FID decision, which is imminent, which is this quarter. Broadly, my expectation would be something like 18 months from FID, but we will confirm that as part of the FID decision this quarter.
Okay. Next one concerns P680. Any foreseeable delays in P680 in regards to long lead items, or are you comfortable we can value in the project from September 2023?
Firstly, I'm never comfortable, particularly with expansion projects. What the projects team has advised has been keeping us informed. There's definitely challenges with procurement, but a lot of that was factored in as part of our schedule and base plan, and the team will continue to work hard on that. We're not worried about schedule yet, but we'll of course keep everyone informed as that project progresses.
Okay. Next question. Considering the company's market cap is about AUD 15 billion, making it larger than some ASX 50 indexed companies, is there any indication that the company might be included in this index in the near future?
Yes. There is. Subject to, of course, our market cap at the time that rating gets done. We stand a good chance at the current levels of entering the ASX 50, but we'll see how we go. The market's volatile.
Okay. Here's a question on diversity. Oh, sorry. No, I've opened up the wrong one. Why does the Calix J.V. decision continue to be delayed? Is the question.
Would you like that one?
Yeah. Sure. The decision hasn't been delayed. We announced a binding MOU in June to proceed with a joint venture with Calix, and we're just finalizing the terms of that. I think possibly the decision to make the FID to actually build the demonstration plant is another key milestone and probably a more important one. That one is still on target. We're just continuing with feasibility studies. Does that answer it, Duff?
Yeah, I think it's pretty good.
Okay. Next question is, what would you say is the proportion on-site workforce and off-site are women? Apologies if you have already provided this, but could you please repeat it?
Across the business, it's approximately 25%.
Yeah. Got a question on POSCO. Pilbara's planned JV with POSCO to build a lithium hydroxide plant. Given the immense difficulties others have experienced with getting their plants, namely one mentioned in Kwinana, and where they have Chinese partners with deep experience, what steps does Pilbara have in mind to bypass these extreme difficulties? What is the target date for the hydroxide plant to start up?
Sure. Firstly, as mentioned earlier, the joint venture plant target for construction complete of the first train is October next year. As to the mitigations which can be undertaken to ensure a successful ramp-up and a rapid ramp-up, POSCO is doing everything they possibly can in this regard. I have to say, POSCO stands a really good chance of doing a good job at their ramp-up for the simple reason that they've been running their own demonstration plant in Gwangyang for five-six years. That's a hydroxide plant called the POSCO X plant. There are hydroxide and lithium carbonate operators who have been working in that plant for some years. POSCO will be transferring those to the joint venture plant.
There is already an existing nucleus of skill set who knows how to operate these plants. They're doing that. That would be one. Number two, POSCO have been engaging with consultants and engineers who have experience within this space. Now, granted, there's not many, but POSCO certainly got on with the job of engaging with as many of them as they can. The third mitigation or de-risk is we're gonna do everything we can to support POSCO. We've consummated the marriage, we're together, we want this to be successful. Anything we can do to conduit technical help or improve the ramp-up, we're gonna be doing that. The sum of these things, I think, help. Probably lastly, one last thing is the industry is growing, the learning experiences are growing.
Yes, there's been growing pains at some different operations, but that's good for the industry because those learnings are available to others. We will, of course, encourage POSCO to grab those and integrate those learnings.
Okay, thanks Dale. Next question is, would you have any comments on the lithium price outlook as two brokers have been calling for lithium prices peaking with more supply coming through? Also comment on lepidolite as one of the suppliers in future.
Yeah, the pricing outlook is the most difficult variable obviously to predict. There's a question I get from analysts. That'd be the highest priority question I get from analysts is, do we have an opinion on the long-run pricing for product? We don't offer that opinion 'cause the probability of getting that wrong is pretty high. What we've done historically is look towards credible commentators in the space, Benchmark Minerals. Historically, we've utilized their outlooks to guide us in terms of long-range pricing. That being said, we do look at all of the forecasts for long-range pricing. We don't offer our prediction on where that will head. As to lepidolite is definitely a source of lithium units, but it's not a very good source.
The reason being that the lithium is in very, very low concentration, and it's chemically bound within a micaceous mineral. It's more expensive to get that lithium out. It's for this reason that historically lepidolite has not been utilized as a supply source for lithium for that reason, 'cause it's high cost, challenging to utilize. Now, yes, lepidolite may be a source for the market, but we don't think it's gonna be attractive source. If it does come, it's going to be a high cost source, much more higher cost than spodumene concentrate.
Okay, we're on the home run. There's four questions left. Next question is, given the lithium price may be volatile in the future, will the company choose to err on the side of caution when committing to new investments and select only those with shorter payback periods?
We will do what we've always done, which is take a conservative, prudent approach to all of our investment decisions. If there's a strength Pilbara has, and credit to the Board and the management team and all the team, we've had to be very disciplined and prudent through every step of the journey of this business to date, raising the financing, the build, surviving the downturn. Here we are on the other side of that with an incredible position. The last thing we want to do is spoil that through a decision which is not accretive for our shareholders. We will take the same discipline and thoroughness we have done to date, and we'll be applying that to any investment proposition moving forward. Rest assured.
Yep. Question about offtake negotiations progressing. How are they progressing? A general comment that why, you know, does offtake pricing sort of lag behind spot market pricing?
Credit to Alex. I'm pleased to report that offtake price renegotiations have been progressed this quarter, and some of the benefits of that will start to flow through this quarter. The outcomes will of course flow into the quarterly reports, which we will re-report in due course. A big well done to Alex and the team on that. As to the differential which occurs between offtake and spot, this is the function of a long-term commitment versus a small spot sale. Not dissimilar to other spot versus offtake environments, there is effectively a higher premium paid for small volumes through a spot market than you realize through longer-dated offtake contracts. That's all about that long-dated co-commitment the two respective parties have. That's the reason for a delta.
Of course, Pilbara, as our competitors have been doing, have been working on the split of the winnings in terms of that offtake pricing.
Yeah. Next question. In addition to downstream opportunities, is the company actively looking for exploration opportunities, joint ventures or takeover possibilities for spodumene deposits in North America or elsewhere? Will expansion of mining outside Pilgangoora operations be prioritized in the capital management policy?
As per that slide I showed on strategy, we think about diversification or moving beyond the Pilgangoora asset down at number four. Our priorities flow from operating asset performance, number one, expanding that operating asset as rapidly as we can. That's the best use of our capital. Three, finding ways to create more value per lithium unit, i.e. downstream participation. This is in rank order the priorities. Lastly is thinking about diversification beyond the Pilgangoora asset. This is the way we think about our priorities. What we don't wanna do is take our eye off the ball and spoil the incredible asset that we're developing through becoming diffuse in our focus on other things. That's not to say we won't look at other things, but it's just not the highest priority.
Okay, lucky last question. This concerns OEMs, which are really the car manufacturers we're talking about here. Any comment you can offer on receiving direct investment from OEMs, given a lot of OEMs are now looking at securing lithium sources?
Yeah, the OEMs have got a big problem and I think everyone's observed some desperation emerging as they scramble to secure their supply chains, and part of their response has been to offer financing. In fact, their response has been to offer anything that they can in order to shore up their supply chain. Pilbara will of course consider any good counterparty and think through what could they bring to the table. You know, funding is not as high a priority as it used to be, as you'd expect, given the position that Pilbara is in now. As we think about strategic opportunities for the future, we're far more focused on other attributes other than funding. It's not to say we're not interested in funding, but there's other priorities.
That's it, Dale.
Thank you very much. Thanks everyone for your time.
No, that's fine.
That's a wrap.
Yeah.
That's a wrap. Thanks everyone. Let's coffee and cake.