Operator: Thank you for standing by, and welcome to the Pilbara Minerals, September 2021 Quarterly Investor Conference Call and Webcast. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. I'd now like to hand the conference over to Mr. Ken Brinsden, Managing Director and CEO.

Please go ahead.

Kenneth Brinsden: Thank you, Bernadette, and welcome, everybody those on the Chorus line and shareholders participating by the webcast today. Thank you very much for your participation. And we're looking forward to sharing a bit more detail about what we feel has been another very, very strong quarter for Pilbara Minerals against a backdrop of rapidly improving pricing dynamics both at lithium chemicals level and of course also at spodumene level. We've been able to create, you know, lots of production.

In fact, with our Pilgan plant, the original Pilbara Minerals facility, operating above nameplate capacity, combined with the strong pricing outcome means that we're now well into a healthy operating slow environment looking forward to further growth in respect of the pricing outcomes themselves. So yes, a very, very strong quarter, but likely only just the beginning as it relates to this cycle. Demand conditions also very strong. I'll come back and speak to the effect of the market in more detail after information shared from Dale Henderson, our Chief Operating Officer; and Brian Lynn, our Chief Financial Officer, also with us in the boardroom here Alex Eastwood, General Counsel and Chief Commercial Officer; and David Hann, our Investor Relations Specialist. So yes, looking forward to sharing more detail about what it is that we've been up to, more recently or post the end of the quarter.

You'd also be familiar with the commissioning of our Pilgan plant improvement works, and the restart at the Ngungaju plant, both of which - were both projects now being well underway and key contributors to the next round of growth in Pilbara Minerals, Pilgangoora production base. And then this week the finalization of the POSCO downstream joint venture, and offtake terms. We're very happy to get to the completion of that deal or the execution of the terms. Given that it has been a very long standing relationship, a relationship that we've enjoyed, all they're taking quite a long time to get to a close that jobs now done. And we're looking forward to the effect of further vertical integration of Pilgangoora spodumene supply to the proposed plant in South Korea.

In terms of the completion of that deal, some Korean approvals which we'd consider to be, administrative in nature means that we'd expect the deal to come to a close by the end of the December quarter. In the meantime, POSCO is continuing to get on with their work that facilitates the construction of the projects and early works are already underway with major construction works to commence in the March quarter. And what that means is that the PASCO Pilbara Minerals hydroxide project is one of the near term growth elements in hydroxide chemicals production with commissioning commencing approximately mid-2023. So yes, relative short dated as it relates to future lithium chemicals expansion and Pilbara Minerals is very, very happy to be a part of it. I'm going to come back a little bit later in the call, I'll talk a bit more about the state of the market and Pilbara Minerals participation.

In the meantime, I'll hand on to Dale who will give you an overview in the operations and projects area.

Dale Henderson: Thanks, Ken and good afternoon, everyone. My comments will be in three parts, I'll speak to the operation firstly then projects and then to finish just a quick touch on the exploration and the reserve. So starting with operations, really positive quarter for the operation, safe for one recordable injury, where we had a cut to a hand. That being said TRIFR did reduce for the quarter as a few of our late dated injuries dropped off the formula.

So we're down at a TRIFR 1.88. So good to see that trend but yes, of course a shame on the injury for the quarter. From a production perspective, a big quarter 85,000 tons of spodumene concentrate produced, 11% increase from the previous quarter. From a mining perspective, it was about the quarter was all about increased movement for mining up 35%. By volume from the previous quarter, most of that was owed to an increase in waste movement, which has been part of the plan to increase strip as we've moved out of the down cycle into this upcycle.

We're doing some catch up on waste movement. So it was roughly a 50% increase on waste movements. So that that went well, we would have liked to move a bit more for the period. But nonetheless, we're happy with mining activity with all feet being continues to the plant. Mining generally, across the industry has been a challenge for personnel and mining services contractors certainly, been feeling that.

So we're working closely with our service contractor but as a say hasn't affected us in terms of our production outcomes. Moving from mining to processing, recovery was on plan and runtime for the plant was on plan, so all of that has some through as I say to a very positive quarter for production. So moving from operations into projects, the projects world for the business has also been very, very busy with a suite of projects happening across the Pilgangoora asset. So starting with the Pilgan plant and Ken touched on this, the quarter was about bringing on the improvement projects package as we've called it. That's a series of projects to improve the Pilgan plant, but the main one being the installation of some debottlenecking and throughput increase projects which give another 10% to 15% production capacity.

So that was progressed during the quarter and we got first concentrates from those improvement projects, which was announced just the other week on the 13th of October. So during the course of the December quarter, we'll continue to ramp that up and enjoy those extra tons so that's all on target so happy about that the Pilgan plant. Moving to Ngungaju busy, busy place at the Ngungaju plant as we've been undertaking commissioning and restart works and that culminated in a first concentrate announcement on the 13th of October as well so, for the coarse circuit so we're. As we’ve seen Pilgan projects, the Ngungaju plant we're busy ramping that one up, and looking to have that at full run rate by June next year. Other projects are underway, solar farm we announced the award of the six megawatt solar farm to Contract Power, Australia.

So that was awarded just the other week. So that's triggered a key milestone and a key commitment under our clean energy finance undertaking so that's underway and that's a another good step forward in terms of our decarbonization pathway. Lastly in the projects category, studies are progressing for detailed engineering for our next incremental expansion for the Pilgan plant. So that's I think progressed and readiness for ultimately any FID decision for that incremental expansion. And that completes projects, so to finish just a quick touch on exploration results and reserves.

So during September we announced the mineral, our new mineral resource, big increase there, up to 309 million tons 39% increase, ore reserves also announced and again another big increase 54% increase to 162 million tons. So that was announced on 6th of October. So, we are absolutely delighted to have completed that rewrite of the reserve and resource, it was a key benefit of the Altura acquisition and one we were expecting, we would realize some good benefit of amalgamating the two assets and that certainly proved to be the case. So we're delighted with our big step ups and reserve and resource. So in summary, very, very busy quarter across operations projects and the exploration space, but very positive.

So with that - that's a wrap from me, and I'll hand over to Brian, our CFO.

Brian Lynn: Right thanks, thanks Dale and good afternoon, everyone. I think the overriding reflection from me on this quarter results is - is to think about where we were 12 to 15 months ago, when we were receiving at price for our product below USD400 a ton. And for this quarter, just from the September quarter, we've actually are now operating at a - or had achieved an operating margin for each ton sold of in excess of USD400 a ton. So, it is quite amazing how the market conditions have turned around and how quickly things are moving and as I think everyone is aware that prices continue to improve.

So for the quarter Dale mentioned that we produced about 86,000 tons of products. We drew down about 6,000 tons of product from inventory. And that resulted in our shipping 91,500 tons of product. The average products achieved for the product shipped during the quarter was between us USD850 and USD900 a ton. Now that has you know that range is given because there is still some provisional pricing adjustments, which is still to be to be determined.

But between USD850 and USD900 a ton price received. The units operating cost achieved for the quarter was us on USD445 per dry metric ton. So obviously, the price does that cost gives us a margin in excess of USD400 a ton which is a very pleasing outcome and - reflective of where the market currently is. This then transpires into an improvement in our cash position. So when we acquired our cash position, we also acquired the letters of credit that we have in-placed for shipments that have already left, and which we can convert to cash if we chose to.

So at the end of September, we had AUD137 million of cash analyses, compared to June of AUD116 million. So we've had an improvement in our overall cash position of in excess of AUD20 million during the quarter. That improvement is largely driven by the improvement in the cash operating margin. I've referred to before so there was about an AUD48.5 million cash operating margin from a cash point of view during the quarter. And that's really reflective of the strong market pricing conditions as well as the fact that I think we've largely contained the cost that we are able to control.

We also had laid about AUD15 million of cash as investments into our business and that was largely in relation to the improvements being made to the Pilgan plant. The restarts of the Ngungaju plant as well as getting ready for operations and also on capitalized waste development to access the ore required to increase the run rate that we wish to achieve in the short-term. From a unit operating costs point of view, I mentioned that we achieved the cost of USD445 a ton and Australian dollar terms just over AUD600 a ton and that compares to our guidance which we put out in August, which was between us USD395 and USD430 a ton. So that is obviously higher, slightly higher than the guidance. But that is largely those high costs are largely driven by the underlying market conditions that we are experiencing.

So the effect of a higher selling price goes through into a higher royalty that we pay to the state government. And so that will - that sort of represents about USD12 of that cost increase. And then we're also experiencing much higher freight - ocean freight costs at the moment. So that accounts for about an additional USD18 a ton compared to what - we had assumed in our guidance, and that's largely around the timing and supply of super vessels, as well as just generally much stronger demand conditions for ocean freight. Lastly, I think I decided to quickly touch on some updated guidance that we had provided in our quarterly.

So in our guidance that we provided in August, we did mention that we would be providing an update on how much waste mining we'll be capitalizing following the completion of our ore reserves, which we did during the quarter as Dale mentioned. So having done - having completed the ore reserve, we've now been able to establish what we believe will be the deferred waste mining costs that will be capitalized to our balance sheet, and we forecast that to be in the range of between and this is in Australian dollar terms AUD40 million to AUD50 million for FY 22. And the reason that range is relatively wide is just reflective of the significant ramp up in activity that is going to be occurring at the operations during FY '22. We have chosen not to change our unit operating costs forecast on the back of the change in the deferred waste mining costs. You would obviously expect that having capitalized some of those mining costs, the unit operating costs would come down, but that reduction is actually we believe is going to be offset by higher royalty costs and higher freight costs.

So the savings that you get from capitalizing the mining costs is actually offset by the higher royalty costs from the higher pricing. And obviously the high freight costs which we expect will continue for the rest of the FY '22 period. I think that's all I wanted to cover off, so now I’ll hand over to Ken now for further commentary on the market.

Kenneth Brinsden: Yes, thanks, Brian and thank you Dale. Yes, so to talk a bit more about the market, which is obviously an area receiving some very, very close attention.

We'll see what we can as it relates to the combination of our market Intel, interaction with customers and for that matter renegotiation that's going on with customers. So really an incredible quarter to the acceleration in chemicals pricing and by that I'm principally referring to domestic pricing in China, which is the most relevant market as it relates to spodumene sales. Within that period of time, according to Platts ex-works pricing to battery grade carbonate it went from RMB87,000 in the beginning of the quarter, to end the quarter at RMB185,000. So a very, very strong uptake in chemicals pricing within the domestic market in China, and some of that has reflected been reflected in international pricing as well. One of the key drivers is as a function of price discovery with respect to Lithia units and principally by that I'm referring to our BMX platform options, which have obviously put a rocket under the cost of Lithia units and then those costs are passed downstream to lithium chemicals players, hence the very rapid escalation in chemicals pricing.

Now, we have been quite deliberate in our strategy with available offtake not currently accounted for well, sorry not accounted for in offtake having tons available within emerging spot market we saw the opportunity to create a sales environment that could be targeting the marginal buyer. And that's now being reflected in the value in spodumenes so the three options that we've had so far demonstrated, you know, what we would consider to be true price discovery for the value in Lithia units. Approximately USD1,250 a ton for 5.5% product FOB Port Hedland while leading up to the most recent auction USD2,350 5.5% basis FOB Port Hedland. Now we've been quite deliberate in that strategy because we want to understand the true value in spodumene so that we can have that reflected better in offtake arrangements with our longer standing customers. And I'm pleased to say that those conversations have both been well progressed and largely achieves outcomes that we would consider to be appropriate.

Whilst not yet complete with every customer, we certainly completed them with respect to the majority and that now translates to offtake pricing based on a spot basis for this week of between about USD1,650 and USD1,800 per dry metric tons, CIF China SC 6.0 basis that reflects a rewrite in the value of the offtake, but also accommodating the appreciation in the chemicals price. So it's two things happening here. Chemicals pricing is increasing, so naturally, that would increase the value in the spodumene. However, more importantly, we are now achieving a bigger slice of the pie in the chemical value via the value to sales in our spodumene under offtake. So that does represent a pretty material change for Pilbara Minerals as compared to the historical norm so to be clear, offtake currently pricing in the range of USD1,650 to USD1,800 per ton.

The other point I'd make in respect to spodumene price, Pilbara Minerals achieve a very, very healthy price for its spodumene in the September quarter, we believe ultra competitive and likely beyond the pricing achieved via our peers. And yes, we're very happy with that outcome. And as Brian's quite rightly pointed out, that translates to some very healthy operating cash flow with an expectation that that's going to be materially higher during the December quarter, as a function of what we've achieving, we're achieving in respect of offtake pricing, and for that matter, what we might get achieve in further spot sales should we undertake any during the December quarter. So in summary, quite an unusual period of time in the market, but I feel like Pilbara Minerals has achieved as good an outcome as you can hope for. And I would argue well beyond people's expectations as to what's going on with respect to offtake pricing.

So I'd like to think that that's going to result in you know, it's going to be reflected well, in terms of Pilbara Minerals performance and pricing in these next periods. Right, so, I think that represents the market summary. Inevitably there'll be further questions I would imagine. Bernadette, why don't I hand to you to open up, the call for questions. Thank you.

Operator: Your first question comes from Al Harvey of JPMorgan. Please go ahead.

Al Harvey: Good day, Ken and rest of you guys. I think just first up Dale, I think you mentioned that you're doing an updated plan on building Pilbara expansions. Just wondering what kind of works been done here, is it kind of just refreshing the previous Stage 2 and Stage 3 studies.

And what's the kind of expected timing, for when we could get those releases and how long across till we get FY data and is 1 million ton per ounce still the target?

Dale Henderson: Yes sure, no problem. So yes firstly 1 million tons and above is still, what we have in mind in terms of the total aggregate production achievable from the two operations. The studies that I mentioned are essentially a refresh for the phased expansion for the Pilgan plant. And we are intently focused around that first phase, which adds another approximately 100,000 tons of spodumene concentrate production. We see that really as being the next cab off the rank given that we've done improvement projects.

We built the Ngungaju plant starting that next phase would be that first phase of expansion for the Pilgan. The timing, so we're doing some more detailed engineering around that first step right now. And we're anticipating to, mature that to a conclusion probably very early next year. And about that time, the Board and management will obviously be circling the appropriateness or not to move forward with an investment decision. So that's where the focus is right now in parallel with that there are - there's another stream around the next step during the Phase 2 of the Pilgan expansion.

And that's really the final leap, taking us up to that million ton per annum plus, but that would follow later with turnaround and pursuing an incremental expansion. We think that that's a proven strategy to deploy given history in the market. Does that answer your question, Al?

Al Harvey: Yes, that's perfect thanks, Dale. If I can just do another one in, I was wondering if you guys could just clarify see things with the call option to increase your stake at the spodumene to 30%. I just want to make sure you can boost that up to that extra 12% as long as you exercise a call option for battery grade specs rates, and if that's the case, you only pay 12% of the $650 million to $750 million of CapEx for the project, is that correct? And is there anything that would lead you to wire a little bit longer and subsequently pay too early?

Kenneth Brinsden: I think your understanding is correct Al, the mechanism you described frames the decision to Pilbara Minerals.

And I think logic would dictate that that's the path you would typically follow. The only other circumstance that we were trying to protect was that if the project became difficult, or were exposed to significant cost overruns, then we wouldn't necessarily have to exercise straightaway. So that was really an insurance cause. I think the primary methodology and what you'd logically expect to happen is what you described, that we buy in at cost in the period leading up to and including the effect of the plant itself being certified.

Operator: Your next question comes from Hayden Bairstow of Macquarie.

Please go ahead.

Hayden Bairstow: Hi Ken, and just a couple questions from me. Firstly, just on the discussions around the pricing outlook and obviously, one of your offtake partners have effectively agreed a similar sort of high number with for Mt. Catlin? Just trying to understand what those discussions are about, you're looking at changing to direct links of the domestic prices for carbon and hydroxide in China or individuals or more reflecting of what you're getting on the BMX platform is that sort of the discussions are ongoing. And I presume given that Mt.

Catlin sort of been sorted it there's different discussions with different offtake partners, is that sort of how to think about it?

Kenneth Brinsden: Yes, they all differ at least a little bit, but not that much as it relates to each customer's position in offtake. The negotiation really what it reflects is a change in the relative value in spodumene contributing to the value in the chemical that's the way to think about it. So the effect of that uplift, at least in the current cycle is a double whammy because chemicals pricing is going up and therefore spodumene would have been going up anyway. But now there's the combination of achieving a larger slice of the pie. To your question about the price reference, it is mostly about China domestic production and the effect of the ex-works price as compared to international pricing.

So that really is a dominant price reference or index as it relates to the relativity of the spodumene. So that's typically where the customers gravitate to. The link to BMX will because it's not, in the eyes of the market, there's not sufficient volume being priced against that auction outcome. There's no one that's prepared to pay you know pegged - the value in the spodumene and offtake through that price. So from our point of view, it was always about just getting reasonable discovery for the value in a marginal ton.

And then having at least that part of that reflected in the value in the offtake. And I'm pleased to say that that's largely what's happened and the customers have been accommodating, because the alternative is worse for them now. The idea that there may not be supply, and that's a big issue and that leads to a reasonably pragmatic discussion about realizing the value in the spodumene. So all in all, we'd say, a reasonably fair outcome, and represents a new norm for the value in the spodumene in the market and the offtake.

Hayden Bairstow: Okay, great.

And then on that price range you're talking about, that's just for this quarter, are you sort of looking at some stuff overall volume over the rest of the financial year?

Kenneth Brinsden: No, we're not thinking about that really being a reflection of this quarter at least based on what we know today. Pricing is still under these revised terms is still provisional, with a settlement on final pricing to be determined. And that's why, there's a range there to indicate the value in the spodumene obviously, we don't know what's going to happen with respect to chemicals from here. But nonetheless, we think that's a reasonable reflection of what can be achieved, under offtake in the current quarter.

Hayden Bairstow: Okay, great.

Just the final one on the cost guidance not changed yet, but do we just assume that if you do end up with a $700, $800 price that costs guidance will have to be pushed up just on the royalty?

Kenneth Brinsden: Yes, exactly yes, yes. While there is very, very high pricing outcomes of course that's going to be reflected through the royalty streams that we pay. And yes, it can be material in light of where the price is getting to.

Operator: Your next question comes from Harsh Bardia of Citi. Please go ahead.

Harsh Bardia: Hi, Ken and team thanks for the opportunity. Just one quick one from my side the 5.5% grade, I believe for auction sale, if it makes sense, because it gives you more sort of recovery range. What it would look like with the POSCO offtake agreement, that 315,000 is there any target grade for those materials as well down the line? Thanks.

Kenneth Brinsden: Yes, good question Harsh. So you're right in your thinking about us targeting 5.5% for the purpose of the BMX auctions.

We're working on the premise that it's the Lithia units that are being valued, not necessarily the absolute concentrate grade, in which case, we can take advantage of a, lower cost higher recoveries at a lower concentrate grade. And we're pleased to see that effect playing out - as we would have expected, I guess, as we've run the BMX auctions. So in fact arguably over time, you know, we might even go lower and that might very well be justified as a function of price versus cost and recovery time will tell. We haven't made any decisions there at the moment, we've been happy with 5.5 and on the face of it that looks like a good solution for the market. We're obviously achieving some very healthy pricing outcomes.

With respect to offtake, offtake is priced against a six reference. So, we're delivering cargoes on average, sort of in, you could say in the range of for argument's sake 5.8 through to 6.1, depending on you know, the sections of ore that we're in and ore the customer that we're dealing with. There's lots of variables that sit there, but basically their price on an SC6.0 basis, and we’ll continue to do so that would be the same for the purpose of future deliveries to POSCO unless we chose to negotiate with customers about modifying the grade there. Broadly speaking, we think that there might yet be opportunity in you know, reconsidering deliveries to customers, because the SC6.0 reference is really it's a function of history. That's because that's what Greenbushes did, you know for the last 20 years, it doesn't necessarily mean it's the right answer for the industry.

So we are of a view that there is opportunities to consider lots of different things in the market that might very well create a more efficient supply chain. So anyway, as it stands today offtake referencing SC6.0 BMX referencing 5.5, but they could be subject to change, depending on the opportunity that we see in the market.

Harsh Bardia: Yes, that's very comprehensive, thanks for that. And just while we're on this grade, that midstream product I mean, it wouldn't matter like what's the starting point for that product, like a higher grade product, like how your plant is run in terms of initial output 5% or 6%? I mean, does it matter in that case, as well?

Dale Henderson: You can ask good question and the short answer is no. So that the grade doesn't matter as much for the midstream product and once you've touched on is actually what we think may prove to be one of the key benefits of the midstream strategy.

And the combination of process steps we're bringing together enables a lower grade product and fee while still achieving the upgrade for high quality lithium salts. So yes so the short answer is it's not as affected by grade and yes I'll pause there.

Operator: Your next question comes from Glyn Lawcock of Barrenjoey. Please go ahead.

Glyn Lawcock: Hi, Ken.

Just two questions firstly, just on the new price reviews or contracts you've got? I mean, how long have they set for I mean obviously, we've had a dramatic change in the market and you've managed to reset if the market changes again, for whatever reason, I mean, are these locked in or do you have periodic reviews that we can change them again, if something happens? And when you answer that as well I just note, if you say chemicals prices, call it 28,000 a ton ex-works, give or take. You know, if you look at the price you quoted for spodumene that would suggest like a 50% margin for the chemicals producer? Is that how we think about it you know, this has been set such that there's a margin for the chemical guy? And then second questions more just on the ops and FIFO the jab rule that comes in end of the year as well. Does that pose a risk to the workforce as well with to jab rule and do you have a sense of where your workforce is? Because I mean, it's unlikely we'll get to 100% you know, everyone jab you know, some people will just not want it. So is that premium risk into the business in the New Year? Thanks.

Kenneth Brinsden: Yes, good morning Glyn, welcome back mate.

With respect to price review yes it works both ways for the same reason we were able to open up the price reviews, customers in theory can do the same thing. What we've sought to achieve, is a way to redress a balance that we would argue wasn't necessarily there historically, when there was very, very few buyers of chemicals in China. And it's all to do with, I think you've quite rightly said that the share of the available margin. Now logic, the logic in pegging spodumene value to the value in the lithium chemicals was that you in effect, you build up the relative cost base the cost of mining on a lithium carbon equivalent basis, the cost of chemical conversion. Then determine a rural cost base for a chemical ton, inclusive of the material costs.

And then compare that to the price outcome and then subdivide the margin to distributed back to the respective parties. In the example that we've described through recent negotiations over the last three or four months, we've sought to ensure that the value in the spodumene attracts more of the available margin, but without it going to the point where it has the effect of how to save it. Not damaging the market, but otherwise creating another imbalance that extracts either too much value for the spodumene level or two little value for the spodumene level. So it's a delicate sort of balancing act, but one that we hope becomes a bit more normal in the market as compared to the historical norm. Yes, there's so few suppliers that can create margin, merchant tons of spodumene in the market today that we've been able to force the hand of the chemical conversion industry to attract more margin to the minor.

We'd like to think that that represents, you know, redressing an imbalance historically.

Glyn Lawcock: So Ken maybe, before you touch my second question then, when you look at it you - I understand the index, if you'd like to see an index, you had to do the auction, but it's not liquid. But those big prices, do you feel those big prices for the recent two auctions has help push the chemical price up? Perhaps a little bit too high to 28,000 because you know that, if you look at where you think spodumene is at 1,700 call it a 50% margin is what you're giving away to the converter at 28. So is it, what I don't understand, what do you think is leading? Do you think you've pushed chemical price up through those auctions or do you think the chemical price that we're seeing in China is actually real?

Kenneth Brinsden: It's a natural position for the chemical conversion industry in China to want to take the cost and pass it on. I guess there's a question mark, as to how long industry downstream is prepared to accept that cost being passed on, but that's not the answer.

I don't think that's really the answer to the question that you're asking. Because at some point in time, I feel that at least in the current cycle, where there is insufficient raw material supply, the margin as the chemical conversion industry will become constrained. Now, we would like to think that as a raw material supplier, there is not many other places I can go in which case, our margin will still be okay. We'll still be healthy.

Glyn Lawcock: Yes, okay second question, ops versus jabs? Well, the situation here is that it's absolute now, there's a mandate.

So no one can entertain, fly-in and fly-out without having vaccinated personnel. That's our obligation as much as it's the individual's obligation. So in effect, if they're not jabs, they're not going to be on a plane. Here in WA now, our current take on where the workforce is at, is that we'll see that impacts being very, very minor i.e. there is not that many people available choose not to be vaccinated.

The bigger issue is, the borders being open for the industry such that more personnel are available in total, for the workforce. Dale in terms of controls, is rapid engine testing, let's opt him.

Dale Henderson: Yes.

Kenneth Brinsden: I'll pass when finally hits in.

Dale Henderson: Yes, now - as to the business risk aspect, but we're feeling - yes feel like comfortable at this stage.

As Ken said, it's the mandate everyone has to move in this direction. And we're deploying all of the controls to support that transition, and - an engage deeply with the full workforce and operation to sort of support them in the process. And through that we're obviously helping people get comfortable with the need to get these vaccine jabs. And although it's anecdotals, we've had sort of good progress in that regard. So all said and done, but we're not too concerned as we step into that period of required vaccine to the operation.

Glyn Lawcock: Okay, sorry Ken to harp on it, maybe just going back to the first question, just so I'm clear. I should be watching the chemical price ex-works. There's a formulaic approach to deriving your spodumene outcome, that gives me the bulk of the volume and then you'll be doing some spot sales on the BMX platform is that how I should think about it?

Kenneth Brinsden: Pretty much 30% to 40% of our sales by the middle of next year will be under either different arrangements or on spot via the BMX platform. As it stands today, it's not that big a number because we're still ramping up the equivalent capacity for Ngungaju which is in virtual terms where the extra capacity comes from that's not already here today.

Glyn Lawcock: But the tons that are under this revised contract, I should be watching the chemical price and just believing there's a formulaic approach to get back to your spodumene price from that?

Kenneth Brinsden: Yes mate, yes we've been pretty clear about that the bit has changed is that the proportion of the value according to our demand is higher yes.

Operator: Your next question is a follow-up by Al Harvey. Please go ahead.

Al Harvey: Yes, thanks guys. Just wanted to get your view on how you're seeing the relative dynamic between carbonate and hydroxide and battery chemistry, just whether or not the POSCO downstream facility will have any ability to switch to carbonate if LFP battery keep gaining more share over NCM batteries?

Kenneth Brinsden: Yes Al, good question, and the answer is yes, it's a relatively simple carbonation process that really twists the hydroxide back to carbonate. And in fact, you'll find virtually all new plants being built for chemical conversion capacity, our direct hydroxide roots.

For that reason, so it's a cheaper path to hydroxide and a very low cost twist at the end of the facility to get it into a, healthy battery grade carbonate stage. So that cost is measured in a couple of USD100 a ton as compared to the conversion the other way from carbonate to hydroxide, which depending on the technology and the grade is, it's probably a couple of USD1,000 a ton. So yes, very simple twist at the end of a current generation, chemical conversion plant. As to the battery chemistry debate, honestly for most foreseeable chemical price outcomes, you can be ambivalent about whether you've sourced spodumene or whether you've sourced for the purpose of carbonate supply or hydroxide supply. It's not really relevant until you start to get a very low chemical price that penetrates the respective margins of chemical conversion capacity and mining capacity as compared to BMX.

So we don't really feel like we have to take a view about the success of any one of those battery technology groups LFP or high nickel battery chemistries.

Al Harvey: Thanks, Ken. Just one final one, any update on the Calix midstream R&D work?

Kenneth Brinsden: Yes, the engineering is well advanced there, and we're not too far away from reporting the first round of outcomes. Keep your ear to the ground there Al.

Operator: Thank you.

There are no further phone questions at this time. I'll now hand back for webcast questions.

Kenneth Brinsden: Thank you, Bernadette. Yes the line is open for the purpose of the webcast for those to make an inquiry. So we have a couple of questions and we'll get Nick to relay them.

Thank you.

Nicholas Read: Thanks, Ken. Good afternoon, everyone. We have three or four webcast questions. We have touched on a few of these issues.

So we'll be able to move through these very quickly. Firstly, Trent Barnett from Euroz Hartleys, asks, should we be assuming spodumene prices of 1,650 to 1,800 for the March quarter if downstream prices don't move from current levels?

Kenneth Brinsden: Yes, very straightforward.

Nicholas Read: Okay, great. We had a question about the Calix situation which I think you've covered off Al. asks, is the BMX platform just for Pilbara or is there scope to auction product from other companies?

Kenneth Brinsden: Yes, that's a worthy discussion topic for which, at least at this point in time, it's unresolved.

We had always thought that a platform that ultimately penetrates deeper volumes in the market that is more spodumene or more lithium price points are established via a platform creates greater price transparency. So for example today, one of the critiques of the BMX platform might be that it's finally the very margins of the market, and it's just one price and it doesn't represent any volume. Well, we would argue, perhaps something slightly different as a function of what we see in the bidding itself, and the number of bidders and the number of bidders that are prepared to go deep into the auction. So those things we think are important tools that are available to Pilbara in understanding the market as an auction progresses. And by the way, we would say generally say that's been very healthy, and has been healthy competition to discover the price.

So from our point of view, we'd say that's a great big chicken in the box. For others to enter the platform, I think the answer is maybe, but I'm resolved as at this point in time.

Nicholas Read: Thanks, Ken. And a couple of questions from David and one is the impact of current spot prices on your pricing outlook, which I think you've really covered. The second question is what formula is proposed for sales to the POSCO JV at market for that committed offtake?

Kenneth Brinsden: While the formulas continues in the relationship with POSCO are not that dissimilar to the formulas that otherwise exist with our offtake - existing offtake customers.

So it's a connection between the value in the chemical as compared to the value in the spodumene. The logic there is similar. And it's intended to discover a market price. So that it represents the value in a spodumene ton for a longer dated offtake relationship. Yes, I don't think there's any reason to be concerned about it not being anything other than a market price.

There's no kind of reference to discounts. There's no reference to premiums. It's just the market price and that's all at arm's length to the joint venture.

Nicholas Read: Thanks, Ken. Question just in from Mark who says, you said you progressed well over negotiating offtakers now that not all could be renegotiated, what percentage do you need to renegotiate?

Kenneth Brinsden: I'll look the majority are agreed and executed in terms of variations under the offtake arrangements.

Nicholas Read: Okay, I think that just about covers it. I'll hand back to you.

Kenneth Brinsden: Okay, thank you, Nick. Thank you, Bernadette. I think we're all done here.

Thanks, everyone for your participation today. Whether it was on the Chorus line or the webcast, much appreciated. David and the team stand ready if there's any following inquiry to digesting the quarterly report. Thanks everyone for your participation today, and we look forward to speaking again soon. Thank you.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.