00:00What would you say are the key takeaways from your results for investors watching this today?
00:06Look, delighted with the half-year results we've delivered today. It's been a strong set of
00:11financials with 250 million plus EBITDA, a 41% margin. What's behind that? Well, strong performance,
00:19improvement in sales, improvement in production, lower costs. All of that's come together at what's
00:25an improving market for pricing, something in the order of a 40% increase on the prior half.
00:31But what's best of all for us, this is really our strategy in action. It's delivering. And so this
00:37half to us is really proving up a multi-year strategy, which we've had in play because
00:43navigating the lithium market, it's not easy. It's a small industry growing very rapidly. It's very
00:48volatile. Our strategy has been all about careful deployment of capital, building out production
00:54capacity whilst doing it in a more efficient way, whilst navigating the low points of the cycle.
01:00And here we are, what we think is on the other side of that. So delighted to be in a
01:05position to reward
01:06shareholders. So how long do you think you can reward them with dividends as well?
01:13What we flagged today is a positive expectation on the full-year results. Of course, that depends how
01:21we go for lithium pricing. And ultimately, it's in the board's hand. But in accordance with our
01:26capital management framework, free cash flow is going well and market pricing is going well. Well,
01:32that sets up the possibility for a dividend the full year. So let's hope that happens. And look,
01:39the trajectory so far is looking pretty positive.
01:43But the thinking behind no interim dividend for now, does that speak to perhaps the need for balance
01:50sheet flexibility and your expectations of market volatility for now still?
01:58So the half that we just reported is really, in our view, sort of the inflection point of the market.
02:03So after sort of two to two and a half years of a downward trend, what we saw was really
02:09a low
02:09point in the September quarter. And the December quarter, we've seen the first of the inflection.
02:16So when you flow that through against our capital management framework, that doesn't print a
02:21dividend. It's minuscule. So in the board's view, let's not look at a dividend for the half. However,
02:28as I say, on the expectation of a stronger, continued strong pricing, well, look, we're set up
02:35well to consider a dividend of the full year.
02:39Talk to us a bit more about how you have been seeing the lithium market, perhaps maturing since
02:45the last boom in prices. What are some of the shifts that you've been seeing underway?
02:50Sure. Look, there's a lot going on in the lithium industry. Of course, that's because what's behind
02:56that we've seen broad electrification, increases in e-mobility, deployment of batteries for
03:01data centers, mass and energy storage, you name it, some really strong growth support. However,
03:09the build out of the supply chain has been highly volatile, given it's from a slow,
03:14because it's from a small base. Now, in terms of the moving parts, well, there's many at all layers.
03:19So we've seen at geopolitical levels talk of shoring up different supply chains, dedicated
03:26supply chains. At the battery maker level, there's been a competition between battery
03:31makers and battery chemistries. And then further into the supply chain, we've seen chemical converters
03:36and suppliers like ourselves vying for positions. So there's been a lot going on. And we've seen in
03:42the media some downstream facilities which have been challenged, and we've seen others which are
03:47going well. It's a very fluid space, you might say. And well, for PLS, we've always known that.
03:57And what we've done is we've set ourselves up for that volatility, strong balance street,
04:01low cost position, options at our disposal. And here we are. And today's results really represent
04:10the strength that we've built over the years. Yeah, it's a very dynamic market. And especially for
04:16PLS with your offtake agreement with CanMax technologies, right? Are we going to see
04:21more of these sort of direct investments coming from big players, whether it's CanMax or
04:26you know, General Motors or some other big giants going directly into the industry?
04:33Look, my guess is yes. I think we will see bigger moves because the necessity is building.
04:42We envisage a structural deficit emerging care of the strong growth and the absence of supply and the
04:48long gestation of supply. So that sets up a tension. Now, for those groups who are needing to secure
04:54supply, well, they're going to have to get involved and find tools and methods by which to secure that
04:59supply. So the likes of the offtake we announced is a proof point. You know, it's the first of its
05:06kind,
05:06in our knowledge, this combination of terms of 100 million US unsecured, interest-free prepay,
05:12coupled with a healthy floor price. To us, it speaks to the necessity to secure supply. But it
05:20also, I think, speaks to the value of partnering with PLS. You know, we build a reputation as a
05:26reliable partner. And we think that's part of the deal we awarded last week.
05:33Every time there's a dynamism in the market, it also means that other players will be jumping in,
05:38mines being restarted. Are you considering any restarts of your plans? And could this also risk
05:43oversupply at some point?
05:46We actually announced today, reactivating some of our swing capacity. We've got
05:51our Nuggetu processing plant. We announced today, we're going to bring that back online.
05:56For the simple reason, it's low capital, allows us to lever that production volume into the market to
06:03capture some of this margin at the pricing that we're seeing today, which is sort of circa $2,100 per
06:09tonne. So it makes an abundance of sense to do that. Will others do the same? I think so. But
06:16for many of them, their situation is different. Their cost to bring their capacity back online is
06:20higher and their gestation period is longer. So through that, that presents an opportunity for us.
06:27But of course, beyond that, well, we still see this potential emerging structural deficit because
06:33beyond the swing supply, well, where is the next wave of supply coming from? It's not being invested
06:40in yet. Meanwhile, demand is compounding this healthy 20% per annum growth rate. So look,
06:46potentially there's two waves of opportunity for our shareholders. The one we're capitalizing on now,
06:51plus this more midterm dated one where that broader structural deficit bites in.
06:58You talk about some of these opportunities. Does that include in brines potentially at some stage?
07:05For you now, it's mostly a mining of hard rock, but you know, some of your larger peers,
07:11they've bet heavily on brines. Is that something that PLS is considering actively?
07:18Yeah, so as you say, look, hard rock, lithium supply, that's our specialty. It's what we build our
07:25business around. We have an open mind to diversification in brines. However, it's not
07:32our course and skill set. If we were ever to do it, we'd probably do it in a small way
07:36with another
07:37partner. But it's not, you know, a strong pursuit of ours, but we certainly consider it. So yes,
07:44and what I'd add is sort of stepping back, the world needs a lot of lithium. We believe that
07:49lithium will come from the best assets globally. Those best assets include both hard rock and brines.
07:55So for these reasons, as a scale global player like PLS, well, of course, considering involvement
08:01in the right high quality assets is a good thing to do. You talked earlier as well about some of
08:09the
08:09downstream projects and perhaps maybe among the players, some of your collaborations are faring a
08:17bit better than others in the market. What do you think is helping the cost curve in terms of performance,
08:25specifically for PLS? Sure. Look, it's as a function of the sort of the volatile lithium market,
08:34particularly the period where we had sort of over the last 18 months is a challenging time for any
08:39downstream operator globally, including those established low cost operations within China. So
08:46very challenging, challenging market as a function of the low pricing everyone had to experience. And
08:51we've spoken historically about being deep into the cost curve. Now, in terms of where to from here,
08:58well, our view is the world needs to build out multiple supply chains to serve this growth market. So
09:03more downstream is required. Absolutely. Now, that's why we've got involved with our joint venture with
09:10POSCO and South Korea. And we think that's got the makings of a fantastic position for the long term.
09:17Reason being, it's an existing battery hub ecosystem with, you know, buyers of the batteries being car makers,
09:24it's got cathode making, battery making and our chemical production care of our facility. And it's a relatively
09:30low cost jurisdiction. So for these reasons, we were drawn to that. We're a minority participant at 18% of
09:36the
09:36option to step up. We think that stands a really strong promise for a positive future. But outside of that,
09:42yes,
09:42others have been building other jurisdictions, and some of that has been challenged because they are higher cost
09:48jurisdictions or they're without the synergies of an existing ecosystem. But a lot more needs to be built out over
09:56time.
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