PLS Group Limited

I would now like to hand the conference over to your speaker today. Bill Henderson, Managing Director and CEO. Sir, please go ahead.

Thank you, Michelle. Good morning and good evening, and thank you all for joining us today. I'll begin by acknowledging the traditional owners on the lands on which PLS operates, the Wachuk people of the Nomad Nation in Perth, and the Nyamal and Garriara peoples in the Pilbara. We pay our respects to elders passed in prison, I'm joined today by Alex Wilcox, our Chief Financial Officer, and Sandra McInnes, our Chief People and Sustainability Officer. FY26 was a record year for PLS and a strong demonstration of our through-the-cycle strategy and action. Today, we will take you through the operational, financial and sustainability performance for the year, our strategic progress and the outlook for PLS before we open the line for questions. Turning now to slide 2. At Pilkingora, we delivered record production and sales, both up 17% on the prior year and we achieved our FY26 guidance and we lifted this year to a new record of 76.5%. As market conditions strengthened, we were also able to respond quickly. Approving and preparing for the restart of the Nagaju facility and accelerating P2000, including the approval of approximately $175 million of pre-FID investment for P2000. We continue to progress Kalina as our principal geographic diversification opportunity whilst maintaining a disciplined approach to chemicals, commencing commissioning of our mystery and demonstration plant and operating our PPLS, JV and batch mode to preserve capital. That strong operating performance together with improved market conditions translated into a significant improvement in our financial results, fitting now to slide 3. Revenue increased by 152% to $1.9 billion, driven by stronger realized pricing and record sales volumes. Underlying EBITDA increased to $1.1 billion at a 59% margin, reflecting the operating leverage of the business and delivering net profit after tax of $526 million. We finished the year with $2.3 billion in cash, providing the capacity to invest selectively in growth whilst maintaining our balance sheet strength. And in accordance with our capital management framework, as a board, we have determined to fully frank final dividend of $0.05 per share. Turning now to slide four. Alongside our operational and financial performance, we continue to make progress across our sustainability priorities. Safety remains our most important priority. Our group trips were improved by 11% from the prior year to 2.77%, but we remain focused on continuing to make improvements in this area. We also reduced absolute Scope 1 and 2 emissions by 5%, and we recorded zero major environmental, water or waste incidents. Sandra will cover our sustainability performance in more detail later in the presentation. Turning now to slide 5, which shows our through the cycle strategy and how this played out during FY26. During the weakened market, we positioned the business defensively, protecting the balance sheet, reducing costs and preserving operating flexibility. As market conditions improved, we were able to respond quickly, approving a restart of the Nuggetview facility and moving back towards the P1000 operating model and accelerating our growth options. Our strategy was not dependent on predicting the market turn. It was about ensuring the business was positioned to act when the opportunity emerged. As I've said historically, we've been using the cycle as leverage, not a limitation. And then slide 6 shows that operational flexibility has translated very quickly into cash generation, turning to slide 6 now. As pricing strengthened through FY26, the operating leverage in our low-cost platform became increasingly evident, Causing cash margin from operations increased from $8 million in the September quarter through to $579 million in the June quarter. And with 100% ownership of Putin Gora, our shareholders received the full benefit of the scale, the cost position and the operating leverage we've built. The strong cash generation, together with their balance sheet strength, gives us capacity to invest selectively, whilst maintaining financial strength. One more call-out from the slide. I draw your attention to the horizontal line. That is $2,465 per tonne. This is Benchmark Minerals' long-run expectations for pricing for the industry. Now that return that we see in the June quarter, $5.59 million, that was at a value less than the $2,465. As you can call it, it really does demonstrate the cash-generating potential of the platform, and it's exciting to think about the future, depending on what price you want to pick. It's an incredible platform. We've got the scale, we've got the low-cost position, and here are the results, as you can see in these results we've announced today. Now, with that, I'd now like to hand over to Alex to take us through the financials.

Thank you, Dale. Good morning and good evening, everyone. Turning now to slide eight. FY26 delivered strong financial performance, underlying EBITDA of $1.1 billion, NPAT of $526 million, and a closing cash balance of $2.3 billion. These results reflect disciplined execution, capitalizing on market recovery. Revenue of $1.9 billion was up 152%, driven by a 121% increase in real-life price to US$1,488 a tonne, combined with 17% volume growth, partially offset by some FX headwinds. Unit operating cost on an FOB basis improved 9% to $569 per tonne, reflecting volume leverage, ongoing operational improvements and our cost-smart future-ready program in action. Underlying EBITDA of $1.1 billion reflects that revenue growth and operational efficiency. Net profit after tax of $526 million captures our strong earnings, partially offset by higher depreciation from an expanded asset base and tax expense as we return to profitability. Capital expenditure of $328 million was in line with guidance and comprised mine development capex of $146 million and infrastructure projects and sustained capex of $182 million. These strong operational and financial results translated directly into substantial cash generation as shown in our cash flow bridge, now turning to 5.9. Cash margin from operations of $1.36 billion underpinned the 135% increase in cash to $2.2 billion, supported by volume growth, cost discipline and strong pricing. The year-end cash included the US $100 million prepayment associated with the CanMax off-take agreement announced earlier in the year. We received a prior period tax refund of $74 million, which will normalise now that we have returned profitability. Net financing cash flows of $353 million reflects net proceeds from the US $600 million inaugural US bond, partly offset by a $442 million RCF repayment, as well as lease costs and interest expenses. The combination of these factors resulted in a further strengthening of our cash position to $2.29 billion, and we finished the year with $2.79 billion of liquidity. Turning to the balance sheet on slide 10. We have maintained a strong balance sheet while deploying capital for growth and retained capacity to fund future investments. Property, plant and equipment increased 6% to $2.86 billion with $445 million in mine properties and development additions, partly offset by $275 million in depreciation. Tables increased to $436 million, reflecting in part the contract liability for the remaining unutilised portion of the CAMNAP repayment. Borrowings increased to $853 million, following the US $600 million bond issuance, net of the RPF repayment, with the remaining $500 million RPF facility undrawn. Leased liabilities increased 24% to $281 million, reflecting approximately $90 million invested in heavy mobile equipment. We expect to complete the last phase of the owner-operator transition as we progress through FY27. The strength of our balance sheet positions us well as we consider future investments supporting long-term value creation for our shareholders. Turning now to slide 11. On the back of this strong financial position, the Board has determined a fully franked final dividend of $0.05 per share, representing a distribution of approximately $160 million to shareholders. This implies a payout ratio of 22% of F126 adjusted free cash flow, which is within our payout ratio range of 20% to 30%. I'll now hand over to Sandra for an overview of sustainability performance.

Thanks Alex. Good morning and good evening everyone. Turning now to slide 13. Our three sustainability focus areas of valuing our people and communities, sustainable operations and responsible and ethical actions guide how we manage our impacts, engage with our people, communities and partners and make disciplined decisions that support responsible long-term value creation. Turning now to slide 14. Safety remains our first priority and we're pleased to report our total recordable injury frequency rate increased by 11% from last year to 2.77. We also continue to invest in our people and culture. Our latest culture and engagement survey achieved a participation rate of 86% and an overall engagement score of 75%, which are above the Australian benchmark. These results show our workforce feel valued and connected to our vision. Female employment increased to 21.9%, demonstrating our continued progress towards our diversity and inclusion objectives. Turning now to slide 15. Through sustainable operations, we aim to reduce our impact while identifying better ways to make a positive contribution and create value. Across our Australian operations, we achieved a 5% reduction on our Scope 1 and 2 emissions. We surveyed more than 45,000 hectares of flora and fauna, supporting responsible management of our environmental footprint. We also recorded no major incidents, with zero major environmental, water-related or waste-related incidents during the year. Turning now to slide 16. We believe that long-term success is built on genuine partnerships with our communities and stakeholders. During FY26, we directed 93% of our procurement spend to Australian businesses, supporting local economic values. We also invested $38 million with 20 First Nations businesses, strengthening Indigenous economic participation. Our financial contribution extends across our stakeholder base. We paid $65 million in royalties to government, and we also increased our investment in communities, contributing $2.9 million across Australia and Brazil. This published comprehensive report covering our operations and sustainability performance for FY26, which reflects our ongoing commitment to transparent disclosure. These reports are available in the sustainability section of our PLS website. I'll now hand back to Dale to discuss strategy and capital allocation.

Thanks Sandra. It's great to see the progress in the area of sustainability. And although sustainability is a full organisational focus, I want to thank you Sandra for your leadership and your team for the great progress we've made over this past year. Now I'd like to spend a few minutes on the strategy behind our overall results and why we believe it positions PLS well through the cycle. Pilkingora is the foundation of PLS. It's a tier 1 asset with an over 30 year mine line of which we own 100%. That ownership gives us control over operating decisions and capital allocation, whilst our shareholders retain the full benefit of the upstream economics. We have significant growth opportunities ahead of us at both Pilkingora in Australia and Kalina in Brazil, as well as selective opportunities downstream. Our financial strength means we can progress these opportunities selectively and on our terms. This gives us resilience through weaker markets and the capacity to act when opportunities emerge. The next few slides show how that strategy has translated into operating performance, lower costs and balance sheet strength. Turning to slide 20. Over the past three years, lift-to-recovery has steadily improved, moving from 67% to just under 77%. Behind that improvement has been a consistent focus over a number of years. Test work, process improvements, and plan enhancements, including the application of all-in-technology, The result is that all processes remain broadly stable, whilst production has increased to a record 880,000 tonnes in the year that we're speaking to today. That is a strong demonstration of the improvement we continue to make in the operating performance of Pilbengora. Slide 21 shows how these improvements have translated into higher production and lower unit costs over time. So turning to slide 21 now. So over the same period, we've continued to build the scale and improve the cost position of Pilbengora. The P680 and P1000 upgrades increased the capability of the operation, whilst the PA50 operating model allowed us to phase production and protect the business when market conditions weakened. That has supported an 11% compound annual increase in production over the past five years, whilst maintaining a strong focus on lowering our unit costs. Operational changes including our move to our owner-operated mining model and our CostSmart future ready program have also improved the underlying cost base. Those operating outcomes have generated returns that allow us to continue to invest through the cycle, which we'll turn to now on slide 22. So lithium is a volatile market and our surging is designed to use this cycle to our advantage rather than as a limitation. Over the past four years, we have allocated $4.8 billion across the business, reinvesting $2.4 billion, returning $800 million to shareholders through dividends, excluding what we've announced today, and increasing our cash balance by approximately $1.7 billion over the period. That has positioned us to continue to invest through the cycle without compromising the strength of the core business. Turning now to slide 23 to talk about what our next chapter looks like. P2000 is the most significant growth option at Hilton Goros with the potential to increase production capacity to around 2 million tonnes per annum. The feasibility study is progressing with outcomes expected in the December quarter of this year. We have approved $175 million of pre-FID investment to shorten the pathway to first door if the Board elects to proceed. That investment is about readiness, not pre-committing it by you. Any decision to proceed remains subject to the study outcomes and board approval, as I mentioned. Heading down to Kalina, which is our principal geographic diversification opportunity, moving to slide 24. Kalina is a 100% owned project in Brazil and provides us with a significant long-term diversification option outside Australia. The pinkability study is progressing, with outcomes expected in the December quarter next year, and we continue to assess enabling infrastructure that could support future development. The approach remains staged, with development timing dependent on the study outcomes, funding and support of market conditions. Following year end, we also acquired neighbouring tenements to expand our position in the district. Turning now to our selective chemicals exposure on slide 25. Our approach to chemicals remains selective and staged. We are maintaining exposure to downstream value creation through our PPLS joint venture, our midstream demonstration plan, and our work together with Scunfone, whilst limiting capital commitment until the economics are proven. That gives us the opportunity to build capability and preserve future pathways without compromising capital discipline. Turning now to slide 28 for our FY27 forums. So looking ahead to the year we're in, FY27, the priority is execution. Firstly, it's about safely ramping up the Nuggety facility and maximising production cash generation from the field and core asset. Beyond that, we will continue to progress P2000, Collegium and our Selective Chemicals pathways, with capital deployed in a staged and disciplined way. The aim is simple. Deliver from the core, while continuing to advance highly accreted growth opportunities. Turning now to slide 28, rectifier 27, guidance. The execution focus is reflected in our guidance for the year. Production is expected to increase between 1.03 million and 1.1 million tonnes as an overview ramps up. SOV unit operating costs are guided in the range of $575 to $625 per tonne, modestly allowed FY26, as the higher costs are being returned to the production mix. Capital expenditure is guided in the range of $620 to $685 million, reflecting increased mine development, sustaining an infrastructure investment, together with the approved $165 million P2000 pre-FID. Any additional growth capital outside its guidance ran subject to further decisions. Turning now to slide 29, which details how we prioritised our capital. Our first priority is the capital required to safely sustain the operation and maintain the long-term performance of Fulham Gora. Beyond that, we are evaluating infrastructure investments that can enhance the capability of the operation and position it for further growth. Both remain selective. The P2000 Pre-FID program is approved, whilst P2000 FID and the Kalina Pre-FID remain subject to successful studies, market conditions and board approval. The appendix in the back of the pack provides a detailed breakdown of what is included in FY20 CapEx guidance and what remains outside of guidance and subject to future approval. This approach to capital deployment is prioritised. protecting the core, improving the platform, and capturing growth opportunities without committing capital ahead of returns. Now turning to slide 31 for the market outlook. The long-term fundamentals underpinning electrification remain compelling. Battery costs have fallen by around 90% since 2010, making electrification increasingly competitive on economics rather than incentives alone. We had seen that in electric vehicles in June, more than one in four vehicles sold globally were electric, with penetration reaching 27%. Energy storage is growing rapidly as well. Global battery energy storage investment was around $80 billion in 2025, and the IEA expects it to exceed US$100 billion in 2026. Behind both this sits a rapidly changing electricity system. Under the IEA state of policy scenario, global electrification generation increases by more than 50% in 2040, with solar and wind alone reaching 46% of generation. As that share of intermittent generation increases, so does the need for energy storage. Those demand drivers are translating directly into lithium consumption. Moving now to slide 32. The growth in lithium demand is well established and has been going for years. What is changing now is the scale and breadth of that demand. Chinese battery production is up 66% year-to-date, while lithium chemical inventories have fallen to 57% over the past 12 months and now represent around two and a half weeks of demand. Looking further ahead, benchmark minerals base case for lithium demand growth was around 8% per ounce in 2040, reaching 5.1 million tonnes of LCE, roughly three times the size of the market today. China remains the largest demand centre, but growth is broadening materially across other geographies. In June, Europe accounted for around 1 in 4 EVs sold globally. And in battery storage, year-to-day, year-on-year growth outside of China is even stronger. Europe up 96%, and Asia, excluding China, is up a whopping 258%. And the rest of the world up 93%. Incredible stats from the prior year. Demand has also broadened by application. Electric vehicles remain the largest end-use, but stationary storage is growing rapidly. supported by strong front of grid deployment and rising demand from data centres. The demand base is getting larger, more diversified and increasingly global. The question is whether supply can keep pace and increasingly whether that supply can be delivered reliably. Turning now to slide 33. Meeting that demand is becoming harder. Development timelines have lengthened materially, with new projects increasingly complex, capital intensive and slower to deliver. Benchmark estimates a potential supply gap of around 1.6 million tonnes of LCE by 2040. And to put that perspective, that's equivalent of approximately 12, in fact more than 12 Kg of that gap, which which takes us to the point that mine development cycles have continued to extend to around 18 years, which you can see on the right-hand graph on the slide. So in this environment, reliable, long-rise supply becomes increasingly scarce and increasingly valuable. That is particularly relevant for PLS. Our platform provides customers with scale, consistent product quality and reliable supply from a long-life operation. We are seeing that value reflected directly in our commercial arrangements. Earlier this year we executed an off-take agreement with a US $1,000 per tonne floor price, no price ceiling, no discounts, volume flexibility and supported by a US $100 million prepayment. Post year end, we have executed a further agreement on similar terms. Same floor price, no price ceiling, no discounts, volume and flexibility of PLS collection, and a US $18 million bank guarantee for security. That structure provides downstream protection whilst preserving untapped upside and flexibility over volumes and terms. Those terms are not offered lightly. They demonstrate the emerging premium that supply chain partners are prepared to provide for reliable supply and the value of PLS's ability to deliver. So this is just a quick shout out to the PLS sales and marketing team led by Aaron and Mel. A fantastic set of outcomes in the year which has been. to the teams, your leadership, but most importantly, the strong, trusted partnerships you've continued to build on over the years working with PLS. Attending to slide 34 for my closing remarks, FY26 was a record year for PLS and a strong demonstration of that through the cycle strategy in action. We improved the performance of Pilgrim Gora, we responded quickly as market conditions strengthened, and we converted their operating leverage into significant cash generation. That has left PLS with greater scale, a strong balance sheet, and the capacity to invest through the cycle without compromising the strength of the core business. The long-term fundamental solution remains compelling. Demand continues to grow, broaden, and deepen, increasing the value of reliable alumni supply. We entered FY27 focused on safety ramping up Novoju, further improving the performance of the Pilgrim Gora asset and capturing the growth opportunities ahead. I want to thank our team across PLS for what they've delivered during FY26. An incredible set of results. Thank you team. And I also want to thank our shareholders for your continuous support. I appreciate many of you have remained resolute in the opportunity this incredible market presents. And more than that, your faith in PLS and the team's belief delivered. Thank you for your support. With the platform we have built and a clear focus on discipline execution, Peel is as well positioned to create long-term value for our shares. And with that, Alison and Sandra and I would be pleased to take your questions, and I'll now hand back to Michelle to open the floor for those questions. Thank you, Michelle.

Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. We ask that you please limit yourselves to one question and one follow-up. One moment while we compile our Q&A roster. Our first question is going to come from the line of Austin Young with Macquarie. Your line is open. Please go ahead.

Good morning, Dale and the team. Strong results and strong bidding dividends. So just keen to understand the shareholder return part. This is fully front and following this, you know, capital allocation framework, should we anticipate a constant return even when the company goes into the high growth phase with P2000? Thank you.

Good morning, Nelson. Thank you for the question. As you said, we're pleased to be able to announce the $0.05 fully franked dividend this year. It is at a 22% payout ratio. It sits within that 20% to 30% adjusted free cash flow, which is consistent with the capital management framework. As we look forward, in normal course of business, we'll always continue to assess the capital management framework to ensure that it remains relevant and if there was to be any changes, we talk about them at that time. Obviously, the way that the dividend policy works, it does naturally flex through market cycles because it's tied to our free cash flow and that's something that continues to make sense given the nature of the market that we're in.

Yeah, and I did add to Alex's outline there, Austin. As you know, it's all about price. We're seeing a strong improvement in the year to date. June alone, cash operating margin of more than $500 million generated from the business. Just incredible returns, depending on what the headline price is. Depending on what price you want to pick, the outlook ultimately depends how we think about capital distribution. As Alex sort of outlined, it's a ratio of free cash flow, so it naturally moderates as a function of the headline price that we're receiving.

Thank you. Thank you. Just, yeah, on the point of flexibility, just a quick follow-up. As we're getting to the second half of this calendar year, the market is tightening, and you highlight at the presentation the operation to give a strong recovery result. Should we anticipate more flexibility in the rate of the products you offer to the market, given that Nanju is coming up online, to balance and choose, you know, to keep the recovery at a continually high level by slightly reducing, you know, the product rate? Is there any scope of that? Thank you.

Yeah, thanks, Austin. So in terms of delivered product to market, there is no change in sort of our target product growth. What we've done with product rate is it's already optimised to sort of maximise yield, maximise recovery and sort of through that maximise return. So no change there. With NuggetU coming on, of course, it's another processing plant and it gives the team the opportunity to do some more blending effectively across the two operations. But as I say, no change to target product rate. That's clear. Thank you.

Thank you. And we'll move on to our next question. Our next question is going to come from the line of Hugo Nicolese with Goldman Sachs. Your line is open. Please go ahead.

Good to see the plants. 3 or P2000 progressing and getting its own name now which is great. Just looking at the footprint you've given us on slide 23 and it looks like that's significantly larger than the P850 model you've got in the background. I correct you in looking at that. Firstly, the layout, you're going to have to relocate some of the existing waste dump and maintenance works there. Can you maybe talk to, just given the spacing you've got on the plant set up, just the future optionality you're building into P2000 and what sort of potential future de-bottlenecking opportunities you might have? Thanks.

Thanks, Hugo. As you say, the P2000 expansion is significant. Obviously, it's doubling the capacity. What that means practically, it's essentially a new everything in terms of new ROM to zip from, new crush tool stockpile, a new front-end dry plant, a new front-end wet plant, and that pictorial that you can see is essentially a 3D visualisation of that. So, It's a fairly extensive bill. To the question of what's on its way, there are some temporary facilities, I call it, which have been relocated. There's a small rework that they're on, which has already been completed to sort of make way. But in the main, it's a fairly clear area for the build of the park, which is good. And importantly, this makes, in some ways, for a more straightforward build in that we get the benefit of a brownfields expansion in the sense that we've got existing camps Power, existing support infrastructure, but it's greenfields in the sense that it's spatially dislocated from the P1000 plant. Albeit there are some tie-ins in the main, it's spatially separate, so that makes for a more straightforward build relatively, so we're in good standing there.

Great. Thanks, Alan. And then maybe turning to Brazil, just subsequent to the year, I think roughly $50 million buying some tenements off Lithium Ionic next to Kalina. Should we think about that more as just an opportunistic bolt-on for future flexibility, or is that likely to be incorporated into your Stage 1 studies at the moment?

Yes. Yeah, thank you. Yeah, the intention is that that will flow into the studies. Look, that particular tenure package butts up to the... boundary of our existing tenure. Obviously, we were keen to have it. We're having our commencement transaction and we look forward to factoring that and ultimately to a revised study outcome December quarter next year.

Great.

Thanks, Paul. Thanks, you guys.

Thank you. And one moment for our next question. Our next question will come from the line of Glenn Lockock with Barwin Joey. Your line is open. Please go ahead.

Morning, Dale. Just to follow up firstly on the dividend policy, can I just confirm, you were thinking about revisiting the 20% to 30% of free cash flow and maybe adopting a slightly different approach. Is that still something you're thinking about or are you right now the 20% to 30% of free cash flow, your definition remains your preferred?

Thanks. As Alex touched on, we're applying the Capital Management Framework as it stands and that's what we've announced today. As to the possibility of revisiting that, of course there's always that possibility. We're not looking to make any changes in the very near term. We will consider this later in the year for the reason that several things will come together. We will have provided clarity to market on some of these capital projects, in particular P2000. Secondly, we will have had a few more months of operating within the market. We'll see what headline pricing looks like and what the outlook looks like. Really, some of those things will come together and we will continue to reassess it. Out of all that, I'm not saying we will change it, but it would be sensible to reassess later in the year or early next year. We'll see how we go. Alex, anything to add on that?

Great summary. I think it's something that we will naturally always consider. I think the other pieces that I'd add is as we look forward through our upcoming investment phase, we're well placed in terms of different funding options. We've been really pleased with how the bond has traded since the issue in April that creates a really good benchmark for us. as we go forward. And so that combined with broader market outlook. And the third piece I'd add is, as we've navigated through the last cycle, the strength of the balance sheet has definitely been a strategic asset for us. And that's something that we'll always consider as well in the broader context of capital management framework, ensuring that we've got good, strong liquidity on the balance sheet to ensure that we can navigate through any conditions and make sure we're making those right long-term decisions for shareholders.

Yeah, great. Maybe just pushing that a little bit further, I mean, when you think about the change, I mean, what is it you think you need to do? Is it move to a payout ratio approach as opposed to percentage of free cash flow or is it just simply the amount? I mean, can you give us any insight into your thinking?

I mean, I think as seen and with the dividends being announced within the framework and within the payout ratio, it works well for the organisation that we're in. It naturally flexes based on market conditions. I think that's always important and relevant, particularly as we look to the chapter ahead. and some really significant investment opportunities for us. So, you know, 20% to 30% feels like a reasonable balance and the right judgment will continue to assess. But there's nothing that says that it's not suiting as well at the moment.

OK, that's great. And then, Dale, just one final question. Just the unapproved CAPEX that you call out, you know, sealing the roads, the camps, the HMEs, I assume all of those need to go ahead regardless of your P2000 decision and I'm surprised we haven't made those decisions yet. I thought we might have seen one or two of those announced today. What's the sort of timing when we get some insight into those spend? Will it come with the P2000 in Q4 or before? Thanks.

As we've flagged, the three categories of spend, the base operation, the enhanced category, and then the outright growth category. The enhanced category, the second one, really speaks to that point around investments that you would do in all cases because it lowers the operating costs overall and makes for more resilient operation. So we do have in that category, as you say, some investments we plan to do over time in terms of growths. Camp, et cetera. And we flagged this to market, I think it was May, so not that long ago. As to timing, well, we're in study mode. Some things are up for tender. That process is in motion. And when we're ready to advise the market, we'll update you. So just look out for that one. Glenn?

All right. Thanks, Dale.

Thank you. And one moment for our next question. Our next question comes from the line of Raul and with Morgan Stanley. Your line is open. Please go ahead.

Oh, hi. Good morning, Dale and Alex. Thanks for the call. Alex, sorry to lay the point on the dividend. I know you've had a couple of questions on that. Just if we can perhaps revisit, if we're not changing the policy here and if we just go back perhaps two, three years when you were undergoing significant capex for P600, P1000. The thinking at that time was that you want to maintain a conservative balance sheet and net cash balance sheet. Obviously the lithium markets were fairly different. If we do look forward now, I think what's changed really in the company is that you've got a really solid base of producing asset now generating some really healthy cash flow and perhaps you're much more protected from the lithium cycle in a way in terms of the cash generation. So I guess the question is if you do undertake one or two projects at the same time, obviously I'm talking about Kalina here into next year or end of next year, and at that time you would assume that P2000 is still ongoing. Is there an element of conservatism that perhaps sneaks into that framework again or is it purely the 20% to 30% payout and the leverage ratio that's been defined is the right way to think about the board's thinking on the dividend from a go-forward perspective? That's the first one, thanks.

Yeah, well, thanks for the question. I think you've articulated well all of the different factors that we consider. You know, the first piece is, you know, as we think around the broader balance sheet and household management, you know, the first pillar is a conservative balance sheet to ensure that the operations through any point cycle give us the ability to continue to invest in sensible projects rather than needing to make short-term decisions. So that's the first thing. I think the second part that's changed as the business has naturally matured, and particularly as our funding options have matured, is we have different financing options as well that help complement what is the right amount of liquidity to keep within the business. So that's the second part that we think about. And then the third piece is just naturally, we will always be operating... in a sector with any commodities or cycle. And so a dividend policy that's linked to different cycles makes sense. But we're also aware that for a number of our shareholders, dividends are a feature. Now, ultimately, we are a growth organisation and we believe that that is the number one priority for us and where we can deliver the best long-term shareholder outcomes. is really investing in those significant projects that we have in front of us, and so that will be a priority. But at the moment, we see that there can continue to be a balance amongst all of those different features that I've talked about. It doesn't need to be one or the other.

So I can probably just say that it does feel a bit of deja vu for us as a company. Back in the last cycle, We moved out of a low of $400 per tonne to a high of more than $8,000 per tonne. And as we looked forward, we were embarking on the opportunity of doubling the capacity. Files for today, it's deja vu in the sense that, yes, it's been a slightly different cycle. Rather than lows of 400, it's been lows of 600. As to where highs go, you can pick the number there. But as we look forward, we're essentially doubling the capacity again from this point. That's without thinking about likes to clean it. So as we... Take that outlook view, it really is a case of modelling and understanding the balance of what's the price expectation for the future relative to the balance sheet we've built, and this is really the thing we have to continue to triangulate on. As Alex has said, no change is slated at this time, but we'll continue to reassess in the future.

Yep, thank you for that. And Dal, while I have you, perhaps the second one you can help me on. It's more around, you know, the P1000, P2000 project. So if we look at the recoveries, they've obviously been quite strong, and you had a question on that earlier. From my perspective, one thing that also helps recoveries is the head grade that you put into the plant. So I do note that the headquake remains above the reserve grade. So I guess my question is twofold. One is, is there an expectation here that it would revert to the reserve grade over the next two to four years? Or is the expectation that with P2000 coming on, you're probably going to have a better defined reserve ore body given your resource grade is higher than reserve at the moment. Which of those two directions should we be thinking along the lines of? Thanks.

Sure, sure. So probably the place to start is the good problem that we've had is over the years the resource has continued to grow materially as we've drilled it and Things like the average head grade have continued to change favourably. Stronger head grade for longer is ultimately what flows through some of those resource and reserve upgrades. So that's been one factor which has changed. So it just really relates to what we continue to find in the ground. Separate to that is our tools and techniques to maximise resource capture, extraction and concentration. And the good news here is that we've continued to get better and better as an entity that's sort of mastering that and the results we've announced today really speak to that, which is a multitude of new techniques and levers. You know, we continue to talk about all sorting, online analysers. There's other things we do on the mine, which is enabled us to capture more resource and maximise lithium recovery. As we look forward to ultimately the expansion, the mission remains the same. We're looking to maximise resource capture, maximise lithium recovery, and head grade will ebb and flow as a function of the mine plan. So no change to the mission. There's no sort of target head grade at the moment or anything like that. It's just a function of what's been optimised at the line plan. And as we roll forward to PT1000, we'll be able to, when we come to market with that study outcome, we'll be able to provide a bit more visibility as to how we think about maximising lithium recovery with that new processing plant.

Got it. Thank you. That's my two.

And one moment for our next question. Next question is going to come from the line of David Fung with CICC. Your line is open. Please go ahead.

Good morning, Daryl, Alex, and Tim. My first question is regarding your contract itself. So we know that previously you have the CMEX agreement combined for price and repayment. I'm just wondering, is that type of structure still attractive to other customers nowadays? and would you consider having more of this kind of contracts to protect your cash flows against potential volatility in the market, especially when you're potentially entering a new round of extension capex? I'll come back with my second one.

Yeah, great. Thanks for the question, and the short answer is yes, there's been strong interest and competition around around offtake and the types of terms that we've announced today. So that's great and I think that speaks to the appeal of PLS as a reliable supplier. So that's good. As to PLS's objective, the answer to that is yes, we're of course wanting to always secure the strongest commercial terms we can and delighted with what the team's achieved here. It's another sort of step forward on what we announced off the back of the Can-Mac offtake and as we move forward we'll look to do what we can to continue to secure terms of the stage or even better if we can and of course that's the name of the game to try and protect our business from the downside whilst also ensuring a bit of exposure to the upside so we'll continue to work hard at that.

Thank you, Dale. And just have a follow-up on just assuming that TPIS remains in its current operating model. Could you remind us how your offtake sales to POSCO is exacted at this stage and what level of sustaining cost and expenses you need to roughly bear in FY27?

Let me talk to the off-take and then Alex might want to speak to the cost. So as it relates to the JB and South Korea, the supply is 100% dependent on the volume from Pilgengora. How that works practically is on a year-on-year basis, we sort of book and are acquired long in discussion with with Bosco, a JV partner, and that gets translated to a shipping schedule. So that's how we manage it on a year-on-year basis. But 100% supply comes from Pilkingora. As to cost of production for the JV, It's been sort of a period of initially ramp-up, then a moderated period, and now we're moving back into essentially ramp-up. We've not yet had the opportunity to really demonstrate the JV unit cost in terms of what's possible with maximised input, recovery, et cetera, et cetera. So we don't have much of a say yet, but we're looking forward to and due course being able to talk to that.

Yeah, thanks. Exactly as Dale said, I think the first piece, obviously, as an 18% shareholder, we don't disclose broader forecasts and cost information at a granular level in relation to CPLN. But exactly as Dale said, we've been pleased with the fact that there are good proof points both trained in terms of full rent rates and ability for that plant to be able to operate efficiently. At the moment, though, it is operating in batch mode, and so with any facility of that nature, obviously batch versus a full run rate will have a significant impact on just that cost rationalisation.

Thank you very much. I'll pass it on.

As we move on to our next question. Our next question will come from the line of James Redfern with RBC Capital Markets. Your line is open. Please go ahead.

Good morning, Dan and Alex. Hope you're well. Thank you for the market comments to 2040. I was just wondering if you have any sort of strong views on supply growth in the next five years and how you're thinking about the lithium market over that period with regard to the supply-demand imbalance for lithium And then my second question is, has PLS ever disclosed its long-term price assumption using this forecasting? Thank you.

Yeah, thanks for the question, Shane. So if it relates to supply side, of course, we continue to build an in-house view of that. And we factor in what we think are the more probable supply. And for that, what we think is most probable are the various ground field expansions, restarts. Of course, the Chinese mines are in that. And when we load that all in with some quite conservative demand assumptions, the good news is that we see a more probable demand deficit occurring. then the question becomes, well, where to beyond that? And you have to turn your mind to the Greenfields projects. And what we're observing there is there's few and far between who have been approved to date, let alone getting on with a bill and commissioning. I think what that sets up is essentially the potential for potentially a more elongated deficit period. Time will tell. When you roll back the clock and you look in the rear-view mirror, what was, in the last price rally, what appeared to be some of the more easy-to-start operations are now all plugged in. So the next wave of supply, I think, is probably going to be more challenging, given that in most cases these mines are more difficult locations or difficult domiciles. But time will tell. But for PLS as a low-cost operator, it doesn't faze us. We continue to study where we sit on the cost curve, and given the strong balance sheet, the low-cost position, the strong off-takes that we continue to secure, we're incredibly well-placed for what we think should navigate probably every part of the cycle. and we keep focused on setting ourselves as strong as we can be in that regard. Moving to the question of what are their long-term price assumptions, now we haven't made a practice of disclosing this other than when we have done FID points, we've provided and assessments and some sensitivities around this. And typically at those junctures, we have taken a consensus average at that moment in time. So we've done that historically. As it relates to the in-house work, what we do is, as people would expect us, we model a range of scenarios to make sure that we can comfortably navigate all parts of the cycle. And of course, within that, we're deeply focused on downside scenarios, of course, to make sure that we can comfortably navigate that pilot cycle if it was to eventuate.

Okay, Dale, thank you very much. Appreciate that. Thanks, James.

Thank you, and one moment for our next question. Our next question is going to come from the line of Tiago Ogia with Citi. Your line is open. Please go ahead.

Hi, thanks. Good morning, everyone. I think my first question is regarding Colina, just on a follow-up from previous question. I understand that the area does not only add some resources to the project, but also would help you in design the pit. So if you can comment exactly how this will change the pit design, if it will. And the second question, perhaps for Alex, I understand that you have a leveraged policy. I just would like to understand if there is any M&A opportunity that comes up, I understand you have a lot of growth projects arriving on the pipeline, but if any kind of M&A opportunity comes up, would you have any kind of flexibility? And these would use your EBITDA through the cycle or EBITDA spots to make these decisions? Thank you.

Thanks, Tiago. I'll take the first one. Alex can speak to the second. As far as it relates to the acquisition, it bumps up right against the boundary of the existing tenure package. So The benefit of that acquisition is, yes, there's an increase in resource, so some more lithium units, we like that. As to what's the opportunity spatially, as to waste dumps, mine plans, and is there a different configuration? We're really at the start of exploring that, and there is potential that this can help us, but we don't need it, and we didn't need it in terms of going into this acquisition, but it's accretive. Obviously, that's why we did the transaction. The team will really be working through the process of revised studies on the basis of this acquisition, and we look forward to updating more conclusively December quarter next year.

Hi, Tiago. In relation to your other part of the question and M&A, as you'd expect, we continue to be active and look at a whole range of opportunities, as I think we'll always be part of PLS's DNA. Should any of those eventuate, I think the great position that we're in at the moment is we have a number of different options depending on what form that could take if at all it did present itself. In relation to our leverage target, yes, that is very much a through the cycle target. And so we'd always look at it over a two to three to four year view. I think the other piece that we would be considering is should the board approve a P2000, then we would look forward as well to what expected eVIC dial would be on an expanded operation as well when we make those considerations. So I think it's really, we've got lots of optionality in front of us around should we choose a pathway of further inorganic growth, there's a number of different ways that that could be funded.

Okay, thanks. Just to clarify, so when you think on the leverage, if perhaps any kind of remedy opportunities arise, you would think on the EBITDA in two or three years from the decision time, right? That's correct?

Well, we've always said it's through the cycle. So what through the cycle means is that we would be comfortable exceeding for a short period of time, as long as on a more normalized basis, that is what the target would look to. Having said that, I should say, as you see in the balance sheet, whilst our target is there, PLS is historically, and as we've articulated again today, retaining a good, strong, solid underlying balance sheet, and strong liquidity continues to be important to us. So I just consider both of those statements as a collective, and we'll always look to find the right balance.

Thank you. Thank you, Alex. Thanks, Liz.

So we're just running out on time. We will just take a few questions from the webcast in the last few minutes. So first question, what exactly are we looking for with the Ganseng GB, a hydroxide plant on midstream in Australia, China or elsewhere?

Thanks for the question. So the objective with the study with Ganseng is to look at additional chemical processing outside of China somewhere. And we've been working together studying... Global League, comparing and contrasting different industrial parks, and as to what chemical type we've been studying that too. And both Gunfang and PLS are very open to full battery product manufacturing or potentially mid-strength. So that's a potential option. So we're studying both together, and we are very happy to be working together with Ganfeng, because we've continued to learn a lot, which I think places both groups very well as this continues to evolve rapidly.

Okay, thank you. Sandra, what was the reason behind 5% reduction in emissions in 2016?

The reduction was primarily driven by improved operational and energy efficiency, including high lithium recovery and our new fleet management system, MindStar, as well as fuel optimisation. It also was aided by the Nugget Youth plant being in care and maintenance, but notably our absolute scope on and to emissions fell by 5%, even as we had increased production.

Great, thank you. Next question. With spot pricing back above $2,000, is BMX still active? If not, why the shift towards full-price term deals such as CanMax instead of capturing spot upside by the platform?

Yeah, so BMX is not active, but is PLS doing occasional spot sales? Yes. Now, we've not chosen to bring BMX back online because it doesn't We see the benefit as a thing unlikely. The reason is the market has changed. When we initiated BMX back in 21, 22, there was an important evolution of the market to enable price discovery because price discovery was few and far between. So that was the principal reason for doing it and that changed. and it was very successful in enabling efficiency with price discovery. Fast forward to today, there's much more price discovery happening. There's multiple entities doing their own forms of private competitive processes of which PLS is doing the same. But our observation would be price discovery is now working far more effectively in the market. So it's for these reasons we've not seen benefit and bringing that back because price discovery is moving, we're doing spot sales. As to the question of why pursue these off-tags with floor prices, well, the answer there is we get the benefit of both worlds. we get the downside protection here of a price floor plus a form of security with uncapped upside. So if pricing moves in the market, which is fueled by stock sales and price discovery, et cetera, et cetera, that flows through to the indices, and ultimately those indices flow through to our pricing mechanisms, these off-takes. So in that respect, we get the best of both in that regard.

Okay, last question online. Can you please elaborate on the impact of data centres' growth in Australia or globally on your business in the medium and near term?

Yes, so the data centre growth is pretty extraordinary, of course, supporting AI and other needs. And speaking to others who are close to this sector, what they've explained to me is they call it the five nines of reliability. where these data centers require 99.99999% reliability. So in order to achieve that, they're adding batteries. So that's fantastic. It's another demand set for lithium. And, of course, that's been drawn. It's essentially a whole new demand vector along with ESS, EV, Z-mobility, and the rest. So we welcome it, more lithium. We like the sound of that. All right, we're over time. Thank you all for dialing in today and for your questions. And thank you all, and thank you to everybody for our shareholders for supporting PLS. The year which was was an incredible year for PLS. Record sales, record production, a 9% reduction in unit costs, all time with an inflection in the market, which has flowed through to strong, lifted revenues and impact. And here we are at the top of a very strong balance sheet, eyes focused on making the most of this incredible market ahead of us. Thank you all for your time today.

That concludes today's conference call. Thank you for participating and you may now disconnect. Everyone, have a great day.