Q & A Highlights

Q: With spot pricing back above $2,000, is BMX too active? If not, why the shift towards floor price term deals such as Canmax instead of capturing spot upside via the platform? A: Dale Henderson (CEO): BMX is not active, but PLS is doing occasional spot sales. We have not chosen to bring BMX back online because we see the benefit as being unlikely. The market has changed since we initiated BMX in '21/'22; there is much more price discovery happening now, with multiple entities doing their own forms of private competitive processes. We get the benefit of both worlds with these offtakes: downside protection via a price floor plus a form of security with uncapped upside. As pricing moves in the market, fueled by spot sales and price discovery, it flows through to indices, which ultimately flow through to our pricing mechanisms for these offtakes.

Q: Saw the result and strong beating dividends. Just keen to understand the shareholder return part. This is the fully franked. And following this capital allocation framework, should we anticipate a constant return even when the company goes into the high growth phase with P2000? A: Alex Willcocks (CFO): We are pleased to announce the $0.05 fully franked dividend this year, at a 22% payout ratio, which sits within the 20% to 30% of adjusted free cash flow consistent with the capital management framework. The dividend policy naturally flexes through market cycles because it is tied to free cash flow. Dale Henderson (CEO) added that it is all about price; the June quarter alone generated more than $500 million in cash operating margin, and depending on the headline price outlook, that determines how we think about capital distribution.

Q: Just to follow up, firstly on the dividend policy. Can I just confirm, you were thinking about revisiting the 20% to 30% of free cash flow and maybe adopting a slightly different approach. Is that still something you're thinking about? A: Dale Henderson (CEO): We are applying the capital management framework as it stands, and that is what we have announced today. We are not looking to make any changes in the very near term, but we will consider this later in the year. Several things will come together: we will have provided clarity on capital projects like P2000, and we will have a few more months of operating within the market to see what headline pricing looks like. We are not saying we will change it, but it would be sensible to reassess later in the year or early next year.

Q: Just looking at the footprint you have given us on slide 23, and it looks like that is significantly larger than the P850 model you've got in the background. Am I correct in looking at that, firstly, the layout, you are going to have to relocate some of the existing waste dump and maintenance works there. And can you maybe talk to, just given the spacing you have got on the plant set up, just the future optionality you are building into P2000 and what sort of potential future debottlenecking opportunities you might have? A: Dale Henderson (CEO): The P2000 expansion is significantit is doubling the capacity. It is essentially a new everything: new ROM to tip ROM, a new crushed ore stockpile, a new front-end dry plant, and a new front-end wet plant. There are some temporary facilities being relocated, and a small rework at the ROM has already been completed to make way. In the main, it is a fairly clear area for the build. This makes for a more straightforward build in that we get the benefit of a brownfields expansion with existing camp, power, and support infrastructure, but it is greenfields in the sense that it is spatially dislocated from the P1000 plant.

Q: Then maybe turning to Brazil, just subsequent to the year, I think you spent roughly $50 million buying some tenements off Lithium Ionic next to Colina. Should we think about that more as just an opportunistic bolt-on for future flexibility? Or is that likely to be incorporated into your Stage 1 studies at the moment? A: Dale Henderson (CEO): The intention is that will flow into the studies. That particular tenure package butts up to the boundary of our existing tenure. We were keen to have it, and we look forward to factoring it in ultimately to a revised study outcome, expected in the December quarter next year.

Q: My first question is regarding your contracted sales. So we know that previously, you have the Canmax agreement combined of floor price and prepayments. I'm just wondering, is that type of structure still attractive to other customers nowadays? Would you consider having more of this kind of contracts to protect your cash flows against potential volatility in the market, especially when you're potentially entering a new round of expansion CapEx? A: Dale Henderson (CEO): The short answer is yes, there has been strong interest and competition around offtake and the types of terms we announced today. That speaks to the appeal of PLS as a reliable supplier. We are always wanting to secure the strongest commercial terms we can, and we will look to do what we can to continue to secure terms of this nature, or even better, if we can. The goal is to protect our business from the downside whilst also ensuring we have exposure to the upside.

Q: I was just wondering if you have any sort of strong views on supply growth in, say, the next five years, and how you're thinking about the lithium market over that period with regards to the supply-demand imbalance for lithium. My second question is, has PLS ever disclosed its long-term price assumption using its forecasting? A: Dale Henderson (CEO): On the supply side, we have continued to build an in-house view, factoring in what we think are the more probable supply sources, including brownfields expansions, restarts, and Chinese mines. With some quite conservative demand assumptions, we see a more probable demand deficit occurring. The next wave of supply is probably going to be more challenging given that in most cases, these mines are in more difficult locations or domiciles. As to long-term price assumptions, we have not made a practice of disclosing this other than at FID points, where we have taken a consensus average at that moment in time. We model a range of scenarios to make sure we can comfortably navigate all parts of the cycle.

Q: I think my first question is regarding Colina, just on a follow-up from previous question. I understand that the area does not only add some resources to the project, but also would help you in design the pit. If you can comment exactly how this will change the pit

For the complete transcript of the earnings call, please refer to the full earnings call transcript .