Operator: Thank you for standing by and welcome to the Pilbara Minerals March 2022 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. [Operator Instructions] I would now like to hand the conference over to Mr. Ken Brinsden, Managing Director and CEO.

Please go ahead.

Ken Brinsden: Thank you, Guilen, and thanks to everyone joining on the Chorus line and a special thank you to shareholders that might have been participating on the web host. Welcome to everybody. I’m joined in the Pilbara Minerals’ Boardroom by; Dale Henderson, our Chief Operating Officer; Brian Lynn, our Chief Financial Officer; David Hann, Investor Relations Specialist; and Alex Eastwood, our Chief Commercial Officer. And we’re all very happy to be with you this morning and give you a further update on site activities and events arising and post the March quarter.

Thanks for joining. Well, I guess the backdrop for the March quarter is the same or very similar to the December quarter. Accelerating price, strong demand. And I’m sure that if we could produce more spodumene, we would easily be selling more spodumene for a very healthy price. And the acceleration in price, in essence continued from the December quarter into the March quarter, and now going through to the June quarter.

And the most recent piece of evidence to indicate just how strong the demand conditions are, is the fact that Pilbara Minerals held another BMX sales trading platform auction closed the business yesterday and settled on another record price as it relates to spodumene in the market. The equivalent price for a 6% spodumene tonne landed in China, was approximately USD6,250 a tonne. So it represents another high watermark as it relates to pricing in the market and further clear evidence as to how short the market is. And I’m pleased to say that Pilbara Minerals is very, very well placed to participate in this strong price environment as a function of well obviously what we’re achieving by the BMX sales platform, but also more generally as a result of the growth that’s going on in production and especially our expectation is during the June quarter. So yeah the conditions are very, very strong.

As it relates to the work underway, Dale is going to give you a much more detailed rundown with respect to mining and processing activity, the work that’s been underway on the Ngungaju plant. But again, more broadly, there are some challenges and I’m sure they’re no different to the experience of just about every mining company. Well not even just in Western Australia, but Australia-wide. The effects of COVID are being felt, and that’s our experience. Previously, it was affecting the border closer constraining the pool of available labor.

I would like to think that some of that has been relieved as a function of the borders being opened. However, now we’re experiencing the direct impact of COVID transmission in the community that results in the combination of either you know illness and inability to present the work and or the effect of isolation. So that has been another source of frustration. I think that broadly you would say that the net effect of what we’d experienced with respect to COVID, and the delays in some of those people’s issues means that in reality, we are about two to three months behind in production where we would like to be nonetheless, still competent in the capacity of the various plants, and the ramp up that occurs between now and the end of September. So as a result, we continue to target the 580,000 spodumene concentrate run rate, and we expect that to arise during the September quarter.

It’s also fair to say that the June quarter is an important step along that path, in which case we will see higher production and sales during the June quarter as compared to the March quarter. As a result, I think it’s also fair to say the costs are a bit higher than we would like and or expect. Basically, the big picture story there is that we are carrying costs as it relates to the additional tonnes, but as yet we haven’t delivered the additional tonnes albeit that’s coming. So that results in a slightly higher costs – cost result for the March quarter. Elsewhere in the business, post the quarter end, we’ve completed the formation of the POSCO downstream joint venture and POSCO themselves are now taking into the delivery aspects around the large scale hydroxide plant that’s been built in Gwanyang in South Korea, we’re really pleased to be working with POSCO in that endeavor.

It’s an important part of the future growth inside Pilbara Minerals, our ability to sell spodumene into South Korea, and also to pick up that economic participation in the downstream facilities alongside a partner like POSCO. It’s a fantastic outcome for the company, and a very important part of our future growth. In a similar vein, we continue to progress the Mid-Stream Project and the work with Calix on the proposed joint venture for the Mid-Stream Project. And we’re also really pleased with results there. The Mid-Stream Project is also going to be an important part of Pilbara Minerals’ future as we value-add product at Pilgangoora and change the current spodumene supply chain at least in part with the expectation that we’re going to be able to access markets beyond China with that mid-stream products, but in particular, targeting the European market in the first instance and likely North America over time.

They’re all important initiatives that relate to the mid-term and longer-term growth for Pilbara Minerals and in my view represent the next leg – leg up in growth for the company by valuating product and creating different jurisdictions for participating with those value-added products. So, they’re all important steps for the future growth of the company. That’s it for the introductory comments, I’ll come back and talk about the market in a bit more detail and the BMX auction. But in the intervening period, I’m going to hand to Dale who will talk about of some projects and then after Dale, Brian will backfill a bit more of the cost detail and financing detail. So, over to you, Dale.

Thank you.

Dale Henderson: Thanks, Ken and good morning, everyone. So I’ll stick to as Ken mentioned, based on ops and projects. And lastly touch on a little bit the exploration. So starting with ops, yeah, the general comments as Ken – Ken’s kind of covered is, absolutely it’s very [called off] [ph] where we’ve had COVID headwinds.

And that’s played through to an operational impact really in the form of some pressures around our personnel resource levels. And generally that’s been at different points in time being felt in every corner of the operation. Yeah I appreciate we’re not alone with this challenge and we were anticipating some effects and we certainly felt that during the March quarter, and as I say, of course that’s played through to an operational impact. Well yes, we’ve met guidance, but it’s not been without some challenges there. So, just want to acknowledge the huge effort across our team and our contracting upon those who had to contend with what’s been a very dynamic environment we’re reacting to, unfortunately, challenges in the space, and by way of a little anecdote where we had a charter plane for shutdown which got canceled at the last minute due to pilots being taken out for the camp of COVID, that sort of knocked out 70-plus people at the last minute for a shutdown.

So that in itself is not really a material issue, but in aggregate, these types of sort of incidents have obviously some through to an operational impact. So anyways looking forward to moving through this period. And it’s certainly well underway within the WA state now. So, looking forward to getting on the other side of it as everyone else’s. So moving from those sort of general comments around the macro picture and stepping into the vitals signs of the operation.

From a safety perspective, a step forward and safety with a 20% drop and TRIR were down to 3.5. But we did have one hand injuries for the quarter. So, yeah not without yeah one incident, so disappointing in that, but at least the trend is hitting down. From a production standpoint, 81,000 tonnes for the quarter, meeting guidance, not shooting the lights out, but as I say, meeting guidance against those COVID headwinds. From a cost perspective, are in a unit cost basis principally due to the lower production volumes.

We had some extended shutdowns and runtime challenges then, in conjunction with some sub-optimal ore feed which was a function of needing to change ore sources daily frequently which plays through to a recovery impact that Brian will offer a few more details around the cost performance when I hand over to him shortly. So those are the vital signs of the operation, offering a little bit more detail around the activities within the operations for the quarter. Mining was back – continued to step up and outright mine movement. So a 30% increase from last quarter to 6.1 million wet metric tonnes. Despite that big step up, we wanted to be doing a bit higher than that.

So, we were a little bit under. But again, really a function of the mining challenges across that part of the business. In the mining space, March quarter, we ramped up our owner-operated fleets in conjunction with MACA, our mining contractor, the owner-operated fleet there is principally focused around serving the Ngungaju operation with South pit. Then meanwhile we’ve kept MACA focused on the Central pit. So those two operations combined have played through to that big step up.

So, a big increase in manpower and ramp-up across both of those teams and all going well. So, a shout out to it’s a [indiscernible] and Murchison Drill and Blast and Goldfields Services who have been working with us on the owner-operated fleet which really hit the ground running and it’s been a safe and very successful start today. So, thank you to you guys. So within the mining category, yeah that focus remains we’re working very closely with those contracting partners. We want to continue to increase all these high rates of volume movement as we move forward.

And, of course, it’s all about setting us up for the expansion cases, which I’ll update on – in a second. So moving from mining and then stepping into the process plant area, starting with Pilgan. Recoveries were broadly in line with what we were targeting, 61% to 64%. Of course, a lot lower than historically what we’ve had in the past. But we knew this going into that as a function sitting around the chopping and changing of ore feed that we were anticipating for this – for that particular quarter.

That plus the outages, plus a period of all training new operators all played through a more modest recovery target for that quarter. But as we look forward, we’ll definitely be stepping that up for all the June quarter as we move into what we think should be a more stable period until the Aussie operator stability and all going well less impacts from COVID, touchwood. So that’s on the Pilgan plant herein, now to Ngungaju. A reminder about the Ngungaju operation. This was always about a stage during commencement of that operation.

So, a stage one bringing the coarse circuit online and then a stage two around bringing the float circuit online, and just remind everyone, the investment proposition to Ngungaju overall what was always about giving that operation a significant birthday in terms of investment in that plant, bring it – bringing it back up to spec plus also deploying a bunch of operational improvements with the aim of achieving a most higher operating performance from that asset in terms of runtime and recovery. So we were at is, coarse circuit we keep that back into life then October last year, pleased to report during the March quarter, that part of the circuits been running well, that’s really hitting its straps now. And that equals basically approximately 40% of the expected run rate from that operation. Meanwhile, during the March quarter, there was – for the flotation circuit being the other part of the circuit, the team was busy completing the construction works, which were not insignificant so those in the form of a new floatation addition, so new tanks, pumps a complete birthday through all the flotation circuits, new rotors and stators, rubber lighting, you name it, quite a significant piece of works executed now construction completed in the March quarter and during the March quarter, we started the no load commissioning, which is the commissioning of the circuit without ore feed. So we’re at today in the Montreal, we are deeply in the [indiscernible] introduced in that ore and from this point forward, it will be about ramping-up that float circuit with a view of the exiting the quarter at a much more healthy run rate across both the combined cost of float circuit and as Ken mentioned, it’s during that September quarter that we want to be getting up to nameplate and releasing our straps across the combined coarse and float circuit.

So, a bit of detail there at Ngungaju, but just wanted to remind everyone about the journey there and how we’re traveling. And, yeah, of course, we’re looking forward to those extra tonnes coming at the back and getting those onto the exchange all going well. So that completes this sort of the kind of category there. Now, stepping into the project line. Really, really that the area for the project team and getting more busy as we look to get her up and capitalize on this incredible pricing environment.

So on the project space, starting with the improvement projects, to remind everyone, that was a debottlenecking package for the Pilgan plant for another 10 to 15 uplift, that’s all done and dusted, ramped-up and built into the plant and that’s all okay, so ticking the box there. The next piece of the incremental expansion relates to what we call the P680 Project. That’s another 100,000 tonne increase to bring us up to 680,000 tonnes aggregate production run rate, we’re at with that as the team busy finalizing the docs to support the FID decision which we’re looking to get that squared up this quarter. So, looking forward to announcing that in the coming weeks all going well, obviously subject to Board approval. Beyond the P680, of course, is the P1000.

So, a separate stream of activity getting busy, well we are relatively busy on that working towards an FID for the back of the calendar year, December quarter. And that will, of course, as the name suggests, P1000, bring us up to 1,000 tonnes in aggregate out the gate from the Pilgangoora operation. Other projects and the projects category, the Solar farm that we will, at some time back to contract power that will hit the ground during the quarter and they’re underway to get on to its construction for that, so good to have those guys out there and underway on that package. Life Cycle Assessment was completed, another key package of work as part of their obligations that Clean Energy Finance Corporation. So that’s all gone well, and thank you to [indiscernible] who’s a specialist in this area who’s helped us out with that package of work.

We’re looking forward to releasing some of that information as part of the annual report coming out. Lastly in the project’s category, the Mid-Stream Project that Ken touched on, Scoping Study was finalized. We like what we see and it’ll support moving forward. So, we’re looking forward to progressing that with Calix and yeah we’re busy working with them. And as Ken mentioned, we see this as a key proposition for the future of Pilbara Minerals as we looked to value-add and creating more value for our shareholders moving further downstream.

So that completes the sort of projects’ category. And lastly, to finish a couple of quick ones on an exploration category. Johnny Holmes, our Exploration Manager has been able to drill rig again, so it’s a sterilization drilling and he’s gone and found more ore. It’s a another grade intercepts which long story short, just – there’s just more evidence which underscores just this incredible system now that we have at Pilgangoora, the more we drill, the more we find, now we have the good problem of clicking through GL, we develop all of those. So, if we give them half a chance, they’ll be doing more holes surely for John.

So, well done, John, thank you for the new ore. And, lastly, Mt. York, a couple of gold intercepts. Of course, we’re not a gold company. But we like to find value and create value for our shareholders.

So we’re looking forward to seeing how we progress that piece. So that’s a ramp across the ops, projects and exploration, and at this point, I’ll hand over to Brian, our CFO.

Brian Lynn: Right, Thanks. Thanks, Dale and good morning, everyone. So I’m just going to just get some key highlights from my financial perspectives on the quarterly results.

So, in summary I’d say you know we’re obviously operating in a very positive price environment and that led to a strong operating margin being generated. That strong operating margin then flow through into an improved cash position at the end of the quarter. But as I think Dale mentioned, we have been constrained operationally, there’s clearly been some issues around manpower shortages, and that has had an impact on our production levels, and that flows through to ultimately having an impact on our unit costs. So the unit costs for the quarter were up compared to both guidance and compared to the previous quarter. With respect to price and operating margin, you know the price, there was a significant increase.

So we generated – we managed to achieve an average price of USD2,650 on an SC 6 basis for the quarter, and that compared to a price of 1 – USD1,750 that we achieved for the December quarter. So a significant increase during the quarter. That’s ultimately meant that we generated an operating margin for the tonnes from the Pilgan plant of USD1,800 a tonne so that’s you know a fairly significant margin on the 50,000 tonnes that we sold from the Pilgan plant. [Technical difficulty] strong operating margin led to a strong cash margin being generated. So the cash generation from the Pilgan operation was just shot of in AUD116 million for the quarter and interestingly that compares to about a similar number for the December quarter, but we actually sold about 25,000 tonnes or less this quarter compared to the previous quarter.

So, clearly that higher price had a significant impact on the margin our operation has generated. Cash position at the end of the quarter, including the irrevocable letters of credit that we count towards cash was USD285 million. So that’s about a USD40 million increase from that turned in USD45 million at the end of December. Just running through the major movements in the cash balance. As I mentioned, we had about USD150 million of margins being generated from the Pilgan operation on lower terms.

And we also generated even though Ngungaju was still in the commissioning and ramp-up phase, it was able to generate about an operating margin of about USD7 million. So clearly, the high prices allowing that operation even during ramp-up the commission to cover its costs and make additional money as well. The results of the positive pricing environment has meant that we had to repay some debt back, so there is a cash sweep mechanism within the Syndicated Facility agreement that we have. And the result of that is, that we paid back USD25 million of debt during the quarter. We spent about USD38 million on capital.

So that’s a combination of the work we did on improving the Pilgan plant, the restart of the Ngungaju operation as well as the waste movements that’s required to open up the waste ore bodies to allow us to provide the correct blend of ore to the plants. Interest costs about USD3 million, corporate and administration costs about USD4 million. It’s probably worth also just noting that we noted in the quarter that we just missed out on our shipments of about 20,000 tonnes, that was meant to have gone out in March and it was planned to go out of March, but due to poor constraints that actually ultimately sailed on the 7th of April. So that ship had actually, if we’d managed to get that out by the end of March, that would have actually added about another 67 – in Australian dollar terms about AUD57 million to both the cash balance as well as the operating margin. So the operating margin, it would have been at about USD180 million for the quarter, if that ship had sailed by 31 March.

Clearly, we will get the benefit of that when we talk about the June quarter. Just turning to the unit operating costs for the quarter. So it’s been – you know, the challenges that we were experiencing at the operations in December continued certainly for the first half of the March quarter. And in fact, they were probably compounded just because of the fact that we had a sort of a major impact as a result of these manpower shortages. So those yeah as Dale mentioned, we had some significant challenges around COVID transmissions, as well as that the mining industry in WAs are experiencing some fairly tight labor markets as well.

So. all-in-all, the managed shortages we had really had a significant impact on operations. Now, the result of that is that, if you don’t have all the right people in place, you have reduced ore tonnes, you have less optimal ore being fed into the plant, your plant shutdowns are extended and sometimes they’re actually end up being unplanned, because you can’t get into the battle rhythm of making sure the maintenance programs working properly. And you end up with lower lithia recovery. To sum of all that is that the result is that you end up putting in the same number of ores feed into the plant, for the same cost that you get, you get less Lithia coming out at the other end.

And that ultimately leads to a higher unit cost. So the unit cost for the – and this is for the Pilgan operation in Australian dollar terms, FOB before royalties was AUD632 a tonne. So that’s about AUD55 higher than the December quarter of AUD577 a tonne. And also head of our guidance, which was around about AUD490 a tonne. The increase from the December quarter you know that is largely just driven by the fact that we just didn’t generate the same number of spodumene concentrate tonnes so we’re probably I think about 12% lower in terms of concentrate terms.

And interestingly, the unit cost went up by similar numbers. So, that’s all relative to the concentrate tonnes that we ultimately generated. A couple of other cost increases which came through during the quarter. Fuel obviously, I think everyone’s aware that fuel has obviously been significantly higher than it’s – than it was in the back half of last year. So fuel probably has added another AUD16 – Australian dollars per tonne.

Tantalum also we didn’t quite get as many tantalum byproduct credits this quarter largely as a result of mining more ore out of the South pit, which doesn’t have as much tantalum in it. So that would count for about USD7 per tonne. And we also introduced a bonus during the quarter this bonus was introduced to try and help us attract and retain more people. So I think it was actually you know a reaction if you would like to the labor market that we find ourselves in. And that’s – that bonus which I think is a good idea and has actually helped stabilize the workforce towards the back end of the March quarter, added about USD7 a tonne to the cost.

If we add on royalties and freight in Australian dollar terms, we ended up with about AUD949 a tonne, which compares to AUD805 a tonne for the December quarter. Main increase is being about AUD12 – Australian dollars as a result of price increases. So freight costs during the quarter averaged about USD70 a tonne and the prior quarter was about I think USD60 a tonne so a trademark is still very, very tight and those costs have continued to increase. And then clearly our royalty costs which is just a function of the price that we sold the product for has gone up in line with the highest selling price that we received. So, clearly costs were disappointing for the March quarter.

But we are confident that production levels will improve during the June quarter. We feel like we have made some inroads into improving our workforce numbers and making sure that we got a consistent workforce as well. And this should lead to us providing better quality ores to the plants, having a better maintenance regime and this in turn should result in improved production levels, therefore, more spodumene concentrate, and therefore a better unit cost outcome compared to the last quarter. So listen that’s for the June quarter. And so as a result we now – we’ve guided to unit cost for the June quarter ended these excluding royalties in the range of AUD490 to AUD530 a tonne.

One final matter of note, is just a point around the cash sweep mechanism. So I mentioned that during the quarter we paid back in Australian dollar terms about AUD25 million of debt as a result of this cash sweep mechanism. Now, we’ve been in discussions with our lenders during the quarter, became evident to everyone that is, in this pricing environment, if we continue to allow that cash sweep mechanism to work the way it’s designed, the debt would probably be repaid by about August of this year. So that clearly is not an outcome, the lenders wanted to know an outcome that we as a company wanted. So we have worked with our lenders, and they have just in the last day actually confirmed that they will agree to a waiver of that cash sweep mechanism for the remainder of this calendar year.

I think that’s very important for us, obviously allows us then to direct the cash flow being generated, both to our operations, but also to – will be also directed to any of the expansion programs that we referred to as well. So I think that’s very important for us and we’re very pleased how our lenders are with us to achieve that result. So I think that’s everything I wanted to go through. So I might hand back to Ken.

Ken Brinsden: Okay.

Thanks, Brian. Thanks, Dale. I’m going to touch on the nature of the market a little bit more color around the BMX platform and a quick reference to the structure in the market and how conditions today you know are clearly different to historical norms. The BMX platform I’ve alluded to the fact that we finished another option yesterday and achieved another record price. The BMX platform has turned out to be I think quite an important innovation for the industry and Pilbara Minerals is genuinely leading the charge in this regard, mainly because we’re very pleased with those levels of participation in the platform itself.

We’ve had now about 50 inquiries with respect to participation. We’ve screened over 30 participants for access to the platform. And each time we run an auction, we’re receiving bids from many, many counterparties and the bidding itself is aggressive. The other point I’d make is that, you know quite often were asked, okay, but who is actually bidding you know for example, is it traders? Well I can tell you that almost universally participation and active bidding is represented by end users. So again, it clearly shows that there is a key issue in the market in the sense that there is not enough lithium raw material supply, because it’s the end users that are bidding up the price, not traders.

So I think that’s an important distinction to draw. And, in fact you know demonstrates how successful in fact the BMX platform is and hopefully can be over time as we continue to grow production from the Pilgangoora and start to place more product on the platform. The other point I’d make is just about absolute price received. Pilbara Minerals is a leader in respect of price received against spodumene concentrate and its sales and has been for quite some time. Part of that is motivated by tools like the BMX platform, but the other part of it is the combination of contractual arrangements around offtake and the relationships with our customers.

The net effect of all that is that Pilbara Minerals clearly outperforms its peers in respect of price received quarter-on-quarter. And yeah I’m really pleased with the work that the team has done to get us into that position. And honestly, I think it augurs well for the future. Well, one of the conditions today, we haven’t been definitive about our expectations around price received during the June quarter. But broadly speaking, there is going to be another material step up in price received.

We’ve alluded to the fact that the SC 6 price referenced to the March quarter was USD2,650 odd dollars a tonne. That is easily going to be USD4,000 a tonne plus in the June quarter, because of the effect of the chemicals’ price movement quarter-on-quarter. Now, as to what we achieved with the BMX platform while we’ve also been clear about that obviously it’s materially higher. So that’s another important distinction to draw. When people reference pricing, it’s now also important I think to be clear about what’s being referenced, is it a contractual price for longer dated offtake arrangements? Or is it something that’s representative more of spot market conditions that is an important distinction to draw, because the two prices now are reasonably materially different.

The last point to make in this area is about the structure of the market. And again, I think this is potentially something that’s been missed as people think about the future of the industry. Historical norms are being broken down and the net effect of what’s happening is, and I think clearly demonstrated by our BMX sales, is that, the miners are going to win more of the margin into the future, because it’s likely that there will continue to be lithium raw material supply shortages. In effect, margin that might have been available downstream is going to be passed upstream. So that’s point one that I would make about price.

Now, what I think that means is that you know I don’t know what – I don’t have a crystal ball, I don’t know what the price is going to be, but I can assure you is going to be materially higher than the historical norms. The second point I’d make is about the structure of the cost base in the market. And again, this is not – that’s not well understood. When you think about how much new lithium raw material supply has to come to market, it is going to build out the right-hand side of the cost curve. I have no doubt about that.

The combination of novel lithium sources and projects that are either in lesser grade or in more difficult jurisdictions subject to transport limitations, all those things mean, that the cost curve is going to be built out on the right-hand side. And what that means is, you should not rely on historical norms when you think about future price. So out of all that, you know in the end, I think Pilbara Minerals is incredibly well placed, because we’ve got a flexibility with respect to our sales platforms and or participating in the market. We’ve got a project that’s very, very large in scale and in the right jurisdiction, and the right proximity to keep ores. So out of all those things, Pilbara Minerals is for a lot of you analysts in the room, Pilgangoora is the anti-container of the lithium industry.

How about that? I think that’s enough and I’m sure there’s going to be some fantastic questions. So, in summary, it is a challenging quarter, the March quarter I think represents another difficult kind of period for the companies, we bring on the two facilities, continue to ramp up capacity, and especially in light of the impacts of COVID-19 and the more recent community transmission. That’s been difficult. Again, you know that’s the irony and all that is that our experience is no different to just about everybody else’s, and perversely, it probably supports price. So I think you know out of all that, we can simply say we’re headed in the right direction.

We’re a little bit behind where we would like to be, but nonetheless still able to participate fully in the market because of the key pricing outcomes that we’re achieving. Right. Guilen, I kick it back to you and we’ll take some questions from the Chorus line. And I encourage those on the webcast to submit their questions and we’ll get to them shortly. Thank you, Guilen.

Operator: Certainly. Thank you. [Operator Instructions] Your first question comes from Hayden Bairstow with Macquarie. Please go ahead.

Hayden Bairstow: Good morning, Ken and Dale.

Just a couple for me. Just firstly on the longer-term, Ken, just interested to understand you know how quickly you think you could accelerate I mean sort of talk about the next 100,000 tonnes of spodumene. But what is the scope to you know target that ultimate sort of 1 million tonnes a year, what everybody else with ultimate potential well here is at least of 2 again. Given where the market is now, the speed of EVs and everything, can you really accelerate that base expansion plan?

Ken Brinsden: Yeah it’s not as easy as it might sound. But nonetheless, we’re working out that as hard and fast as we can.

So I’ll get Dale to jump on and just explain a little bit more detail about how he sees those projects unfolding.

Dale Henderson: Yeah. Thanks, Hayden. Yeah, as it relates to growing the production base. Absolutely what we’re trying to do is rapidly as we can as to how long, this is the very question we will be grappling with the team, because what we’re observing is, there’s pressure around long leads and supply chain challenges, everything’s heading to the right.

So historically and it relates to that 100,000 tonnes where we’ve had a target of say, nine months from FID. However, depending how we go with finalization of long lead-times, that might be more like 12 months. We’ll see how we go, but, of course, we’ll be doing everything we can to bring that to the left. So that as it relates to that P680 Project. The P1000, again, is in the category of evaluating long leads to see what we can do.

And yeah, as you can probably appreciate, the top – couple of same pressures. So, we’re looking at anywhere around sort of the 18-month mark from FID. But I’d like to say that that’s going to be something to the left of that. But at this point, yeah I’m not able to confirm that. Thanks, Ken.

Hayden Bairstow: And then just on the overall product. I mean, can you give us an idea of just what the average grade is at the moment? Just want to compare that to where recoveries are? And then how much work have you done on with customers on dropping the average grade to improve recovery? So over time, just given you know are we seeing that from some of the other producers out there who materially dropping grades really on product quality?

Ken Brinsden: Yeah, that’s the current question, Hayden. Yeah so we’ve alluded to that in the quarterly. Basically up to this time, we’ve continued to target the SC 6 products. That’s been – and what and the net effect of that is, that you typically shipping a product between about let’s say, 5.7% and 6.1% or something like that, you wouldn’t be in that range.

However, in the last three to four months, we’ve continued to test with customers the ability to ship at a lower grade. And in particular, targeting something that’s more akin to an SC 5.5 product, you can see that as it relates to our BMX sales, we’re interested in those has targeted basically SC 5.5, as compared to SC 6. And our customers on the face of it are demonstrating some flexibility, because you know as you’ve alluded to, they really want the lithia units and if it translates to more lithia units, they are prepared to accept a lower grade. What – so what – in summary, what does that mean? I think a highly likely trend as it relates to Pilbara Minerals, but arguably to the industry more broadly is that the trend is from SC 6 to SC 5.5. And we might even yet look at special cases where it’s SC 5 and the logic in doing that, is that, you know still price competitive.

But ultimately it should deliver a step up insight of those recovery and more lithia units to customers.

Hayden Bairstow: Okay. And then on recovery rate? Is that still if you went to those grades is 70 to 75 still the range or could it be better than that?

Ken Brinsden: No, it should be better than that, Hayden. Yeah.

Hayden Bairstow: Yeah.

Ken Brinsden: Yeah.

Hayden Bairstow: I’ll leave at this. Thanks, guys.

Operator: Thanks. [Operator Instructions] Our next question is from Alexander [indiscernible] from Citi please go ahead.

Unidentified Participant: Good morning, Ken and team. Two questions. Related to a news that EV manufacturers in China there to shut down due to COVID restrictions, are you seeing anything to impact on states for crossing? And for the Ngungaju plant restart and ramp-up, are you comfortable with the long rates at the end of this [technical difficulty]?

Ken Brinsden: Yes. Alex, thoughtful questions. With respect to China and the impact of car plants being shut down, we have not seen any impact in demand.

In fact, demand has been consistent now with respect to our ability to sell for the best part of 12 months and we haven’t seen any change. That has been a little bit of softness in pricing. But in part, that doesn’t surprise me, because the market had obviously run very, very hard and fast in the period prior, the fact that it’s taking and breather, it really is no surprise. What happens from here? Well, there is some uncertainty. That’s why it’s a good question, Alex you know we don’t know how the COVID situation might yet play out in China.

But my sense is that the market is so short in respect of you know carbon and [technical difficulty] hydroxide, especially domestically in China, to indicate that they will take all the product that they can and in which case you know we should not see any particular impact as it relates to demand. Should be taken on? Absolutely. Do expect it to impact demand in the short and medium-term, not really, because the market is critically short. On the question of Ngungaju, well really at Ngungaju is you know the outstanding item now is the ramp-up of the flotation circuit. We’ve modified the circuit, it’s quite an extensive project that Dale alluded to there, so that replicates, largely replicates the Pilgan plant in respect of flotation technique.

That’s quite a big job. But nonetheless, we understand the flotation process pretty well as a function of what we’ve done at Pilgan historically. So therefore, we remain confident about ramping-up the flotation circuit at Ngungaju, and ultimately hitting the overall Pilgangoora production run rate of 580,000 tonnes per annum by the September quarter. So that’s basically current and that’s the ops targets in which case you know from the latter part of the September quarter we should be running at 580,000 tonnes per annum.

Unidentified Participant: Thanks for that.

I’ll pass it on.

Operator: Your next question is from Timothy Hoff with Canaccord. Please go ahead.

Timothy Hoff: Good morning, gents. I was just wondering if you had any commentary for us on the current inventory levels inside China? I mean, the pricing implies that there’s not a lot of round.

But is there any additional info you can give us around that?

Ken Brinsden: Yeah, Tim there was a bit of commentary about some inventory being released from that [indiscernible] operations in the West of China. That commentary sort of arose you know the back end of the summer season there to try and help with you know price relief in the market. But as I understand it, not particularly large volumes, I think you’re right, the price indicates that the, you know the inventory levels across the Board are very small. I’d go one step further than that, Tim and say, there is already customers that are contractually bound for the delivery of chemicals in China that don’t have the raw materials. So yeah I mean that tells you that the whole market is not even really price-dependent, there is just no product.

So you know I think the situation is pretty acute there and indicative of what’s yet to come in the industry, it’s a big problem.

Timothy Hoff: Yeah so and then could you give us an update on the executive search and how that’s going finding the next kin?

Ken Brinsden: Yeah, Tim, good question. Sorry I should have addressed that in my commentary. Yeah well the process is obviously ongoing. The latest advice from Tony, our Chairman is that, the company has been through the process of shortlisting and that basically represents the current status.

In which case, we’re you know we’re on target to make it clear to the market as to the new CEO over approximately the next two to three months would be my suggestion.

Timothy Hoff: Fantastic. And then just on the Mid-Stream product. I think you should have – I guess that came out mid quarter and we didn’t get too much of a chance to chat around that. But just to confirm that what you’re looking to produce can actually go straight into an LFP cathode?

Ken Brinsden: Yeah, well the first of the results that we’re targeting there is lithium phosphate.

So yeah, there’s a natural kind of propensity to say okay, well that might yet can become feedstock for LFP cathode materials. It’s not yet completely clear, Tim that that can be the case, at least not directly. Indirectly, yes, I think that is absolutely true that the idea that the combination of lithium and phosphate is a key value-add to that supply chain, but cannot be done directly. That’s to be determined. It’s one of the reasons by the way that we, in fact, are going to work on a demonstration plant of reasonably serious scale to help in the definition of the combination of product and the end users.

So I think the answer is maybe, but subject to more work. But in any case, Tim, whether it’s direct to LFP or just the component feedstocks, the message coming from the market is how soon can you do it? And how much can you deliver? That – that’s basically you know what the combination of end users of particular product are saying.

Timothy Hoff: Okay, great. Thank you. It sounds interesting.

It would be great to see our realizations flow through with some value-add.

Ken Brinsden: Yeah. And an important consideration there to successfully generating with the BMX platform would indicate we should be able to do it with multiple products and help with respect to price transparency over time, that feels like that’s going to be a very important tool for the company in the future as well.

Timothy Hoff: Perhaps finally around BMX platform, can you add much more interest on placing third-party volumes onto that yet?

Ken Brinsden: Still are subject to discussion just sure. And yeah like I think broadly speaking, the answer is yes, there is interest in a model like that.

And to be clear from Pilbara Minerals’ point of view, we are also supportive of that objectives, because you know we think that the idea that more product, more users, more customers and varying products is an important development for the industry. It’s one of those situations where the rising tide should float all boats.

Timothy Hoff: Excellent, thank you and I’ll hand it over. Cheers.

Operator: Your next question is from Al Harvey with J.P.

Morgan. Please go ahead.

Al Harvey: Good day, Ken and team. Just one from me. Dale, you mentioned the sterilization drilling actually turned up some basic results.

So just wondering if you could indicate roughly where that is with respect to the two pits and if that does have any impact on the space to build out both your expansion plants? Cheers.

Dale Henderson: Now, thanks, Al. You know the well the location of that sterilization drilling just outside the West of Central pit. So you can see there’s a figure in the announcement there as to its inclusion in the pits yeah it looks like we should be able to bring some of that which is good. Yeah.

Thanks.

Operator: The next question is from Glyn Lawcock from Barrenjoey. Please go ahead.

Glyn Lawcock: Good morning, Ken. Ken, I was just wondering if you could maybe help provide some guidance on how you plan to price and sell the Ngungaju volume when it comes online this quarter now? I mean, I assume it’s all uncontracted.

So, here you’re planning to put a lot of it into the spot market thus by the BMX or it will be sold against a particular index or is just any, because I know you gave us color around greater than 4,000 for the quarter. But just curious how you’re going to plan to Ngungaju in and in answering that as well just are you carrying any legacy comes through into the June quarter now or should we really be thinking you get closer to some index? Thanks.

Ken Brinsden: Thanks, Glyn. We thought of taking the additional production that’s represented by the Ngungaju plant is destined for the BMX platform. So broadly speaking, that’s the intent, but it goes – it’s all blended together.

So whether it’s Ngungaju plant production or Pilgan plant production, it defines basically a single product. It’s really just the incremental growth that comes out of Ngungaju that represents unallocated offtake. And therefore is available to trade on the BMX platform. An interesting side note, Glyn is that, we still get purchasing the product out right. So people basically give us unsolicited bids to try and access the product.

But our preference, I think broadly speaking, our preference is to help with price transparency by getting these options up and running and doing that on a more regular basis to ultimately build transparency. And who knows, even over time and index based on the frequency of those trades from multiple sellers and multiple buyers. What does that all mean? Well, in summary, it means that the frequency of the auctions shouldn’t – should be growing from here. We liked the success that we’ve generated so far, albeit sporadically our intent leading into the end of the year is that they’ve become much more frequent and a more you know sort of built in part of our business model and becomes a bit more normal as compared to what is currently you know pretty exceptional. What else to say? Where the pricing lens is caught up, we have that one segment that’s going to go you know that gets sold – well sorry, sailed this quarter albeit priced last quarter.

But other than that the balance of the tonnes shift will represent what is in effect the current price, but at least there’s only a small amount of lag maybe a month or six weeks. What do we reference? Well, that typically sold in offtake in the current market will go for between you know USD4,000 a tonne and USD4,700 a tonne roughly.

Glyn Lawcock: I think you’re saying against a number of indices, I assume that depending on what the customer wants.

Ken Brinsden: Let’s say the pricing model for each of the customers are very similar. They’re not exactly the same, but they’re very similar.

And they rely on typically China domestic pricing to chemicals. Silver is a bit unique, Glyn, I think you raised a good point. Silver is one of the only western stocks that you can say is wholly exposed to the domestic price in China which has clearly been a price leader as it relates to price discovery, pricing references for all lithium raw materials. You can see our peers globally pricing, while I would consider pricing their chemicals you know very low in comparison to the prevailing shorter dated pricing mechanisms like those in China. Now, the good news is that minerals is in effect you know largely is not fully exposed to that market.

So we’re one of the few that gets the ability to you know fully participate in that amazing price outcome.

Glyn Lawcock: Okay. So just to clarify then so when you get Ngungaju to up at sort of 200,000 tonnes per annum, I guess we’re looking at sort of 16,000 to 17,000 tonnes a month roughly. And you – would you do that in one auction? Or would you be running sort of a couple of months just trying to see how you might try and judge the liquidity, because obviously it’s a liquidity versus price or it has an impact as well?

Ken Brinsden: Yeah, no I agree with that. We basically looked at parcel a cargo consistent with what we’re trying to achieve the team on the shipping front.

And what that means is that an option would probably be in the range of you know 5,000 to 10,000 tonnes per cargo. The benefit that we get in that is to be able to either parcel it as a whole, so it lowers the cost of freight or parcel it with another vessel that we’re already sending you know north anyway. So logically in the range of 5,000 to 10,000 tonnes per auction, and yes, they would become more frequent as you described when the Ngungaju production gets its stretch.

Glyn Lawcock: Okay. Thanks very much for the color, Ken and appreciate it.

Ken Brinsden: Yeah. Thank you, Glyn.

Operator: There are no further questions on the phone lines at this time. I’ll hand the call back over to the Pilbara Minerals’ team for any questions from webcast viewers.

Ken Brinsden: Yeah, thank you, Guilen.

And I’m just going to squeeze, Nicholas to see whether we’ve got any additional questions.

Nicholas Read: Thanks very much, Ken. Good morning, everyone. We did have lots of websites, web-based questions. So I’m just going to skip through the ones that have been dealt with we have a few on production run rates and [indiscernible] which I think have been dealt with.

So the first question here is from James Edmends from Gilchrist & Co. He says, Ken I’m interested in hearing your thoughts on the long-term pricing of spodumene? And what seems to be getting closer to the market short-term prices that one in particular has left their long-term pricing at USD800 a tonne, despite the success with raising auctions and strong market demand for the foreseeable future. Can you give us your thoughts on the longer-term outlook?

Ken Brinsden: Yep. Well, we’re obviously dealing with two different things there. I think, in parts, so short-term pricing is – short to medium-term pricing is a function of the critical shortage in the market.

But it’s not unreasonable to expect that at some point in time in the future, we obviously don’t know when, but at some point in time, there is going to be a normalization in the supply-demand dynamic, in which case, pricing will more than likely reflect cost base. And that’s an issue if you like, that yet to be resolved by the analysts community and those keen observers of the market. Now, I think that probably the key point I would leave with you there is to say, historical norms are going to be well and truly broken down. So the idea that spodumene long run pricing might be USD600 to USD650 a tonne is long gone. And that’s because the industry – lithium raw materials industry needs to grow about tenfold between now and 2030.

To do so, projects are going to be built that are nothing like historical norms with respect to cost. So, the right-hand side of the cost curve gets built out. And by implication, the long run price must be higher. Now you know that doesn’t happen often you know in industry and in natural resources. But it’s clearly going to happen here in lithium.

I hate to draw the analogy of iron ore. But to describe the dynamic on what I’m talking about here. You look at iron ore and the price back in 2000 and what would you say, 2003, iron ore was priced at USD30 a tonne. Here we are today with iron ore priced between USD100 and USD200 a tonne over the last couple of years. And it’s happened because the projects have been built to deal with very, very rapid escalation in demand growth.

Now, in that same period of time, iron ore probably tripled. Here we’re talking about an industry that has to grow by tenfold. So clearly the price – you know that the long run price has to be materially higher than historical norms to support the industry, otherwise, it won’t grow. So what does that actually result in? I don’t have a crystal ball, but I can show you it’s much higher than what people thought it might have been even just three or four years ago.

Nicholas Read: Right.

Thank you, Ken. And next question is from [Mark Benjamin] [ph] and it’s for Brian. He says, am I right in assuming that the syndicated that’s obviously now has a principal components of trading a USD100 and USD105 million?

Brian Lynn: Yes. Thanks for the question. Again it’s a little bit higher than that.

Currently, the principal component is USD110 million.

Nicholas Read: Thanks, Brian. Next question comes from [Matthew Six] [ph]. And it’s a three-part question. He says, can you give us an update on how you are progressing expiration on your other tenements? Also how long will Mt.

Francisco go unexplored? And how confident are you that it could be developed in the future? And the third part was, how likely is the second POSCO type deal perhaps a year?

Ken Brinsden: Okay, thanks for the questions. Well along the exploration I think I’ll hit the nail on the head saying, the more we drill, the more likely we are to grow the resource and ultimately the period of inventory. The Pilgangoora Pegmatite system that hosts the spodumene is incredible and it stretches over approximately 14 kilometers north to south, a decent chunk of which is still to yet be explored in any detail. And that’s why when we do things like sterilization drill holes, because we want to expand our waste, means that, we trip over some spodumene. So yeah it’s fair to say that as we continue to drill, there will be more discoveries.

The only thing that helps in that regard is in fact the – you know the acquisition of the former Altura operations, because it opens up areas that may not have been explored historically that can now be explored. So the combination of all those things means that their resources in our view highly likely to grow over time. On the question of other projects, where we do continue to ship away at them, but I guess the biggest review is to say that the Pilgangoora system is that good that has to be your focus. So that’s why we typically explore there and we do you know in the scheme of things relatively little elsewhere, that doesn’t mean that they won’t be explored. It’s just that they’re not a priority.

Pilgangoora itself is a priority, because of its enormous exploration potential. With respect to the Downstream interests, well the POSCO joint venture represents you know, well let’s just say it’s the start of our Downstream participation, because strategically what we’re trying to do is more deeply align our lithium raw material into a more sophisticated supply chain, and do it with in relationships with people that are key to the future of the industry. And we would definitely put POSCO you know in that category, because of the combination of the you know skill inside their organization, the scale and ultimately being a key entree to the Korean market. Korea being the next big move beyond China and lithium-ion battery making capacity and a strategic entree to especially North America, because of the geopolitical interaction and you know an important relationship between the US and South Korea. Where do we do that elsewhere? Well, yeah Europe is a key target.

And we would say that the Mid-Stream product is a really important development for the European market. So, hence our focus there what we think we can offer with the combination of the Calix technology and a value-added lithium salt is direct entry to European markets and playing with sophisticated players Downstream to make that happen. So it’s definitely an important objective for the company.

Nicholas Read: Thanks, Ken. The next one is from Trent Barnett from Euroz Hartleys.

How often a BMX auction is likely to be now every month in auctions?

Ken Brinsden: Yeah, well we ran the auction yesterday for approximately mid-June delivery. And we’ll obviously be keeping an eye on how Ngungaju productions unfolding during the June quarter to then subsequently lock-in other options. I don’t think it’s translate – directly translates to necessarily monthly options from here. But I will definitely be getting more frequently into the end of the year. So I think that’s the way to think about it.

We’re motivated to establish you know price reference as frequently as we can, because it helps with all of our marketing efforts, in which case, I would like to think that we’re aligned with you know shareholders about making that happen and we’re working incredibly hard to make them more frequent.

Nicholas Read: Thank you, Ken. The next one is from Victor Gomes from Eiger Capital. He says, can you provide any early estimates of CapEx for the P680 and P1000 expansion projects and the likely phasing of the CapEx spend please?

Ken Brinsden: Yeah, Victor we historically talked about spending about AUD300 million on the combined projects that get us towards that 1 million tonne per annum mark that was the previous print on what we used to call the stage two project. Broadly speaking for that scope, that hasn’t materially changed.

You know however, we are – and we likely have more to say about it in the coming months, but we are looking to increase the scope of the project to include potentially new crushing capacity and or sorting capacity. So the net effect of that will be to increase the project. That’s part of the feasibility work and the FID that’s in progress. So we’ll have more to say about that in the coming month or two.

Nicholas Read: Thanks, Ken.

Just one final one from an investor here. The dividend question always comes up every call. He says, what conditions market operating conditions for the company consider appropriate for dividends applied?

Ken Brinsden: Yeah, love the dividend question. I guess it’s a nice problem to have when the question keeps coming up in each meetings. Well you know the answer there is that you know cash and operating cash flow is going to be focused initially on what’s required within the business to grow, because clearly given today’s market conditions that represents the best way to add value to shareholders.

So the first cab off the rank is to be very clear about how we fund our expansion initiatives. So that’s number one. Number two, the idea that you hand back some cash to shareholders. I think it’s something that would be you know fairly close to our Chairman’s heart. But you would only do it in a circumstance where you’ve been very careful about how you otherwise fund the business for the purpose of growth, because that’s where the priority should be.

Nicholas Read: Thanks, Ken and that’s it from the webcast questions.

Ken Brinsden: Okay, thanks, Nick. Guilen. I think we’re done. Thanks for everyone’s participation.

Really appreciate the time on the call today, whether it was via the Chorus line or the webcast. Thanks, Dale and Brian for your input. And we’re done, Guilen. So back to you. Thank you.

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