Good day, and thank you for standing by, and welcome to the Pilbara Minerals Fiscal Year 2023 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. Please note that Pilbara Minerals will only be taking one question per person, with one related follow-up question permitted. To ask a question during this session, you'll need to press star one one on your telephone. Pilbara Minerals will also take some questions from the webcast towards the end of the call. Please be advised that today's conference call is being recorded. Now, I'd like to hand the conference over to your speaker today, Pilbara Minerals Managing Director and CEO, Dale Henderson. Please go ahead.
Thank you very much, and a warm welcome, and thank you to everyone who has joined the call today. Our FY 2023 full year results. To start with, I'd just like to acknowledge the traditional custodians of the land on which our businesses operate, the Whadjuk Noongar people in Perth, where our head office is, and the Nyiyaparli and Yamatji people to the north, where our operations are in Pilbara. We pay our respects to their elders, past and present. As to introductions today, you'll be hearing from obviously myself and also Luke Bortoli, our CFO, and I have many of the team in the room, including the full executive.
As to the call outline, we're conscious we've only got an hour today, so we'll endeavor to keep the presentation to approximately 30 minutes and have 25 minutes of Q&A from the analysts and then five minutes for the webcast. As I say, we'll do our best to keep that within the hour. Now, moving to the full year results. We have had an absolutely incredible year, a breakthrough year, where it's all come together. It's about five years of operating expertise, combined with production capacity here at our Pilgan plant and Ngungaju plant, which was formerly the Altura operation. And thirdly, it's about market timing. Those three things have come together and delivered a magnificent set of results, which we're all very proud of. And I'll get to those in a second.
But to start with, moving to slide two, just a quick reminder for those who are not familiar with Pilbara. We're located southeast of Port Hedland. The two Tier 1 location, being just southeast of Port Hedland, being the largest bulk export port globally. And we're developing Tier 1 asset, and that's been further confirmed this morning with our reserve update. Increasing our reserves by 35%, which is an increase in mine life to 34 years, which absolutely reinforces the asset we're developing as one of the best globally. And we're getting on with making the most of that asset, with the forecast to bring up outright production by a further 70% in the years to come. So great spot to be in this burgeoning market.
Moving now to slide three, the highlights for FY 2023. It's an incredible set of numbers. We've got triple-digit percentage increases across the board, revenue, EBITDA, profit, and cash. Because of those strong financial performance metrics, that's flowed through to enable us to pay a fully franked dividend at the top of the allowance contemplated in our capital management framework. So we're, of course, delighted to be doing that and rewarding the many shareholders who have supported Pilbara and watched the journey over the years as it's unfolded. So thank you very much to those shareholders for, and particularly those ones who sort of supported us from the start. Thank you for backing the asset, backing the industry, and most importantly, backing the team which we weren't always delivering results like this.
Now, moving to slide four. These strong results are only possible through strong operational and project performance. What you see here is the headline percentage increases, a massive step up across the board. 64% production increase from the year prior, a 68% increase in sales, and this was all occurring in a strong pricing market, with an 87% increase on realized pricing. Separate to the operating performance, we've been getting on with our legs of growth. As it relates to the next legs of expansion, the P680 during the year is well into construction. During this quarter, commissioning has commenced, and we're looking to ramp up the P680 in the December quarter.
Also, during the course of the year, we had the P1000 approved, and that project is now in train and being progressed to come online mid-2025. In the chemicals category, a joint venture with POSCO for a 43,000-ton lithium hydroxide plant is well afoot, being constructed in Gwangyang, South Korea. We're looking forward to getting over there in the next couple of months to see progress. That project too is on track. Moving to midstream, working with our joint venture partner, Calix, we approved the demonstration plant for the midstream project and graduates to do that next step down the path on that R&D journey for that project. Midstream, of course, is the concept of onshoring or value adding of our spodumene concentrate into a high-grade lithium-...
salt, a more sustainable lithium salt, given that, we're targeting a drop in carbon energy intensity and a drop out of the waste. So looking forward to seeing that project progress. Then lastly, as it relates to expansion, as I mentioned a moment ago, this morning, we released to market our reserve update, to the tune of, it's as I say, 35%, bringing total ore reserves up to 214 million tons. And I'll offer a couple more comments around that, later in the pack. Before we move forward, just wanted to say a big thank you to the team at Pilbara Minerals and our contracting partners. This is a huge step up in activity across our business during the last year, and it was not easy.
There's been all sorts of growing pains, whether it's ramping up mining, ramping up camps, procurement, in the finance space, we've had all sorts of growth. HR, all sorts of growth. You name it, there's not one part of the business which hasn't had to go through a transformational change during the course of the year. And the team has taken that on, head on, and worked through all those challenges. And because of that, here we are today, looking back on what's just been a stellar set of results care of that fantastic teamwork and that Pilbara spirit, which is the culture we have. So thank you to the team. Moving to slide five. Just to highlight a couple of milestones which I haven't mentioned thus far. Quarter two, we reinforced the balance sheet with some Australian government-backed debt.
Fantastic reinforcement and balance sheet there. Capital management framework, hard to believe that was only in quarter two, and obviously subsequently, we've done first dividend, and now we've just flagged our second dividend. A couple of great milestones. Also, during the course of the year, we built out the executive team, so we've got five new execs, bright-eyed and bushy-tailed. Not so bright-eyed right now, following this week of releases. And of course, they've joined Alex and I, the two old war horses of the executive. Moving now to slide six. As it relates to sustainability, the year, which was one where we've started to get on with giving back more. We committed to four multi-year partnerships, which is fantastic. As it relates to Indigenous engagement, we've continued our engagement programs.
As part of that, we invested and commissioned the Australian community solar battery project, which is an addition to the school and north of our operation. We did that in partnership with our power provider, Pacific Energy. So glad to see that commissioned and supporting that community. And then as it relates to climate change, we've commissioned our 6 MW solar farm, which is now full bore on site, helping to displace some of our carbon energy. Moving now to slide seven. Yeah, I mentioned a moment ago, our HR team is busy. Our full team is busy because it's been a huge year of growth, 78% increase in employee count. As it relates to TRIFR, we did regress from the prior year, slightly, with TRIFR moving up to 4.7.
So, yeah, unfortunately, a regression, as I mentioned, and just a reminder of the necessity for us to keep a burning focus around our safety culture and all of the systems which support that safety result, such that the team goes home safe and well every day. As it relates to our lead indicator interactions, we've exceeded the target there at 2.9. Safety interactions is a proactive measure around safety conversations and assessments in the field, and it's all about driving a safety culture. So, really pleased with the outcome of the team there at 2.9 above two. Now, that completes the highlights, and with that, I'll hand over now to Luke, our CFO, to take us through the financial results.
Thanks, Dale, and good morning to those on the call. Please turn to slide nine of the presentation. FY 2023 was a period of strong performance across all key metrics, driven by production expansion, a number of mine site productivity improvements, and strong pricing. The group successfully ramped up production at Ngungaju. We completed several processing improvements across the operation. We further refined our sales strategy, and we commenced our two key expansion projects, P680 and P1000. These efforts gave rise to an increase in production of 64% on FY 2022 to 620,000 tons in FY 2023, and total sales of 608,000 tons.
We also saw a record year of customer demand, increasing the average realized sales price over the period to $4,447 per ton, up 87% on the prior year at $2,382 per ton. The aggregate of sales and pricing increases resulted in revenue for FY 2023 of AUD 4.1 billion for the group, a 242% increase on the prior period. In addition to strong revenue performance, EBITDA for FY 2023 was AUD 3.3 billion, up 307% on the prior year. Moving further down the P&L, statutory profit after tax was AUD 2.4 billion for the financial year, an increase of 326% on the prior period. Turning now to slide 10.
Slide 10 sets out further detail on our profit and loss, including key metrics used by management to assess the performance of the business. Total operating costs were AUD 776.3 million, up 104% on the prior year. This increase in total operating costs was reflective of higher production and also sales. On a unit cost basis, operating costs were AUD 613 per ton, an increase of 11% on the prior period. As mentioned in previous announcements, during FY 2023, the business pre-invested in mine site personnel and activities in preparation for P680. There was targeted investment in spares and maintenance to improve availability and productivity, and ongoing enhancements to our facilities on site to cater for the growing operation. Operating costs at CIF were AUD 1,091 per ton, up 29% on the prior period.
The key driver of this increase was the additional costs associated with higher royalties due to the significant uplift in revenue. As with many businesses across our sector, costs were also impacted by inflationary pressure in the period, and this is something we'll continue to manage closely. Revenue and pricing growth in the period significantly exceeded the total growth in costs and unit costs, giving rise to a lift in profitability. As mentioned earlier, EBITDA for FY 2023 was AUD 3.3 billion, compared to AUD 814.5 million in the prior year, an increase of 307%. Turning now to slide 11. On this page, we've shown the step-up in revenue, EBITDA and EBITDA margin in FY 2023 versus FY 2022 on a quarterly basis.
As shown in the chart, the profitability of the business has increased rapidly over the past two years. EBITDA margin has expanded to 82% in FY 2023, from as low as approximately 35% in the September quarter of FY 2022. This very strong growth in margins has been driven by the group's strong revenue growth and also the benefit of operating leverage. It's also given rise to the strong balance sheet position the business has today. Turning now to slide 12. On this slide, we've set out our summary cash flow statement. FY 2023 was a year of significant growth in cash. Cash increased by AUD 2.7 billion to AUD 3.3 billion, up 464% on the prior year.
Moving down the cash flow statement, cash margin from operations, as measured by receipts from customers less payments for operational costs, was AUD 3.7 billion in FY 2023. In FY 2023, the business has shown strong growth in cash, but also very high cash conversion when compared to revenue of AUD 4.1 billion. In addition to the strong cash margin from operations performance, the group had several items which were first for the business in the year. This included AUD 209.5 million in income tax payments and AUD 329.8 million for our inaugural interim dividend payment of AUD 0.11 per share. FY 2023 also saw a step-up in capital investment for expansion and operational efficiency of AUD 385.5 million in FY 2023.
This included P680 expansion project spends of approximately AUD 138 million, capitalized waste mine development of approximately AUD 663 million, mine site infrastructure improvements of approximately AUD 34 million, and sustaining capital spends of approximately AUD 56 million. Pleasingly, the ending cash balance in FY 2023 shows that the group has managed continued investment in business expansion, while also ending the year with a cash balance that offers significant flexibility for future investment and growth and dividends to shareholders. Turning now to slide 13. Slide 13 provides a graphical representation of the FY 2023 cash flow statement, and step-up in cash in the period, which I discussed earlier. Turning now to slide 14. Slide 14 shows the group's quarterly growth in cash, generated by a recently very stable cash margin from operations across recent periods.
Finishing as at June 30 2023, with cash of AUD 3.3 billion and generating cash from operations of AUD 3.7 billion. Turning now to slide 15. Quite obviously, the group has a very strong balance sheet position. The group has net cash as at June 30 2023 of AUD 3.1 billion, and cash and available liquidity of close to AUD 3.5 billion. In FY 2023, the group expanded its loan funding facilities and improved the terms on its existing commercial facility. While we're in a strong funding position today, we'll continue to expand and diversify our access to debt capital funding over the coming year. Turning now to slide 16. On this slide, we've set out a summarized balance sheet.
At June 30 2023, net assets were AUD 3.4 billion, an increase of AUD 2.1 billion, or 162% on the prior year. This increase was driven by a material uplift in cash, as already discussed, investment in property, plant, and equipment, and mine properties, which rose to AUD 1.4 billion, up 48% on the back of our continued investment in our mine site, and an offset for a tax liability at year-end of AUD 894.7 million, the result of a significant increase in statutory profit in the year. Approximately AUD 773 million of the tax payable at June 30, will be due for payment in the first half of FY 2024, and relates to income tax for the FY 2023 period.
Other balances, such as inventories, leases, and payables, have also increased the result of growth in headcount and a material expansion of our operations. Turning now to slide 17. Today, we're pleased to announce that Pilbara Minerals will be paying a final FY 2023 fully franked dividend of AUD 0.14 per share. This payment is in line with our capital management framework, as mentioned earlier by Dale, and equates to a dividend payout ratio of 30% second half FY 2023 free cash flow. This is at the top end of the group's dividend payout ratio range. In dollar terms, the total dividend payment to shareholders will be approximately AUD 420 million.
After this payment, it will bring our total dividend payments to shareholders in respect of FY 2023 to approximately AUD 750 million, or 25 cents per share. As mentioned earlier, the strong cash position of the business provides opportunity for us to consider a variety of options in addition to our organic investments, such as inorganic growth opportunities or a return of capital to shareholders. Any capital management initiative would likely be in the form of a buyback, special dividend, or some combination of those two. We'll continue to monitor these opportunities and provide an update over the next several months. I'll now hand it back to Dale.
Thank you very much, Luke. Just a comment on the dividends. Yeah, it's just the most incredible year we've had, and to be able to issue this full year dividend of AUD 0.25, it's just remarkable where we find ourselves in this short five-year history. And like a little anecdote, which I think really captures how rapidly the business changes, relates to our actually our shipping manager mentioned to me that during the course of this, she had to buy a new calculator because of the larger volumes we're shipping times the strong pricing. The calculator, she can't fit the numbers on the screen anymore, so they had to upgrade the calculator.
The same shipping manager, I mean, 2.5 years ago, was the one who would run, grab the bell, when we got a sale for a cargo at AUD 400 a ton. So we've, we really have met amorphosed as a company, as a function of being early to the party and being out on the water, ready to capitalize on this incredible burgeoning market. So a shout-out to Melody with her new calculator. It's been a fantastic year, and as I mentioned in my opening comments, we're delighted to be paying back and rewarding many of those shareholders who, as I said, back the asset, back the industry, and most importantly, back the team. So thank you, and thank you, Luke, for that run-through. Now, turning our mind to the future, our outlook. Moving to slide 19.
FY 2024 is a ramp-up year. We are, of course, bringing on the P680 primary rejection component, which will bring more tons on, and shortly thereafter, we'll have the second component of the P680 we've been crushing and ore sorting, which won't be turned on within the year, but that project is in full flight. So we'll be ramping up production. Ramp-up years always present a few little challenges. We've factored in an allowance for that as part of both the production volume range being AUD 660-AUD 690, and the cost range of AUD 600-AUD 670 per dry metric ton. So that's built into that, and noting that the midpoint of that cost range will be about AUD 635.
As it relates to capital expenditure and stepping through each of these one by one, so the project capital for the P680 and P1000 is on track and consistent with previous guidance. I'd highlight that the crushing also component we phase shifted six months, and updated on that as part of the June quarter results. Mine development is as per plan, and that's really around more mining, effectively setting up for P1000 volumes. Sustaining capital is in alignment. Then projects and enhancements is around additional investment to set up the Pilgangoora operation for the long term. And of course, given our reserve upgrade today, increasing our mine life to three-plus decades, it makes good sense that we invest in some of the peripheral elements to set up for the long term.
So within that includes a tails facility, we've flagged some expenditure around a new camp, some warehouse, and of course, we've got the midstream project, which was FID approved. So that completes a guidance across production costs and capital. And we'll now move to the strategy and market. So moving to 21, just a quick recap on our strategy. Our aim is to be a leader in the provision of sustainable battery materials products. We've got four planks to that strategy. We've covered much of this actually in the call thus far. The operating platform is priority one, ensuring that shoots the lights out, shift after shift, quarter after quarter, year after year.
Then expanding that operational platform, the reserve upgrade case in point, and matching that with commensurate processing capacity, such that we can make the most of this Tier 1 asset that we're developing in Western Australia. Chemicals, this is all about adding more margin per lithium unit flying from this, this resource that we're taking carriage of. The POSCO joint venture is one of the initiatives. The midstream joint venture with our friends Calix is another, and there's more to come in this space. Pilbara diversification beyond the base asset. There's more to come in this, no doubt, in the years to come, but within this category includes our partnering process, where we're considering partnering with potential downstream partners or other partners for joint development of further downstream facilities.
You'll note in our update that we have added another quarter to that, taking it through the March quarter. What that's all about is we've got to take this process really seriously. We've got the great problem of some strong interest and some excitement around what can be done here. We've got to give the process due course to really consider this. These commitments around tonnage are multi-decade, as was the case in what we've done with POSCO. So, we have added on a little extra time so that we can work through that process. We look forward to reporting in due course. Moving now to 22. This is the resource upgrade that we announced some weeks ago.
You can see the Pilgangoora resource has moved from the light green to dark green out to the right, and you can see the asset is comfortably positioned as one of the largest in the hard rock lithium universe. Moving now to 2023. The reserve increased 35%, increase 55 million tons additional, taking us to 214 million tons. That's a nine-year increase, taking us out to 34-year mine life. And of course, because of that, we are underway with the studies to explore that trade-off of more production capacity and a shortened mine life. So we will... The numbers are being crunched. Those studies are underway, and we will report in due course on where we take things. Will we drill more? Yes, absolutely.
That's one of the best ways we can continue to, to drive and create more value for our shareholders. We've got the amazing privilege of stewarding one of the best assets, globally, one of the best locations, so we'll continue to make the most of that incredible asset. So more programs are drilling to come. Now, moving lastly to market. It's the best market to be in, the lithium market, although it's volatile. What's pleasing here is we continue to see strong signs which support the long-term prospects for the industry. We've highlighted a couple of the more recent analyst facts here, Benchmark, and details of a recent update around EV increases, 27% growth to 2026, and 76% to 2040.
As it relates to Fastmarkets in the last about the last week, in fact, they've released some information relating to mass energy storage. What they've noted there is that the lithium-ion subset, battery subset for 2023, it's a large proportion that's being attributed to the mass energy storage subset. That's an exciting emergence, and it's a difficult space to get visibility, but it's exciting to think about. That starts to grow at pace as well as EV adoption. We'll watch that with interest. As it relates to pricing, the lithium market's been volatile throughout its short history. Of course, we've had this run-up in pricing through the September quarter and December quarter, reaching all new highs. March quarter saw a strong drop and a rebound in stability.
Moving through to June and through to now, we've seen a tapering off, but more stability. So as we think about that, our expectation is probably more volatility in the future. That's what we've had to date. What gives us comfort is really in two parts. Firstly, we have our eyes trained on the long game. The stage is set for more growth with lithium. Supply, we think, will languish, and we note that that view is shared by many of the analysts who study this area. The case in point is the graph to the right, which shows the forecast demand versus the forecast supply. And the clear area at 2040, between the top of the column and the demands line, is the equivalent of 12 Pilgangooras.
You would have seen just a moment ago on that bubble chart, there's not many, assets the size of, of Pilgangoora. So there's a shortfall of lithium as, as expectations for long term, plus it also assumes these other projects, come online. What does that mean for Pilbara? That means we, we think we've got this incredible market and moment in time to capitalize for our shareholders. So that's part one, but part two, which gives us confidence, is we're in, we've got scale, and we're a low-cost operator. So inevitably, there will be cycles, and, and the defense against those cycles is ensuring that you're positioned down the cost curve, and that will continue to be, our aim.
As we continue to build out the operation and invest in some of those enabling factors for the long term, we will see gradual decreases in cost, which makes our business more defensive for the long term. It's an exciting time ahead. Pilbara remains excited. We have conviction on the outlook, and we are full force, delivering as rapidly as we can. To finish on the market, a couple of the more recent bits of news which perked our interest. The Canadian government's commitment to $11 billion to Stellantis and LG on the July 6th. Toyota, May 31st, investing another $2.1 billion in a battery plant, as well.
We of course had the China policy. I think I mentioned this in the last call, around their tax exemption for EVs through to 2027. Further support. It seems every, every few days or every, every few weeks, there are other elements of news which reinforce that long-term outlook, which is exciting. So as I say, Pilbara continues full force to make the most of this market and capitalize on the position that we have. And with that, that's a wrap for our presentation, and we'll hand back to the moderator to move to questions.
Certainly. Ladies and gentlemen, as a reminder, if you have a question, please press star one one on your telephone. One moment for our first question. Also, we'd like to remind you to please limit yourselves to one question and one follow-up. Our first question comes from the line of Rahul Anand from Morgan Stanley. Your question please.
Hi, good morning, all. Thanks for the call, Dale, Luke, and team. Look, my one question, I wanted to perhaps focus on the cost guidance for next year. So AUD 600-AUD 670 unit operating costs. I just wanted to confirm, perhaps, a question for Luke here. Yeah, these costs are benefiting from the pre-strip CapEx. Is that the right way to look at them? i.e., you know, that 150-odd mine development CapEx that's being spent is probably benefiting the unit cost by about $200 a ton, roughly. So would it be fair to say that the underlying cash costs at the mine site at this point in time would be about 200 higher than the guided number? Is that the right way to think about it?
That is the right way to think about it. So the capitalized waste, or mine development for the period of AUD 163 million, you could add that back to have an approximate cash cost.
Okay, perfect. And then just as my follow-up then on the cost piece, Luke. Stepping into next year, which is gonna probably have much less in terms of that pre-stripping CapEx that's benefiting the cost guidance. How should we think about the underlying run rates? Because you'd obviously have two impacts. One would be that your pre-stripping tapers off, but then secondly, your operations would be larger and benefit from volumes. So how do we think about those two opposing forces, please?
Sure, and thank you for the question. We're actually guiding to capitalize mine waste development of between AUD 140 million-AUD 160 million for FY 2024. That's broadly in line with FY 2023. Does that answer your question?
Thank you. One moment for our next question. Our next question comes from the line of Levi Spry from UBS. Your question, please.
Yeah. Good day, guys. Thanks for the call. I don't think we quite answered that question. So, mine development, so stripping for the production growth into 2025 and 2026, I guess is what we're asking there.
Yeah, we're not providing any guidance, obviously, for FY 2025 and FY 2026, but at least in FY 2024, capitalized waste mine development will be broadly the same as FY 2023.
I could probably add to Rahul's question. And good day, Levi. We do get the benefits of stronger head grades for next year, subject to the next round of mine plan optimization. So, if that eventuates, we'll get some strong volumes, which of course will play through to a good unit cost. But we'll of course disclose all that in due course.
Yeah. Okay, thank you. And so just thinking about the expansion beyond potential expansion beyond P1000, how should we think about the scope? What are the limiting factors? Can we think about literally adding another plant like you've just done? Is there any limitations in the pit or mining rates or anything like that?
Yeah, sure, Levi. So now, there are limiting factors, and that's the job we need to work through with the studies. But the top priorities are, firstly in the mine, understanding what run rate can be practically achieved as a function of the spatial distribution of the ore, because there are physical limitations as to how much plant and equipment you can get into certain areas. So there's a mine planning component to be worked through. Separate to that then, is matching that with commensurate processing capacity. Broadly speaking, the limitations here are less, in that we've got plenty of paddock out there, we... In which case we can build out our capacity.
But then adjacent to that, you've got all the normal constraints which need to be worked through, that could include approvals, water, logistics, et cetera. But within all of that, I'm not anticipating any issues, but we need to go through the process of the studies to validate that. But yeah, to bring it back to the start, the mine optimization is really the priority here.
Thank you. One moment for our next question. Our next question comes from the line of Hugo Nicolaci from Goldman Sachs. Your question please.
Morning, Dale and team. Thanks for the update this morning. Just wanted to ask one around the CapEx guidance into FY 2024, just noting that obviously the P1000 guidance you gave us back in March didn't include tailings expansion and, and things like that. So I was hoping that you might be able to give us a bit more detail around what the breakdown of that AUD 170-AUD 190 in project enhancements might be, and then, you know, how much is left for those items in FY 2025 for things like tailings expansion still. Thanks.
Good day, Hugo. I was looking at Luke to answer that one. We don't, I don't have the breakdown on that one right in front of me, but let us take that on, on notice, and we can look at providing that in the future. And, and certainly, look, FY 2025, we'll, we'll, we'll provide guidance down the track.
Okay, thanks. So I might follow that one up afterwards then. But I guess maybe just following up around the expansion works and, and life of mine support. Are you able to give us a guide as to what you've sized that to in terms of tailings expansion and, and other life of mine support work? Have you essentially sized it to the kind of reserve life and, and P1000 size back in March, or have you given yourselves some optionality there to maybe go larger on some of that life of mine support work?
Yeah, the way we think about it, if you go sort of, sort of all around the understanding the economic reserve, so that's. So there's room to move as it relates to the enabling infrastructure, tails, et cetera. We're not anticipating any constraints in that regard, as I mentioned earlier to Levi's question, but we do need to go through the studies to confirm that. Does that answer your question?
Thank you. One moment for our next question. Our next question comes from the line of Kaan Peker from RBC. Your question, please.
Good morning, Dale, Luke, and team. Yeah, two questions. Just on the exit run rate, given the exit run rate for 2023, and you look at FY 2024 guidance, it, it does appear conservative. Are there any major shutdowns or tie-ins planned for this year? And can you maybe give an indication of which quarters that they are expected? I'll follow up with a second. Thanks.
Good day, Kaan. There will be some tie-ins, that's correct. And then there's the commissioning process, and sort of which, so the assumptions around how rapidly does the 680 vault on ramp up. We have taken a pragmatic approach to that estimate and the knowledge that commissioning phase always presents some challenges. And broadly speaking, with guidance, we're wanting to obviously ensure that we deliver well, and so we have taken, I wouldn't say conservative, but leaning on the side of conservative approach here. Ramp-up years are challenging, and hard rock is processing, processing is incredibly challenging. We know that well, given our years of experience, so that's folded into the estimate we have here.
Well, thanks. I know with the Lynas find, so with the FID of the P1000, that was incorporated into the mine plan, but there's limited resources that are being delineated there. Is this sort of the next area of upside that's been?
There, there is some more exploratory work to do to the north. There is some infill drilling, and we can do coming further south. And the last round of drilling has demonstrated some new loads, which we are keen to explore, which is, you'll see from some of the cross-sections, and the reserve release deserves more attention. So, so it's not just Lynas. There is area around Lynas, but certainly other areas of the ore body. We were positively surprised by the results of this last round of drilling this year. It's exciting. It's inspired us to do more, and we'll see where we go.
Well, thanks.
Thank you. One moment for our next question. Our next question comes from the line of Kate McCutcheon from Citi. Your question please. Kate, you might have your phone on mute.
Hello? Can you-
Yes, we can hear you now.
Okay, perfect. Hi, Dale and Luke. Congrats on the result, and thanks for your new revenue disclosures. It makes our job easier. I'm interested in some more color on CapEx for the year. The AUD 200 million, almost for projects, is there any breakdown you can give there? And then the mine development spend, I think that's just stripping, as you mentioned. And then the last part, that AUD 490 million-AUD 540 million on P680, P1000, does that imply that you've accelerated the P1000 CapEx there? Or to ask it another way, is the bulk of that AUD 560 million that you've guided for P1000 done this FY?
Thanks for the question, Kate, and Hugo asked a similar question, but it got cut off. So in respect of mine development, yeah, that is just stripping to answer that component. On projects and enhancements, these are new items that we haven't yet disclosed to the market, and they are explained in some detail below the range provided there. But just to provide some more color, we're commencing work on a permanent village at site. We're obviously building a tailings, some tailings infrastructure. There's some work on access roads that's being done as well. And there's a whole bunch of other mine site infrastructure, smaller items that are really focused around improving the environment on the mine site to enhance productivity.
As it relates to growth capital expenditure, that, that really is the rollover of P680 and P1000 CapEx spend that we previously announced to the market. So, so nothing really new there. And in fact, we actually found some savings in respect to P1000 spend.
Is the bulk of P1000 spent this year, or there's still a lot to come in 2025 as well?
There will still be a follow-through to 2025. That's right, and same on the projects and enhancement spend.
Thank you. One moment for our next question. And our next question comes from the line of Glyn Lawcock from Barrenjoey. Your question, please.
Morning, Dale. I guess we're all gonna go down the same path a little bit. So it just sound like Luke said there'll be some follow-through enhancement spend into 2025. I guess that all comes back to what you said, you know, you're, you're setting the business up for the long term. Where does that leave us on sustaining capital then as well, AUD 75 million-AUD 85 million? Should you see that continue to step up? Because, I mean, it sounds like some of the spend that we're doing is perhaps more sustaining rather than enhancement as well. But, you know, any thoughts you can give on where that goes as well? Thanks.
Thanks, Glyn. So sustaining CapEx has stepped up in run rate in FY 2023, and we expect it to step up to this range in 2024 from around about AUD 56 million in 2023. I think that's a reasonable assumption carrying forward, if that answers your question.
Okay. So you wouldn't do it on AUD 120 a ton of spod production. You think, you know, AUD 75-AUD 85 will carry us all the way through to P1000 as well?
Yeah, we're not expecting that it will increase anytime soon.
All right. Thanks very much.
Thank you. One moment for our next question. Our next question comes from the line of Al Harvey from JP Morgan. Your question, please.
Yeah, good day, team. Just looking at the reserve upgrade, I see a fairly big increase in the long-term spodumene price here, up to $1,450. Just wondering how you guys do get comfort around that number and if there's any guide there on the relative contribution to the reserve upgrade that's come from that higher price assumption.
Yeah, sure. Good day, Al. Yeah, the reserve upgrade, $1,450 per ton long run for that modifying factor. How we determined that is looking at the consensus pricing there. So we took the, took the full spread and took the average around that. And of course, we took a close look at what some of our industry peers have done. And we note that one of our industry peers has picked a long-run price of $1,500. So we took the view that we like the idea of being a bit more conservative, and it's the same approach we've applied in previous reserve updates.
To the question of, what's the relative contribution, as a function of that, looking at modifying factor, I don't have those numbers on hand, on that one. Sorry, Al. Starting on the guys, telling the guys that, mentioning that, it's been relatively insensitive to price, based on special distribution.
Just before I get cut off, I just wanted to follow up on another question. Just the timing for the potential timing for the expansion study.
Yeah, good, good question. We're working through that and ask the team to deliver that, those studies as rapidly as we can, and we'll update on that in the next quarterly release. If I, if I commit the team here, I'm gonna get in trouble.
Thank you. One moment for our next question. Our next question comes from the line of Robert Stein from CLSA. Your question, please.
Hi, team. Thanks for the opportunity. Just a question on capital management. So if I look at your cash balance, and the liability from tax, during the half, the forecast during the half next year, are you managing to a level of, I guess, cash on hand at a particular point in time, noting that liability is going out to provide that comfort, that you can afford your cash flow, you can afford your CapEx outflows? And then the sort of follow-up question to that would be, you know, perhaps are you being a bit conservative if you're looking at the cash coming into the business? Is there an opportunity to accelerate, capital distributions back to shareholders, you know, either via a buyback or, or dividend as your franking credit balance allows?
Thanks for the question. Just on the first part, we do have a minimum liquidity balance that we manage to. That is not a concern any time in the near term. In respect of capital management, there is the opportunity, which we highlighted in this presentation today, to consider a one-off capital management initiative for shareholders, and we'll come back to the market over the next several months in respect to that.
Would we be looking to manage, you know, potentially more debt on the balance sheet to accelerate that? Or is it, are you still gonna run pretty lean in that department?
Just based on the cash balance today, there's no reason why we would need to raise debt funding, based on our current projections. The reference to expanding our access to debt capital markets in the presentation really relates to now that the business is at this level of scale, and that the sector is becoming more mature, there's an opportunity for Pilbara to be a leader in the space, and try to raise large secured commercial debt funding facilities, which really haven't really occurred. So that's really what it makes reference to, the opportunity to open up debt capital markets for lithium, as opposed to any need to do so.
Okay, thank you.
Thank you. One moment for our next question. Our next question comes from the line of Mitch Ryan from Jefferies. Your question, please. Mitch Ryan, your line is open. You might have your phone on mute.
Hi, apologies. Can you hear me?
Ah, yes.
Can you hear me?
We can hear you now.
I apologize. Thank you. I note with the increased reserve, there's also an increase to the strip ratio of sort of 7.6, and it was previously running at sort of five. Just wondering if that sort of takes effects immediately, or what the strip ratio profile looks at over the next year or two?
Yeah, thanks, thanks, Mitch. We will have slightly elevated strip ratio for this year and next, and really setting up for P1000. And then, well, I think broadly speaking, it will average around 7:1. But I'd also add that as we continue to drill, we'll obviously continue to optimize the mine, so we're gonna continue to do that. So, watch this space. We'll continue to optimize strip ratio function of the ore we find in the dirt.
Okay. So that elevated over the next two years is some of that's captured in that mine development, the AUD 140-AUD 160 CapEx?
Yeah, you got it. Yeah.
Okay. Thank you.
Thank you. One moment for our next question. Our next question comes from the line of Ben Lyons from Jarden. Your question, please.
Good morning, everyone. Dale, and another dividend balance sheet question. Again, noting those higher than expected CapEx commitments and also that very significant tax true up that flows out in the current half. But having a look at the balance sheet, it looks like you've only got about AUD 20 million of listed investments at the thirtieth of June, which is very reassuring from my perspective. So I guess the dividend questions are two part one: Is the franking account balance as it currently stands a constraint on going harder, you know, than the AUD 0.14 that was declared today? Or has that listed investments figure materially increased since the thirtieth of June, which might also have influenced the board's thinking around that final dividend? Thanks.
Thanks for the question. The payment of dividends from this point forward is based on estimated franking account balance at June 30 2024. So it takes into consideration all the tax that we'll pay, cash tax, in FY 2024. On that basis, there's really no constraint in respect to dividend payments, up to a pretty meaningful level.
Thanks, Luke. And the listed investments part of the question?
So I might pass that one to Dale, but there is, as at today, there's no change in the listed investments balance. So anything else to add to it?
No.
Okay. Thanks. Thanks very much.
Thanks.
Thank you. I'd like to hand the program back for web Q&A.
Okay, thank you. There's a couple of questions from the webcast. The first one is, Pilbara's enjoyed first-mover advantage, but now there are virtually hundreds of new explorers around Australia, Canada, South America. How does... In this fast-changing competitive scenario, what does, what is Pilbara's strategy to protect and indeed grow its market share?
Yeah, thanks, James, and thank you for the online question. The strategy we've got to capitalize is the one we're deploying, which is expanding up our bases as rapidly as we can and simultaneously moving down the cost curve such that we open up margins. That's really the first parts of our strategy. The second parts, of course, are bolting on other initiatives to increase demand, i.e., a chemicals participation while also turning our minds to diversifying that supply network because diversification is good business. So that's principally the, you know, that principally represents the strategy we've got. We do think we've got effectively a first mover advantage around positioning in the market, some of our technical learnings, but we're not stopping there.
Vince Nicolo, our CIO, and Paul Laybourne and the team are moving forward with the next waves of innovation to hopefully put more distance between us and the competition, and continue to reduce costs, increase yield. That'll play through to benefits for our, our shareholders.
Okay, next question: If midstream product is successful, how will you allocate spodumene to that, given everything is already allocated, with existing offtakes and the hydroxide plant with POSCO?
Thanks for that question. As it relates to offtake allocation, there's a few things to work through here. We've, of course, got a subset committed to POSCO, our joint venture in South Korea, and we've got some offtakes, some of which expire and come off. And then, of course, we're expanding. So in all of that, there is actually a significant component of unallocated production. But to the question of, well, to what extent gets committed to midstream or not, it's an open question, and what we are thinking through is making sure that whatever offtake commitments we have in the future, we have an eye to midstream, such that if midstream proves out well, we've got a means by which to migrate to that model.
So that's certainly something we think about. We don't have a definitive answer, but if midstream ultimately proves to be the superior supply chain model, we, of course, want to augment our business in that direction, given the benefits it will yield. So watch this space, and we'll obviously keep the market updated as that picture clarifies.
Thanks, Dale. Next question: Will the dividend payout ratio stay at 30%?
Yeah, good, good question. And the capital management framework is effectively under consideration, and between now and the end of the calendar year, we'll progress the thinking with the board around that. Ultimately, yeah, can't make any guidance around any of that at this early stage, but we're certainly thinking through the scenarios of alternate capital management uses, and we'll guide in due course.
Okay. Last question from the webcast, regarding ESG credentials. What is Pilbara doing to minimize the impact of our operations and raise our ESG profile?
Yeah. The short answer is a lot, given and with Sandra McInnes, our new Chief Sustainability Officer, who's come on board, there's multiple streams of activity underway. Ranging from sort of the practical decarbonization efforts, of which we've got the 6 MW solar, and there's more to come in that regard. With how we're taking our reporting, and you'll see through the combined annual and sustainability report today, we've stepped it up a level from previous years. We've got our community investment engagement. There's many, many different aspects which we're moving forward, and we're moving up that maturity curve. So, it'll take time, but there is certainly a concerted effort from the business in that regard. And yeah, thanks, James, for that last question.
For those analysts who got cut short or would like to have further follow-up, I certainly encourage that. Myself, Luke, and James have got the day available for calls, and so we welcome that engagement. If anyone needs to follow up, then please reach out. Lastly from me, yeah, just and the team, thank you again, everyone who's dialed in. Thank you to our shareholders, to the team, our contracted partners. It's been an absolutely monumental year, a breakthrough year in every regard. It's an absolute delight. Thank you to those who've gone on the journey, and while exciting, it's where we're heading, there's just so much more to come, and we look forward to updating in due course. Thank you all for your time.
Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.