Good day, and thank you for standing by. Welcome to PLS March 2025 quarterly activities report. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the call over to your first speaker today, Mr. Dale Henderson, Managing Director and CEO. Thank you. Please go ahead.

Thanks, Desmond. Good morning, and thank you all for joining us today. I'd like to begin by acknowledging the traditional owners of the lands on which PLS operates. From where we are joining the call today in Perth, we acknowledge the Whadjuk people of the Noongar Nation. We also recognize the Nyamal and Kariyarra peoples on whose land our Pilbara operations are located. We pay our respects to their elders, past and present. Joining me today is Luke Bortoli, our CFO; and Brett McFadgen, our Executive General Manager of Operations. We're also supported by other members of the senior team. This call will run for approximately an hour. We'll begin with the presentation on our March quarter performance, followed by Q&A. We will address questions submitted via the webcast at the end of the session. The March quarter has been a transformational period for PLS. We delivered on several major strategic objectives

the successful implementation of the P850 operating model yielding tangible cash cost savings; the on-plan ramp-up of the P1000 expansion project, marking the completion of a major investment cycle; and the acquisition of the Colina project through the Latin Resources acquisition, adding another high-quality growth option to our portfolio. These achievements were delivered while maintaining our fortress balance sheet, setting us apart in a volatile environment. We operate in a sector known for its cyclical nature. Our strategy has always accounted for this volatility, not just to mitigate the risks, but to capture the opportunity. While lithium prices are currently at cyclical lows and geopolitical tensions have created uncertainty, we remain confident in the medium- to long-term outlook for lithium. Today, while our focus is the March quarter results, we will also highlight some of the longer-term structural foundations that underpin our resilience and our future growth. Please turn to Slide 2. PLS is the world's largest independent hard-rock lithium producer. Our independence gives us the flexibility to respond with agility in a fast-changing global market. Our foundation of the long-life, high-quality Pilgangoora operation in Western Australia, our investments in the P680 and P1000 projects have established a leading lithium processing platform with increased capacity and expected operating cost improvements to follow, strengthening our position on the global cost curve. We continue to diversify geographically and downstream with our POSCO joint venture in South Korea and new growth options in Brazil. We also maintained a strong balance sheet, ending the period with $1.1 billion in cash and undrawn facilities, providing a foundation of strength and flexibility. This balance sheet position is the product of disciplined capital management decisions over the past few years. Luke will recap on this history a little later. Turning to Slide 3. Our strategy is anchored by disciplined reinvestment through the cycle. Over time, this has delivered scale and can provide meaningful reductions in unit operating costs, care of that scale and care of the new processing capability within these expansions. With the P1000 expansion now built and ramped up, we are moving into the optimization phase. This marks a shift from construction to performance improvement, setting the stage for enhanced margins in FY '26 and beyond. Turning to Slide 4. Some key highlights for the quarter include

in the operations, our TRIFR reduced to 3.22, reflecting our continued focus on safety; production of 125,000 tonnes and sales of 125,500 tonnes were on plan after accounting for the 6 days of Tropical Cyclone Zelia, which was the Cat 5 cyclone which came into close proximity near Port Hedland. We also had the ramp-up of the P1000 Project successfully completed and as I said, has now entered optimization phase. As it relates to our projects and joint ventures, completion of the Latin Resources acquisition, adding the Colina project to the PLS table; and the POSCO PLS joint venture, also called PPLS, progressed well with production ramp-up and customer certification progressing. Lastly, as it relates to financials highlights, revenue of $150 million are supported by a 7% increase in the realized price to USD 747 per tonne, operating cash margin of $39 million despite ramp-up headwinds and a lower part of the pricing cycle. This, of course, ladder down to a robust cash position of $1.1 billion. And FY '25 guidance, we're reaffirming across all key metrics. Now with that, I'll now hand over to Brett for a deeper look at our operations. Over to you.

Thank you, Dale. I'll start with safety, and the March quarter delivered a solid safety performance at Pilgangoora with a 12-month rolling average TRIFR dropping from 3.58 in the prior quarter to 3.22. We did, however, report 3 recordable injuries, which was disappointing, and we continue to implement safety program initiatives such as the visible safety leadership program. This program of work resulted in over 800 hours of safety-related training with our leadership group, empowering our people to create a safe work environment. The March quarter spodumene concentrate production volume decreased to 125,000 tonnes compared to the prior quarter. Adjusted for Tropical Cyclone Zelia, this was on plan with the difference between the last quarter primarily due to no contribution from the Ngungaju plant for the full quarter under our P850 operating model, planned downtime for P1000 tie-in and the impact of the ramping up activities. Total material mined was 5.6 million wet tonnes with the reduction compared to the prior quarter in line with the P850 operating model. I'm pleased to advise good progress continued in our transition to an owner-operator mining model through the March quarter with a number of excavators and ancillary mining equipment commissioned, realizing further improved operating efficiencies and cost improvements. We look forward to the addition of operational efficiencies and cost improvements this will provide over time. Lithium recovery of 67.1% in the March quarter was lower than the prior quarter as expected due to the impact of P1000 tie-ins and ramp-up. The commissioning activity can negatively impact recoveries as the plan is interrupted frequently by the very nature of commissioning with parts of the circuit undergoing flow rate and durability testing to ensure construction was to design. This is outside of the normal steady-state operations pre and post P1000 integration. Despite this, recoveries did exceed external forecasts. We expect to see recoveries trend upwards in the June quarter as commissioning activities have concluded. Turning to Slide 6. As Dale mentioned, we've now substantially completed a 2-year investment in the Pilgan plant via the P680 and P1000 expansions. P1000 was commissioned in the March quarter with first ore achieved on the 31st of January 2025 and all performance test criteria achieved in February. Aside from the impact of Cyclone Zelia, the Pilgan plant has operated to plan, delivering daily targeted production volumes during periods of expected plant availability. We will continue to further optimize the plant in the June quarter and expect to see key metrics continually to improve. It's not an understatement to say that these 2 projects have completely transformed the Pilgangoora operation. We've added an additional 420,000 tonnes per annum of production capacity and via the ore sorting facility, increased our ability to capture more lithia units from our ore body. We've also added new technology, which gives us greater operational flexibility to react to market conditions. Most importantly, we've created scale and efficiencies, which will enable us to reduce unit operating costs and capture margin through the cycle. Thank you, and I'll now hand back to Dale.

Thanks, Brett. And just to add, the ramp-up quarter has been a fantastic success when you consider what's involved in integrating and bringing online one of these circuits on what is a very large brownfield expansion. And the success has actually been set up by a fantastic construction build during the course of the year, on time and on budget. But the rubber really meets the road in ramp up when you are integrating. And to do that in a live operation and what is a material step-up in volumes, as Brett mentioned, is quite a feat. And just to remind everyone, and this is pretty obvious, building in the Pilbara is not easy. Doing hard rock processing is not easy. And it's even harder when you are bringing to life what is probably the most complex integrated processing circuit, which has been built to date. So a hell of a feat to deliver this on plan despite the impacts of what is one of the largest cyclones we've seen in the region for many, many years. So well done to the projects team, well done to the operating team and all the team at PLS. It's been a great outcome and really proud of the result. Moving to Slide 7. PLS has steadily built a portfolio of strategic growth options, each designed to provide flexibility, diversification and value creation. As it relates to Australia, and as mentioned, the P850 model is delivering cost savings as expected, and the Ngungaju processing plant remains on standby, ready when market conditions are appropriate. As it relates to the midstream demonstration plant, construction has resumed, made possible care of the WA state government grant funding that we received to us in Calix. Thank you to the Cook government for that support. The P2000 feasibility study, we are deferring that to FY '27 to preserve optionality. Moving to South Korea. Our PPLS joint venture with POSCO is progressing well. Train 1 has certified our production serving to customers so far, and that's set to increase. And Train 2 is advancing towards certification. So great to see that progress. We've also agreed with POSCO to defer the PLS call option on our equity step-up from 18% to 30%. And we're deferring this potential point into FY '27. So grateful for that agreement from POSCO. I'd also add that as it relates to South Korea, we had a team in Korea last week to catch up, and fantastic to hear all the positive news around how POSCO is traveling, but more generally, the South Korean battery market as one of these emerging Western hubs. So really excited to hear the discussions coming from those meetings last week at the Fastmarkets conference. Moving to Brazil. We completed the acquisition of the Colina project, a countercyclic all-scrip transaction. We believe this will be highly accretive to shareholders over time. A small target drilling program and study work is underway with results June -- sorry, results due in June '26. Now of course, all of these initiatives are considered through our capital management framework focused on long-term value creation. And of course, intrinsic within that is making sure any investment is timed appropriately with the market. Now with that, I'll now hand to Luke for a review of the financials.

Thanks, Dale, and good morning to those on the call. Please turn to Slide 9 of the presentation for a summary of the group's key financial metrics for the quarter ended 31 March '25 or Q3 FY '25. Group revenue in the March quarter was $150 million, a 30% decrease on the December quarter. This was driven by a 39% decrease in sales volume partially offset by a 7% increase in the average realized price. The average realized price increased from USD 700 per tonne in the December quarter to USD 747 per tonne in the March quarter. Production volume of 125,000 tonnes in the March quarter was 34% lower than the prior quarter. As has been mentioned, lower production volume was driven by the impact of a full quarter of the Ngungaju plant in care and maintenance, P1000 tie-ins and ramp-up and unplanned downtime caused by Cyclone Zelia. Sales volume of 125,000 tonnes in the March quarter was 39% lower than the prior quarter driven by the lower production volume. Looking at unit costs. Unit operating costs on an FOB basis increased by 10% in the March quarter to $685 per tonne compared to the prior quarter. The potential for an increase in unit operating costs was outlined in the December quarterly and primarily reflects the impact of P1000 tie-ins and ramp-up. Pleasingly, the increase in unit costs was better than our internal plan due to continued operating efficiency improvements, including from the transition to the P850 operating model. Total operating costs in dollar terms were lower quarter-on-quarter. However, lower production volume offset that benefit and resulted in higher unit costs. Unit operating costs on a CIF basis were also 9% higher than the prior quarter at $796 per tonne with the higher FOB unit costs partially offset by lower royalty costs and lower shipping costs. Turning now to Slide 10. Slide 10 shows a cash flow bridge for the March quarter FY '25. The group's ending cash balance as of 31 March '25 was $1.1 billion, as mentioned earlier, and remains strong. Cash declined by $109 million in the March quarter primarily due to planned capital expenditure of $101 million. Focusing on cash margin, our cash margin from operations, defined as receipts from customers less payments for operating costs, was positive and $39 million in the quarter. Cash margin from operations less capitalized mine development costs and sustaining CapEx was also positive $12 million in the quarter. The cash flow improvement benefits of the transition to the P850 operating model are now being reflected in cash margin. Turning to investing cash flows. Total spend of $101 million was made on CapEx in the March quarter. CapEx on an accruals basis was $103 million and comprise growth CapEx related to the P1000 expansion project of $40 million, infrastructure and projects of $37 million, mine development costs of $21 million and sustaining CapEx of $5 million. Turning now to Slide 11. Over the last 18 months, the group has proactively implemented a series of cost reduction initiatives. Slide 11 summarizes those initiatives. Notwithstanding the group has had a strong net cash position over this period and was not facing balance sheet pressure, the group made a strategic decision early in the cycle to focus on maintaining its strong balance sheet. This is a competitive advantage, which PLS holds in the lithium sector. These initiatives have included pausing on dividend payments in January '24, reducing planned capital expenditure in January '24, implementing a workforce reduction in March '24 and transitioning to the P850 operating model in December '24. In aggregate, these initiatives have delivered reductions across operating costs and capital expenditure. Lithium is a fast-growing and constantly changing sector with a strong growth outlook, which Dale will speak to in the next section of the presentation. Fast-growing sectors often feature volatility. The group was an early mover on cost reduction initiatives in response to this price volatility. Today, the group remains highly committed to balance sheet preservation. It is strongly positioned to manage through the cycle given past decisions and a continued focus on prudent financial management going forward. I'll now hand it back to Dale.

Thanks very much, Luke. So moving to the market on Slide 12. Our pricing over the quarter has moved to the right with limited fluctuation for the period. Our pricing for spodumene concentrate is approximately $800 to $820 per tonne on an SC6 basis at this time, depending on which price reference you're referring to. I'll note that this level remains well under the expected long term averages -- long-term price averages that are being projected, including those estimates that have recently been revised downwards. As it relates to supply -- or from a supply side, market share appears to be consolidating amongst the lowest-cost operators with -- and of those, some are certainly reporting margin pressures or outright losses. Given this, it's reasonable to assume pricing moves upwards. The big question is when. Now historically, the lithium market has tended to respond rapidly and catch the market by surprise. Time will tell as this occurs. From the demand side, while there are some very, very strong indicators, which I'll now touch on in brief, moving to Slide 13. EV sales have started the year very strongly. This graph details the monthly EV sales trends for the past 4 years. The green columns indicate the sales this year. EV sales for March '25 are up an estimated 29% year-on-year, a pretty remarkable feat in the context of some of what you read in the pages around EV adoption at this time. Of course, this indicates the underlying trend continues to remain strong. Moving to Slide 14. The battery energy storage system, or BESS, as it's called, continues to grow in leaps and bounds. Installed capacity grew by 52% last year and is predicted to grow by approximately 68% this year. To date, the capacity growth is concentrated in just a handful of countries. As such, this is potentially the tow of a very large global market as other countries seek this energy solution. Moving to Slide 15. This graph on the left is a representation of the breakdown of lithium demand between calendar year '24 and '25. And on the right-hand side is a projection for the next 6 years. Now moving to Slide 16. To close, this slide outlines the longer-term outlook for lithium demand. Forecast indicate demand is expected to grow by 89% between now and the end of the decade, a compelling signal of the sector's underlying strength. On the topic of tariffs and broader trade uncertainty, the potential impact on the lithium industry remains unclear. That said, there are a few important factors to consider. Firstly, the U.S. currently represents a relatively small share of global lithium demand, less than 10% as it relates to EV sales last year. While it's an important future growth market, that is not the major driver of global demand today. Secondly, growth in lithium demand continues to be strong and organically driven in key markets, most notably China, where EVs have passed price parity with internal combustion engine vehicles last year, driving broader adoption. This appears to be a sign of what's to come. Lastly, tariff-related uncertainty may also create headwinds for funding and development of new lithium supply. In this context, companies like PLS with scale, a strong balance sheet and established operations may be well placed to benefit from tightening supply dynamics over time. Time will tell. As for PLS, I can confirm we remain in full offtake compliance and hold no concerns regarding our sales or order book. As a signal of market health, we recently placed a small cargo, which attracted strong buyer interest and achieved market-aligned pricing. Before we move to questions, I'd like to leave you with a few closing reflections. The March quarter marked a major step forward for PLS. We successfully implemented the P850 operating model. We completed and ramped up the P1000 expansion, and we welcomed a new growth asset with the Colina project in Brazil. We've now entered a new chapter underpinned by a more scalable, efficient and lower-cost operating platform. Combined with our strong balance sheet and a strategically diversified portfolio, we are well positioned to navigate the current environment and capitalize as the market turns. While near-term volatility remains, the long-term fundamentals for lithium are compelling and continue to strengthen. We remain confident that our disciplined execution of our strategy, our operational track record and financial strength will provide a strong foundation to deliver long-term value for our shareholders. With that, I'll now hand back to you, Desmond, to open the floor for questions.

[Operator Instructions] First questions comes from Jonathon Sharp from CLSA.

The first question, you mentioned decades in identifying and implementing cost reduction initiatives. Can you just elaborate on that a bit? What are you focusing on? And what are the potential magnitude of sort of further cost savings?

Sure. I'll start on that, and then Luke might want to infill the details. So -- and it's worth just reflecting, going back in time, as the company grew and we were moved into a position where we could get on with investment back into the base, central to that was the same of taking us further to the left of the cost curve. So historically, that was about improving processing capability. Much of that investment were at the back of completing the new crushing and ore sorters, the online analyzers and other tools to improve recoveries in the plant. So that's been happening. We've improved our power this year in the form of LNG coming online. That's both the carbon reduction and cost reduction. Brett mentioned in the mine that we've been moving through a transition to owner operator for mining. So around excavators, we've got our own people in the whole fleet. We've taken over drill and blast. By the way, all of that's happened over the last 12 months. Then outside of that, as it related to the plant, well, CSI, of course, the part of the site, care of the new crushing ore sorters. So we're self-performing crushing and ore sorting. So there's been this trend of taking over the core businesses. We've moved from contractors to owner operate that. All led us through to cost reductions. And then that brings us to really the outlook. And Luke and team have set up a very robust continuous improvement regime, which it hunts for and implements further cost reductions. And there's a bevy of smaller value items, which are being pursued. But there is quite a long list to work with over time. But of course, the highest order cost-out initiatives are scale, improved processing capability, taking over the core business and achieving higher recoveries. Luke, have you got -- do you want to add to that?

I'll add a little bit, but I'll just be repeating a lot of what Dale said. At the moment, we're going through the FY '26 planning process. And the focus is, across the board, cost reductions. A key driver of the cost reductions in the next period will be the maturity of the operation, now that we're moving to a larger production profile; the transition to the owner-operator mining model, which Dale mentioned; reductions to capital spend; and then also looking at supporting overhead costs and how we can reduce those as well. So it's really an across-the-board focus on cost reduction for FY '26. That will reflect an organization that has reached a nameplate capacity and maturity, which allows us to turn the dial further on cost reduction.

Okay. And just a quick question on recoveries. I know they dropped this quarter. And you mentioned it was due to P1000 tie-in and ramp-up. But what specific recovery rates are you targeting after the optimization in next quarter?

Yes. Thanks, Jonathon. The recoveries that we have started to see coming out of our ramp-up period is certainly exceeding the mid-70s -- low to mid-70s. So that's where we know what we can target, that 75%. Now it comes down to, as Dale and Luke attested to as some of the cost-saving initiatives is adding in some of the additional content material, which will affect recovery, but actually provides us with a cheaper unit cost as well. So in terms of the plant, it can do the mid-70s, and we think we'll be able to get it higher in the next 12 to 18 months, but it's really about what the quality of the feed that we can send it to and just making sure that we're targeting the right unit costs for the right outcome.

Our next questions comes from Hugo Nicolaci from Goldman Sachs.

Firstly, a question on strategy. I look at the growth projects, the Pilgangoora extension study has been deferred about 18 months. Colina timing seems to be slipping a little bit as well. I appreciate the current market conditions don't support the original time lines of either of those projects. But you're still $700 million net cash at the quarter and you're still highlighting the positive operating cash margins that you're generating now and expect to continue to generate as the P1000 Project ramps up. So I guess beyond the cash conservation strategy, how do we think about strategy near term? Do you still see yourself as a countercyclical acquirer? Or do you already have enough optionality in the portfolio?

Thanks, Hugo. Thanks for the question. As it relates to the project timing, as it relates to the Colina project in Brazil, we're continuing to progress that with the target drilling and studies. And there's quite a detailed review process and train. And that time line has principally driven that we think we can achieve more with that asset, but we need to do more to understand that in terms of studies and drilling. So that's the principal driver of that. Although studies are very early stage, we also like the idea of lower capital entry for that project. It's too early to confirm that, but that's a potential development. There is a potential development pathway there that the team needs to work through. So we are exploring that. As it relates to P2000, obviously, it's a big step-up. We're pushing that to the right. One of the related factors is approvals time lines, but it makes sense for a number of reasons to push that to the right. To your point on countercyclic acquisitions, we've got a full plate. And right now, the focus is really consolidating on the base, ensuring we achieve this good ramp-up, which we've done, making sure the June quarter is successful as it relates to optimization. And really cementing our position as a low-cost operator. That is the high priority. So that's where -- what's giving our focus at this point in time.

Great. And then just a second one, if I can, just around some of the exploration targets and drilling. Obviously, resource update comes out in a couple of weeks, but just around the extension of the northern system. I guess what are you hoping to achieve there? I mean if the northern system extends, does that help you recut the mine plan and access some shallower material and maybe push out into the well longer term the need to go underground? Or is it too early to tell?

Yes, too early to tell. But yes, there is potential for some beneficial tonnes for the mine plan. But yes, too early to confirm that. But much like the drilling we're doing at Colina, we've been very targeted around what we're looking to do there. And the good news about the Pilgangoora asset is it's an incredible system. And in the years to come when the time is right, we'll get the rigs back out there in force. But for now it's just very much targeted because we think it potentially is in our interest to improve the mine plan in the near term.

One moment for the next questions.

Is there a question? I think they have an issue. [Technical Difficulty]

We seem to be having some technical problems with the queue. So we'll move to webcast questions while we get that sorted. So one question here from a shareholder is, in your opinion, do you think the shares in PLS have been oversold? And where do you see the company in 5 years from now?

A couple of big questions. Now to the first part, of course, I think they're oversold. But of course, I would say that. As to where do we see the company in 5 years, that's a really exciting question when you consider the growth outlook for the lithium industry and PLS' position within it. We have an enviable position given the strong foundation we've built, the absence of really other major players supporting this massive growth industry. That, coupled with the pipeline of growth options that we can navigate to market over time when the market best supports it. So that sets the company up, I think, for an incredible trajectory over the next 5 years. Now what that could lead to, well, that's the exciting question the executive and Board get to work with.

We now have the questions from Kate McCutcheon from Citi.

You've got the government funding for the midstream. Do you have clarity around the 10% production tax credits and whether that's applicable to spodumene processing? Or is there any government benefit slightly in the medium term? And just tying in, are we still going to get an update on medium term, how to think about the P1000 or P850 costs? Or will FY '26 guidance be a good guide for that?

Yes. Sure. Thanks, Kate. As it relates to midstream -- we'll have to come back to you on the production tax credits. I'm pretty sure it does qualify for that. However, as it relates to that midstream demonstration project, that was sized as a demonstration project not necessarily with the expectation of a large revenue earner. Obviously, it's price dependent on the overriding lithium market. Now if a tax credit is attributed to that, well, of course, that helps. But the underlying driver for that demonstration project is to prove up the concept, validate unit cost, validate price of product and from that, use that as a stepping stone to a larger deployment. But we'll happily take production tax credits and any other benefits the government would like to provide. As it relates to the second question, I'll hand to Luke.

No problem. So with respect to a midterm view on costs, we will provide guidance for the full year '26 period at the full year '26 results. It will be a view to what our midterm cost structure is because the Pilgangoora operation will have achieved nameplate. But obviously, over the midterm, the mine plan will fluctuate, which will have an impact on cost. But we don't intend to provide a midterm target, but FY '26 will be indicative of that.

Okay. Got it. So just to clarify, going back to the production tax credits, putting aside the midstream, do you need to clarify if there's anything for Pilgangoora or there's not at the moment, it's just downstream?

For the spodumene concentrate, Kate, my understanding is no, the production tax credit is not attributed to spodumene concentrate production.

And then just on the P1000 ramp-up, so you've given us those metrics on Slide 6. How do we think about the ramp-up to get to that? Is it 4.9 million tonnes of ore throughput a year I think it is in that recovery ramping up towards 75-ish? What does the next 12 months sort of look like? I know we don't have guidance, but when can we expect those nameplate metrics?

Sure. I'll offer a comment and then Brett can infill. So in the very immediate term, we're stepping into the optimization phase or actually, we're in that now. What that means is moving from the ramp-up. So we're now effectively steady state and tuning the operation. Now all going well, we expect the bulk of that to be completed in the June quarter. There's potential some of that moves into the September quarter. But the team is certainly working hard to try and complete the bulk of that in the June quarter such that as we step into the next financial year, we are at nameplate or close to. As it relates to long-term recoveries, we've not changed our targets there as it relates to the long run, 75% of our average head grade. As it relates to the more medium term, specifically next year, that will be a product of the budget process, which we're in the thick of now. We are contemplating different ore feed strategies for the purpose of lowest-cost production. Now there's potential in that -- and targeting a lower unit cost that might take a minor hit to recoveries. But for clarity, we haven't made any decisions around this. We're in the planning phase. And ultimately, that guidance will come later, as Luke mentioned. Brett, did you want to add to that?

Look, no, it's -- there's not a lot more to add. It's exactly as you said, Dale. But it's pleasing to see that in the early ramp-up parts, we have seen the circuit perform very well, and that bodes well for our budget planning for FY '26 and beyond.

Our next questions comes from Glyn Lawcock from Barrenjoey.

Firstly, just on the POSCO JV and the exercising of the option extension, have you had to give anything away to get that out of POSCO?

There's a few minor commercial matters, which we're tying up as a part of that. But really what sort of is more important [indiscernible] that is the strategic collaboration we have with POSCO. We approached POSCO about seeking this extension to which they've provided that and we're really grateful for that. And we're proud of our association with POSCO and excited to see where we can take the relationship over time.

Just on your approach then to have the extension, what was the basis for that approach? Just because of the slow ramp-up and everything else that you just wanted more time and they were quite amenable with the sound of it?

No, two items there really. The first is, yes, it provides more time, which is great in terms of being able to observe the performance. But more importantly, for us, it's about cash preservation and as we think about the outlook for the business.

Okay. That's great. And then maybe one for Luke. Luke, I mean, obviously, you're leading a team to try and pull costs out to think about the business. I mean if you think about the business on a whole operating costs, your sustaining CapEx, you're stripping in your lease payments, do you think with an $800 spodumene price today, if it doesn't move from here, can you envisage you can get this business as a whole to make cash? Or is that going to be a struggle, you think, on an all-in basis?

So the suite of cost reduction initiatives that we've put in place and the ongoing cost reduction initiatives that we're examining now across all parts of the business, operating costs, CapEx, overhead costs, are really with the aspiration to limit cash burn as much as possible at the prices that you're referencing. I can't speak exactly to what you're asking for because it will come out in our planning process. But yes, it's certainly with that aspiration over the short to medium term.

Next questions comes from Ben Lyons from Jarden Securities Limited.

It's a tough environment, as Glyn clearly pointed out, but in your introductory remarks, you referred to your fortress balance sheet. And we continue to observe a cash balance of over $1 billion through this prolonged period of weak lithium prices. So -- and again, like further to that, despite those incredibly robust balance sheet settings, which put you at a clear advantage versus your peer group, shareholders have had to endure a prolonged period of share price underperformance versus that peer group. So my question is a really simple one. Has the Board considered implementing a buyback?

Do you want me to start, Dale?

You go for it.

So I'll start. We have considered buybacks from time to time, and we'll continue to do that. Management and the Board continuously make capital allocation decisions within the capital management framework that's been outlined to the market. In the current environment, where the management team and Board have landed is that ensuring we have a strong liquidity position to withstand persistently lower prices is of utmost importance. As and when the market improves and there's surplus capital available, we will consider then the most value-accretive options for shareholders. And that will certainly include a potential buyback.

Nothing to add.

Okay. And then further to the line of questioning from both Kate and Glyn around the sustainable op cost settings for this business, back in the June quarter of '24, when the operation was absolutely humming, you achieved FOB costs of less than $600 a year a tonne. And as we look forward, fiscal '26 should be an uninterrupted year of P850 production setting. So is there any conceptual reason why you wouldn't be targeting similar levels below that $600 a tonne level?

Ben, we're deep into the planning process now, and we'll reveal once we've completed that part of our guidance. But we're in good standing, we really are, in terms of where I think we will land relative to those levels. But I prefer to wait until we've carried the one, done the numbers and we can come out with confidence. But yes, we are in a really good position, careful investment we've done. The new fleet, taking over drill and blast, the new plant, with all the whistles and bells, we're -- and the scale. So there is an element of economies of scale. All of that puts -- adds through to what will ultimately be an improvement in unit costs. So I'm sorry, I can't give you numbers today.

No, that's all good. You can see the unit costs coming down, the balance sheet is really robust, and you're thinking about a buyback. It's all very positive.

Next questions comes from Rob Stein from Macquarie.

[Technical Difficulty] the P2000 expansion and the investment in Colina, do you evaluate that against the buyback and what the IRR investing in your base business would be? Because I would imagine at these levels, nothing has a better risk return than buying back your stock here.

I think I missed the front of that. But I think I got the gist of it, which was evaluating share buyback relative to the other investment options for the business. And the short answer is, of course, we will complete that evaluation in accordance with our capital management framework. And all of these avenues get sort of evaluated side by side. So the short answer is yes, that evaluation will continue to happen.

Okay. And then just in terms of strategically how you potentially navigate the down cycle and what you do to -- you used scrip to buy Latin, which proved to be a really wise move, given your share price has dropped. Since your scrip is an asset to you in any type of M&A situation given your strong balance sheet, is that something that you're potentially strategically you look to manage to, in fact, try to find a point in the cycle over the next 1 or 2 years when it does make sense to acquire assets using that scrip to do so?

Yes. So you're quite right, Rob. Obviously, that avenue is available to us. As I mentioned earlier, really the key focus for us is the core operations at this point, having gone to the back of the investment cycle. What we're looking to do is really capitalize on that investment. That is priority one. And we already have sort of a full bevy of options secured that we can pursue for growth when the market supports. So as I say, focus is the core operation.

Next questions comes from the line of Levi Spry from UBS.

A fair way down the list, so I think some of this ground has been covered. But I really just wanted to understand, firstly, on the POSCO piece and then the planning process around price. So the deferral of the POSCO option, is that around price? Or is it around like costs, i.e., how you're thinking about costs in the downstream? And then maybe Luke, just as you're going through this budgeting process, can you talk to how you're thinking about modeling the price scenarios, I guess?

As it relates to the POSCO deferral of the call option, which we covered a little earlier -- so hopefully, I got your question right. Please correct me if I haven't. This is about cash preservation. And of course, we get the other benefit of more time to observe the performance of the operation. So that's the principal reason there. Does that answer your first question?

Yes, kind of. Or you're sort of monitoring the performance of it. So that means operating costs, I imagine, volume and operating costs and therefore, margin. So I kind of get that. Maybe just on the budgeting process and how are you managing anything that cost -- your business cost line versus your expectations for price? Is it against spot?

Yes. Thanks for the question, Levi. So the budgeting process is really a broader planning process that involves the mine planning team, capital team, corporate team and various other inputs across the organization. It's a pretty thorough and broad process. The reason I say that is because we adopt the same thoroughness to when we think about what are the potential scenarios going forward. So we, of course, think about price scenarios that are higher and price scenarios that are lower than spot. I'll hand it over to Dale, but I would say, at least in this current market environment and from what we can see, the potential for upside is more significant than downside given that if you look across the cost curve, there are a large number of operators that are operating at a loss at the moment. But I'll hand to Dale just on pricing outlook.

Yes. No, I think you covered it, Luke. I think we're in a good standing. I think as we sort of covered in the slides, demand outlook looks amazing. And as Luke said, supply side is struggling, including what you'd expect to be the lowest-cost, largest operator. So something has to give in that scenario, yes.

Next up, we have Al Harvey from JPMorgan.

Just another one on the POSCO JV. So just wanted to get a sense how you're thinking about that, I suppose. You've mentioned Train 2 will reach certification later in 2025. Are you willing to put a more, I suppose, firm date on when you think that might occur? I suppose it is important. I think back of the envelope, it's around AUD 200 million to exercise, correct me if I'm wrong. And then I suppose just to follow on from that, how you're thinking about how that number could compare to a fair value valuation of the asset if you don't pull the cost option.

Yes. So your timing is obviously -- that's out to the right. That -- the value of that, based on the equity subscription plus a small escalation factor, that would be a lower cost entry point in the fair value. We haven't disclosed fair value estimates, but I think it's fair to presume that would be a value much higher. As to more broadly the progress of the plant and how the team is going over there, we are very positive on what we've seen. Obviously, the construction itself was well executed. And as we've been observing the ramp-up, that too is going very well. And as we've noted in the release today, the certifications, which have been secured for the first train was some of the best in the business in terms of buyers and [indiscernible] train are more certification. So not yet finalized, but on its way. So that's looking good. And then as it relates to the second train and as noted in the quarterly, that volume -- that production volume is being managed such that we get certification because, obviously, you get a higher price once the product is certified. So did that sort of fill in some of the gaps for you?

Yes, it does. Maybe just a second one for me. Just wanted to clarify the earlier comments on recovery. So obviously, you're still looking at different feed strategies. But I just wanted to clarify, if you did feed in a higher proportion of contaminated material, could you still get to that kind of 75% recovery target? Or is that 75% target kind of predicated on optimized, clean feed?

Sure. I'll hand to Brett on that one. Just to close on the last question, the team's handed me a note. An exercise price for equity today will be about AUD 60 million on that one. So hopefully, that helps sort of quantify. It's smaller in the scheme of things. Moving to the recovery question, do you want to speak to that one, Brett?

Yes. Thanks, Al. The -- yes, the recovery of 75% and our long-term life of mine recoveries is predicated on the work we did with the ore sorters. The advantage we have with the ore sorters is able to add in more of the stockpiled content material, which drops our mining rates, which then gives us that unit cost benefit. That's really the trade-off that we could do with targeting slightly lower recoveries. Having said that, the optimization for the plant, we'll always continue to target higher recoveries. It's the bread and butter of the plant. So I wouldn't expect to see the recoveries going down into the late 60s. They'll hold pretty well around the 70s, I believe, in the future.

And probably just to add, Al, the optimization phase will be key to understanding where we might be able to take things in time. Going back in the years, a lot of test work was done, a lot of modeling. But in terms of where can you push the ceiling to, you don't really know that until you start operating at scale, and we're early into that process. But we are pretty optimistic on where we can take things in the knowledge that we have got some fantastic processing capability that we didn't have previously, whether it's the ore sorting in the front end, the online analyzers. We've upscaled the WHIMs, which is the high-intensity magnets, which can rip out iron-related materials. All of the above are new tools the operating team did not have at this level previously. So if you cast your mind back, we were already having very high recoveries in the mid-70s or sort of 73%, around that sort of level, pre this capability. So interested to see how we go in time. And ultimately, if it goes well, we'll get to rerate the reserve, which would be pretty awesome if we can do that.

Yes. Maybe just back to the option, the $60 million number. So I just kind of thought -- my understanding was the build was about USD 900 million. So 12% at cost would have been a bit higher once you factor in some interest. But maybe it's one I can take offline.

Yes. We'll come back to you on that one, Al, if it's all right.

Okay. Dale, I was going to take some questions from the webcast. First question, when do you foresee prices of spodumene recovering? And what impact does the tariff have on production and sales forecast for the company?

Some great questions. The current price mismatch is hard to reconcile given what we've covered today. The strong demand, the fact that much of major operators are losing money, this pricing does not compute. I think part of the reason for that is the market is somewhat dysfunctional given that we're still working with reported prices rolled out through price reporting agencies, not live trading platforms as seen in other mature markets. I think that's part of the explanation for the price dynamics we see today. What we have seen historically -- I care about this function, is price has historically snapped back, much to everyone's surprise. Maybe that occurs again, we don't know. But as to timing, incredibly hard to predict. But of course, we're very optimistic given the low pricing deep into the cost curve, the strong demand outlook. It has to move up is our view. Question is when.

Okay. Thanks, Dale. Next question, where does PLS sit on the spodumene cost curve? And are lepidolite resources cost effective now?

As it relates to where PLS sits on the cost curve, really the best indicator of that will come as part of our next set of guidance for the financial year ahead. Why? Because we will be able to build into that the strength we're expecting care of all the investment that we've made and the new plant and what we've covered on this call. As to lepidolite resources, are they cost effective? Our understanding is no. It's a higher cost of lithium units, much higher than the better spodumene concentrate and better brine sources. And understanding is some of the operators of those lepidolite operations are doing so because they can manage out and/or absorb those costs elsewhere within their business. So yes, our view is lepidolite is higher cost. Okay. With that, that completes the -- I'd like to thank everyone for dialing in today. The March quarter has been a huge quarter for the business, a very successful ramp-up quarter, and we are well positioned for the future. So with that, I'd like to thank you all, and we look forward to updating you in the future. Thank you very much.

That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.