Pilbara Minerals Ltd (OTCPK:PILBF) Q3 2023 Income Convention Name April 7, 2023 7:00 PM ET
Corporate Individuals
Dale Henderson – MD, CEO & Director
Vince De Carolis – COO
Alex Eastwood – Leader Business & Prison Officer and Corporate Secretary
Luke Bortoli – CFO
Convention Name Individuals
Hayden Bairstow – Macquarie Analysis
Rahul Anand – Morgan Stanley
Thomas Hays – CLSA Restricted
Ben Lyons – Jarden Restricted
Mitch Ryan – Jefferies
Levi Spry – UBS
Kate McCutcheon – Citigroup
Timothy Hoff – Canaccord Genuity
Operator
Thanks for status by means of, and welcome to the Pilbara Minerals March 2023 Quarterly Investor Convention Name and Webcast. [Operator Instructions].
I’d now like handy the convention over to Pilbara Minerals’ Managing Director and CEO, Mr. Dale Henderson. Please cross forward.
Dale Henderson
Thank you very a lot. Excellent morning, excellent afternoon, excellent night to anyplace you are dialing in from. Welcome to the Pilbara Minerals March quarterly name. A heat welcome to all. I would similar to to recognize the standard custodians at the land on which our companies function, the Whadjuk Noongar other people the place our headquarters are and the place we are calling in from nowadays. After which Nyamal and the Kariyarra other people up north the place our operation is positioned. And we pay our respects to their elders previous, provide and rising.
Relating to introductions, audio system nowadays, we’ve got were given Luke Bortoli, our new CFO; were given Vince De Carolis, Leader Working Officer; and we will have Alex Eastwood, moderating our questions, he is our Leader Business and Prison Officer. Additionally within the room, we’ve got were given quite a few the staff who’re additionally becoming a member of us nowadays.
As to the decision defined, we will be stepping in the course of the slide pack presentation. The fundamental waft there’s, I will be offering some opening remarks at the quarter. I will then hand to Vince for an operations replace. Again to myself to replace across the expansions and downstream. Over to Luke for the financials. After which finally, I will be updating on steerage and a few observation available on the market.
Because the moderator defined, we are going to take a look at and goal for — neatly, 20 mins kind of, we expect for Q&A questions and 10 mins for the webcast, and we will glance to stay this name inside the hour as a result of I perceive there may be quite a few different calls nowadays, so we will be company at the points in time nowadays.
Now simply beginning with a bit of of opening observation, when it comes to growth for the quarter, it used to be a cast quarter for the industry, each quantity and pricing, albeit at a slight contact of what used to be completed within the December quarter. It used to be nonetheless cast when it comes to volumes and pricing and extra very similar to the September quarter. Financing, a large number of reinforcement and the milestones within the financing space, which I will contact on somewhat bit later. Because it pertains to expansions, all over the quarter, we necessarily simply were given on with the plan, FID for P1000 and P680 in growth. Downstream, POSCO is making nice growth on our three way partnership operation. I will discuss to that somewhat bit later.
After which we are actually underway with our partnering procedure given we will have further tonnes coming on-line mid ’25, P1000 undertaking, which we licensed. So any other busy quarter getting on with the plan. However in fact, that is all set in opposition to a marketplace backdrop that has modified. And it is no wonder to everybody that we’ve got observed some softness type of rising during the last couple of months. And we’ve got observed a value decline, in particular inside the Chinese language marketplace, which is against this to one of the vital international marketplace value references. And I will be offering some marketplace observation later within the pack round us.
However the relevance of bringing up this, in fact, is we have now observed a bit of of a pullback within the learned pricing for this quarter, and a few of that may waft via into subsequent quarter as a result of our pricing mechanisms path the marketplace indices. So we will see a few of that waft via into the June quarter. All that being mentioned, the pricing could be very sturdy. And you are looking again 300% year-on-year building up when it comes to learned value. So nonetheless very cast margins to be made on this marketplace.
Now transferring now to highlights on Slide 2. As I discussed, cast quarter for volumes each in manufacturing and cargo, albeit a slightly again at the December quarter, 80-plus % building up year-on-year for the quarter. So — which type of speaks to the massive jump we’ve got had in that brief duration of one yr. Learned pricing down a bit of on ultimate quarter, reflective of the marketplace. Our unit prices are up a slightly, and we have now revised up our anticipated steerage for prices for the yr. And Vince and I will be able to be offering some feedback on that somewhat bit later.
However a cast set of numbers, which generates some cast margin. After all, that is flowing via to the stability sheet and a excellent stability sheet step-up of $457 million. And that’s the reason after, in fact, paying inaugural intervening time dividends. So nonetheless a really perfect set of numbers, a cast quarter, and we’re going neatly.
Transferring to Slide 3, a few the milestones for the quarter. The dividend that I discussed, nice to get that out — out the door to praise the ones many unswerving shareholders who’ve long past via Pilbara adventure. Because it pertains to growth, the P1000 FID licensed by means of the Board and the staff are getting on with the task of handing over now.
And the class of finance, sure, quite a few finance milestones, debt facility for our three way partnership with POSCO for the downstream plant in Gwangyang, South Korea. I would observe that, that is nonrecourse to Pilbra Minerals, a really perfect debt facility, which is able to toughen our building. Our new debt facility again at house for growth key function EFA and NAIF to the song of $250 million, lengthy tenure cheap debt. After which there used to be the refinance of our current debt on a 5-year time period.
Main development package deal used to be awarded to Primero for the P680 growth undertaking. Website is having a look very busy because the concrete comes out of the bottom and metal is going within the yr. And nice to peer that undertaking transferring ahead.
Additionally all over the quarter, we finished the manager appointments. So the staff is crammed and they’re very busy handing over our expansion profile. And finally, however no longer least, we are now underway with what we are calling a partnering procedure, wherein we are enticing with a make a choice crew of the marketplace to discover joint downstream projects. So stay up for updating on that later within the calendar yr.
Now transferring to Slide 4, only a fast replace on our expansion technique. Our goal is to be a pacesetter within the provision of sustainable battery fabrics product, and we have now 4 planks to that technique. At the start, it is about handing over working efficiency, that is our basis; two, it is about increasing that basis and increasing this unbelievable Tier 1 asset, benefiting from this superb asset that we’re stewarding into life; precedence 3 is set extracting extra worth via downstream integration, the likes of our three way partnership with POSCO, the likes of our midstream three way partnership we have now with Calix or the likes of the partnering procedure, we are now beginning to step into. And finally, however no longer least, precedence 4, ultimate at the record is round diversification via inorganic expansion outdoor of our base asset.
In order that’s a snappy snapshot at the quarter, which used to be — at this level, I will surrender to Vince for an replace at the operation.
Vince De Carolis
Thank you, Dale. So beginning with protection, as you’ll be able to see on Slide 5. Our lead signs, protection interactions, proceed to pattern strongly, which is severely essential in our tactics enticing with our other people out within the box. Our general recordable harm frequency charge has larger from 4.2 within the December quarter to 4.9 within the March quarter, because of some low severity comfortable tissue accidents. This partially has been because of a fast building up in new staff, in particular in mining as a part of our plan to extend mining volumes. We are enacting a plan to make stronger our onboarding of latest starters to rectify that.
We have additionally commenced a brand new coaching for all of our leaders on our essential chance control and easy methods to behavior efficient essential keep watch over deal verifications. And this program will run from now and thru all of FY ’24.
Other people and tradition, we’ve got been handing over on our commitments popping out of the primary cultural engagement survey, handing over a number of hygiene enhancements similar to a brand new warehouse facility and new admin and room amenities to satisfy our rising calls for. And pleasingly, we are seeing a discount in our voluntary turnover. And feminine employment may be sturdy at 22%.
Transferring directly to volumes. Manufacturing, as Dale had discussed, used to be consistent with our expectancies, given anticipated lithia grade and deliberate run time for the quarter. I will be able to additionally verify with this manufacturing quantity that we are ok with our prior to now reported manufacturing steerage. It’s, in fact, famous that this quarter’s manufacturing is fairly down at the earlier quarter owed to a mix of a longer processing plant repairs shutdown for the Ngungaju Plant to deal with repairs actions, and lower-than-planned recoveries because of suboptimal or feed mineral diversifications. Run time for the duration used to be 82% around the mixed processing vegetation. On the other hand, we plan for upper than this. And recoveries for the duration used to be 68% for February and March and fairly decrease in Jan.
In mining, we completed the 4.5% growth in general subject matter moved at 7.8 million tonnes for the quarter, an growth month-on-month in the course of the quarter as neatly. Our mining uplift plan is gaining traction, inclusive of extra assets, as I discussed previous, because of stepped forward usage charges of apparatus and new apparatus plus upgraded amenities that we proceed to paintings on. And additional projects to come back come with fleet composition optimization and stepped forward apparatus availabilities within the coming months.
In processing, each Pilgan and Ngungaju have operated constantly in runtime charges and recoveries. On the other hand, processing charges had been decreased to the prior quarter related to essential repairs actions that had been required to be finished and recoveries had been fairly less than earlier quarter on account of ore feed subject matter diversifications. Methods at paintings are underway with a focal point on recoveries, availabilities and charges.
And unit prices, as discussed — famous within the quarterly unencumber, we adjusted our steerage, lifting our anticipated working value for FY ’23. And that is extensively as a result of 3 classes: inflationary pressures similar to hard work prices, even if they stabilized, it is nonetheless increased, contract products and services similar to our mining carrier contractors, gas and flights, simply to say a couple of. We then had a number of one-offs. We now have quite a few one-off operational expenditures, which come with such things as spares as a part of our availability uplift program and P680 operational readiness. Repairs provisions, such — as famous, such because the Ngungaju shutdown. And upgraded infrastructure, as discussed, the brand new amenities, warehouse once more to boost our operational requirements.
And the 3rd bucket is pre-investment, an element of larger operational prices as we get ready for being a bigger operation, similar to P680 ramp-up, our mining ramp-up, simply to say a pair. However in the end, we predict the unit value relief as we understand productiveness and scale efficiencies into the approaching long term.
And with that, I will hand again to Dale.
Dale Henderson
Thank you, Vince. Transferring to 7, our growth pathway. As I discussed within the opening, we are getting on with the task of growth supply. So happy to file that the P680 undertaking, development is not off course and going neatly. After which there may be the P1000 undertaking, which completed FID all over the quarter, of which we are having a look to be on-line and ramped up of mid ’25.
Transferring to Slide 8, provides somewhat bit extra element on a few pictorials of what is coming to lifestyles. And a bit of of additional element there, only a reminder of the dates, which stay not off course.
Transferring to Slide 9, downstream integration. The POSCO Pilbara Lithium Answers three way partnership goes neatly. To remind everybody, this can be a 43,000 tonne lithium hydroxide plant positioned in Gwangyang, South Korea. The POSCO staff are foot down, going very, rather well on development. It is a 2-train processing plant. The primary practice, procurement is largely whole, a large number of development paintings is finished when it comes to civils and metal paintings. Because it pertains to practice 2, which lags practice 1, the staff has procured 22 of the 26 applications and feature began to begin one of the vital civil works in that regard. So from all reviews and what we see not off course and going neatly, and we stay up for seeing that undertaking increase within the months forward. And tough to consider that it is just going to be — on the finish of the yr, we will be sending some tonnes over there to toughen the commissioning. So very excited to peer this three way partnership facility come to line.
Transferring now to Slide 10. As I discussed, right here we finished our govt appointments. And I do know I made observe within the part yr that a few the staff had joined us, being Sandra, John and Paul. And the ultimate staff member to sign up for us, Luke Bortoli, our new CFO. So a large welcome to Luke. It is week 3. So he is truly had a possibility to unpack his pencil case, however already is definitely off the curve. So large welcome to Luke, and that completes the set of the manager appointments. I am overjoyed as a result of that suggests not more interviewing for me. However I feel we’ve got were given an out of this world govt staff of all in their very own proper, were given an incredible observe report and can serve the industry neatly, and most significantly, serve their groups as a result of it is all about that fab other people in Pilbara, our groups, the whole lot we’ve got completed in our industry up to now has been via our staff. So up to the executives as proven right here, it is all in regards to the staff and the staff supply and supporting the ones groups to achieve success. So I feel we’ve got were given excellent — we are in excellent arms with those new leaders who’ve joined us.
Now with that, I will be able to now surrender to Luke for an replace at the financials.
Luke Bortoli
Thank you, Dale, and excellent morning to these at the name. As Dale mentioned previous, the March quarter confirmed marginal declines throughout manufacturing, gross sales and unit value metrics within the duration. However this, the quarter additionally confirmed endured sturdy efficiency from an working margin and money waft point of view in addition to cost of our first absolutely franked intervening time dividend. Extra particularly, the quarter featured a marginal 3% decline in tonnes offered to 144,000 tonnes, a fifteen% relief in weighted reasonable learned gross sales to USD 4,840 in step with tonne on an SC5.3 foundation, reflecting a softening marketplace value within the duration. And a 9% building up in unit working prices to $632 in step with tonne measured on a unfastened on board foundation, and aside from royalties, basically because of upper mining and upkeep prices as we ramp as much as P680 in addition to common value inflation.
In opposition to those declines, we noticed endured sturdy money working margin within the duration of $919 million, evaluating very favorably to the $950 million won within the December quarter. This sturdy working margin underpinned the $457 million or 21% building up in money to $2.7 billion. As Dale discussed previous, to assist toughen our growth plans, we additionally introduced quite a few finance projects. The primary is the signing of a 10-year $250 million debt facility with Export Finance Australia and Northern Australia Infrastructure Fund to toughen the P680 growth undertaking. We additionally refinanced our current debt facility, changing debt of USD 110 million with a brand new facility of USD 113 million on stepped forward turns via a syndicate of latest and current banks. And after all, we signed a USD 460 million debt facility for the POSCO Pilbra Downstream three way partnership to fund the rest capital and commissioning prices for the 43,000 tonne in step with annum lithium hydroxide chemical facility in South Korea.
To supply some extra element on margin within the duration, as discussed previous, unit working prices, aside from freight and royalties, noticed a 9% building up within the March quarter to $632 a tonne. Against this, unit working prices on a CIF foundation stepped forward by means of 2% to $1,144 in step with tonne within the December quarter. This used to be pushed by means of a discount of roughly $75 in step with tonne in royalty prices related to the decrease promoting value in addition to a endured relief in ocean freight prices.
General, working margin declined extensively consistent with the combo of a decrease promoting value and decrease unit working prices within the duration however nonetheless stay sturdy in nominal phrases. As discussed previous, money working margin used to be roughly $919 million, or $6,368 in step with tonne as opposed to the December quarter at $953 million or $6,412 in step with tonne. So our working margin remained very cast.
Turning now to money waft. As prior to now discussed, the corporate’s money place larger by means of 21% to $456.5 million or $2.7 billion as at 31 March. Key actions within the money stability incorporated internet money margin from operations of $919 million, comprising $1.1 million from gross sales of pay attention, much less $174 million of working prices to provide and promote pay attention.
There used to be capital expenditure of $119 million as opposed to $76 million within the December quarter. Internet proceeds from borrowings of $78.6 million had been basically pushed by means of a partial drawdown of the 10-year $250 million debt facility for the aim of investment P680. We additionally confirmed a primary dividend cost of $0.11 in step with percentage, equating to $329.8 million and a primary tax cost of $88.6 million when it comes to the corporate’s FY ’22 tax go back. Except for the primary dividend cost and primary tax cost, money would have larger by means of roughly $875 million, which is analogous to the December quarter money building up of $851 million, once more emphasizing the sturdy quarter that we had.
I will now hand it again to Dale.
Dale Henderson
Thank you very a lot, Luke. Transferring to Slide 13. As Vince defined, we’ve got adjusted our steerage on our unit working value, tweaking that up from our earlier steerage. So transferring it as much as $600 to $640 in step with tonne unit value vary. And as Vince walked us via, that is owed extensively to a few buckets: inflation pressures, some one-off prices, and a few pre-investment to toughen growth. Importantly, volumes for the yr, we are reaffirming that we are not off course and feeling relaxed in regards to the supply of the ones for the entire yr, which is excellent. And — sure, having a look ahead to transferring via to the ultimate of quarter 4 and completing the yr strongly.
Transferring from Slide 13 to Slide 14, a marketplace replace. I will be fairly extra expansive in my observation right here simply to toughen those that I do know are willing to listen to our views. And answering this, I will communicate via 3 type of items. The long-term outlook, secondly, the March quarter and our observations of what has took place within the March quarter. After which finally, I will communicate in regards to the glance ahead.
So when it comes to the long-term outlook, we stay very certain at the structural deficit for lithium. And naturally, we observe that there appears to be a wide supportive opinion for that deficit. But if we glance again over the March quarter, truly the issues of proof we might spotlight are in 2 portions: one is across the main funding, which continues to occur; after which secondly, it’s round EV gross sales being the important thing intake driving force for lithium at this day and age.
Now because it pertains to main funding, a few the highlights of overdue, clearly, the Albemarle takeover makes an attempt of Liontown’s rejection of that speaks to the worth each the Liontown sees in that asset and in addition Albemarle does. GM invested $650 million in Lithium Americas. Ford invested $3.5 billion, used to be dedicated to for its first LFP plant within the States. LG has dedicated $5.6 billion against their battery production facility in Arizona. Redwood has secured $2 billion from the DOE within the U.S. BMW has introduced $870 million plant in Mexico. And the Canadian executive has unveiled federal executive funds of CAD 80 billion in tax credit for blank generation, together with CAD 25 billion for investments in blank power. So simply damn via a few main bulletins of overdue.
Because it pertains to EV gross sales, China, 27% year-on-year expansion, pulled again quarter-on-quarter, however general, the wide theme stays sturdy. And outdoor of China, the mixed international EV expansion charge stays sturdy at a 25% year-on-year expansion. So extensively, very, very sturdy signs supporting the structural deficit that appears to emerge within the outlook.
Now transferring now to the March quarter, which against this has demonstrated some softness, in particular in China. So simply to supply some observation round us, and I am not going to be revealing anything else in particular new or other yr as opposed to simply give a boost to. We toughen what we are listening to. The proof across the pullback inside the Chinese language marketplace for the quarter used to be owed to quite a few components, that have conflated. There used to be a seasonal variation within the Chinese language New Yr. That is been the tip of the China’s EV subsidies. There is additionally been a struggle underway between the ICE automobiles and EVs. The ICE automobiles inside China had been closely discounted to transport that inventory upfront of a few tightening on Chinese language emission requirements, that are entering impact from the primary of July. In order that, in fact, has put some pageant — some sturdy pageant, short-dated pageant, we expect, available in the market round EV as opposed to ICE. There is additionally been an element of stock destocking or stocking which had took place, which is transferring in the course of the machine.
After which finally, there is a class of what we name purchasing conduct and sentiment and our statement of the Chinese language marketplace because it runs up laborious as value begins to understand and it runs down laborious as value declines, and it looks as if we are seeing that play out another time. In order that’s because it pertains to the Chinese language marketplace. However I would indicate that hydroxide pricing even if it is had a pullback, it is been not anything close to the pullback we’ve got observed within the lithium carbonate pricing, enticing with our consumers who’re in the primary ore weighted to hydroxide manufacturers. And by means of the best way, additionally, maximum of the ones are exporters to the exterior marketplace. Their observation round this talks to the excessive barrier of access to the — to provide hydroxide product against this to carbonate product, they usually additionally communicate of the rest sturdy call for for the excessive nickel cathode feedstock.
So — on account of that, right here we’re seeing a bifurcation at this day and age between, as I say, the Chinese language value issues as opposed to the worldwide, in particular hydroxide value issues, which have not long past off as a lot. Does the space shut? We’re going to to find out. I feel it is most probably the space will shut one of the vital cheap carbonate will also be taken into hydroxide. We’ve not observed that but, however we will see what unfolds within the months and quarters to come back. So it is a little bit in regards to the March quarter.
Now transferring to the glance ahead, the place does pricing cross and what can we see goes to spread? Now in fact, that is within the class of crystal ball looking at. However our review is having spoken throughout our buyer set and tasty with one of the vital respective reporting companies on this area is what we look forward to within the June quarter is most probably both a leveling or softening. Whether it is softening, we would be stunned if it softens strongly, however we will wait and spot. However as to a flip available in the market, the opinion we have now shaped, as I say, enticing with others, is the again part of this calendar yr, it seems perhaps.
Now granted there’s a big choice of supply — starting from — [indiscernible] inside weeks, some announcing overdue within the yr. As I say, we are expecting the second one part of this yr to be the perhaps time that we might see large uptick to get underway. However in fact, all of us have to attend and spot. That is set in opposition to a backdrop of quite a few transferring subject of items, Chinese language home sentiment, international sentiment, the place we will see what occurs. However as I say, Pilbara Minerals stays bullish and at the long-term outlook for the marketplace. We stay dedicated to our expansions and getting on with the task of creating this unbelievable Tier 1 asset and playing, with a bit of luck, sturdy margins for plenty of quarters and many years yet to come.
So with that, that completes my observation available on the market. I will now hand again to the moderator to step into Q&A.
Query-and-Solution Consultation
Operator
[Operator Instructions]. Your first query comes from Hayden Bairstow with Macquarie.
Hayden Bairstow
A few fast ones. Simply on CapEx. I imply, you are seeing a good bit of this now around the trade, however how assured are you to your talent to in truth spend the capital consistent with what you are seeking to do to ship those productions and expansion plans? Is there some dangers round, no longer essentially the true CapEx quantity, however simply the timing to in truth ship it? What are you seeing on that entrance?
Dale Henderson
Sure. You are right kind, Hayden. I would put that — the fast solution is sure. I would put that within the class of any of those large tasks, you at all times have that chance. Our undertaking staff is foot-down busy, getting commitments achieved. And so they guarantee me that we are all a-okay. However as at all times, those tasks — there may be a large number of transferring portions to be stepped forward temporarily and we will stay a willing focal point on that.
Hayden Bairstow
Sure. K. And are you able to simply remind us on learned pricing in your spot contracts, simply how related they’re to — is it home or export pricing for — China, clearly, getting a good bit of bifurcation on pricing in this day and age. Simply to get an concept of no longer such a lot this quarter, however even into subsequent yr, how issues may begin to transfer round between what you get as opposed to one of the vital friends. Simply need to determine the variations.
Dale Henderson
Sure, certain. So I will be able to — we will, normally phrases throughout our offtakes, it is extensively weighted to hydroxide and extensively weighted to the export marketplace, nevertheless it does rely on which offtake we are speaking about. And pricing references a package deal of various — a basket of various reporting companies relying which teams and value issues, that does impact it as neatly. However that is most probably up to I will be able to say with out entering the specifics of every contract.
Operator
Your subsequent query comes from Rahul Anand with Morgan Stanley.
Rahul Anand
Glance, the primary one this is on that spot sale, you flagged for the 15,000 tonnes at the new pricing fashion, which used to be related to tolling this quarter. So the query there for me is, how does that pricing examine to different gross sales? After which when it comes to that contract itself, will have to the downstream margins flip unfavourable? Are you pressured to nonetheless provide into that when it comes to volumes and mainly have losses on that conversion? Or are you able to step out of that contract?
Dale Henderson
Positive. Sure. No, a excellent query. Glad to reply to this. And simply to remind everybody that this actual sale used to be a fifteen,000-tonne spot sale, and this used to be our first toe within the water, as we described it, for doing a tolling contract. And 15,000 tonnes equates to about 2% of our manufacturing profile, an excessively, very small proportion. So it used to be our toe within the water.
To respond to your query, so the fee won from that used to be in 2 portions, and we disclosed this on the time that we did this. So the primary section being successfully the spodumene value element of which used to be locked in. In order that’s protected and achieved. Because it associated with section 2, it used to be an uplift because it pertains to the true chemical value across the time of sale. Now on account of the downward pattern, that parts has necessarily long past to 0, nevertheless it does no longer imply that we cross right into a unfavourable if that’s the case. So we lined the disadvantage chance in that regard. And as I mentioned, this used to be a bit of of a toe within the water as we glance to discover this fashion.
Rahul Anand
K. That is nice. That is helping. Glance, the second one query is across the gross sales this quarter, so 144,000 tonnes, however I observe that there used to be a 20,000 tonne behind schedule cargo within the ultimate quarter, this means that the underlying cargo charge used to be most probably sitting at about 124,000 tonnes. So I assume the query there’s whether or not you held again gross sales all over the quarter as you noticed that weak point within the Chinese language marketplace as a result of in spite of the operational efficiency, manufacturing used to be forward and inventories as neatly, no less than on my numbers, appears to be round that fifty,000 tonne ranges for completed merchandise. So I simply sought after to know whether or not you withheld gross sales, which is analogous to a couple of your friends’ indication available in the market.
Dale Henderson
Sure. No. The fast solution isn’t any. We did not withhold gross sales. The view we’ve got at all times taken is, because the product produced is to get that moved out and stale to consumers, so there hasn’t been any type of — we have not attempted to type of alter any of that. What occurs, because it pertains to the true gross sales, is on occasion it is blocky, and blocky within the sense that it is dependent. It is about pairing with when the buyer wishes that product and the place that specific — the place that timing falls on type of the quarter battery prohibit. The ones are the explanations round seeing some type of ups and downs on this area as we transfer from quarter to quarter.
Rahul Anand
K. So it is mainly one of the vital quantity commitments no longer being taken up at this level, which is able to most probably come via within the quarter? Is that the way to take into consideration it because of the softness available in the market?
Dale Henderson
That is not softness, however sure, it is simply timing. It is simply timing. So the June quarter is a larger quarter for us.
Operator
The following query comes from Tom Hays with CLSA.
Thomas Hays
Possibly a equivalent query to what used to be simply spoke back, however round stock. So we’ve got observed construct during the last 3 quarters, and by means of my rely, it is type of at about 30 days of your manufacturing charge ultimate quarter. Can we see the ones inventories type of keep at that point going ahead? Or given the cycle, are we able to be expecting stock drawdown all over this quarter? And I will come again for a 2nd.
Dale Henderson
Sure. No, we will have to be drawing. At the beginning, Tom — sure, we will have to be drawing the ones inventories down. Sure, the secret is to scale back shares and simply stay that transfer to marketplace. We do not need to grasp our money and shares round produced product.
Thomas Hays
And is there any affect of the cyclone previous this quarter?
Dale Henderson
Sure, we did have a bit of of an affect. Sure, the cyclone, thankfully, because it used to be a moderately gentle contact for our web site in any case, which used to be nice. It used to be a Class 5 bearing down on us and a few we had been batten down and being worried what may transpire. But it surely used to be moderately gentle on when it comes to the cyclone affects as opposed to, in fact, we needed to do all of our shutdown in readiness of the cyclone. So we did take a bit of of successful when it comes to manufacturing run time. On the other hand, we have now successfully allowed for that as we’ve got checked out our steerage for our present volumes for the yr. However — sure, happy to mention, sure, that cyclone used to be a mild contact.
Thomas Hays
And possibly only a follow-up simply on pricing and possibly tackling it from a unique method. I ponder whether you’ll be able to supply type of a high-level cut up of your gross sales by means of nation going ahead?
Dale Henderson
This may be query 3, Tom. However — allow us to take that on realize. Sure, we shouldn’t have many purchasers, and we simply wish to watch out the best way we give protection to the industrial sensitivity of those preparations. However let’s put that on realize.
Operator
Subsequent query comes from Ben Lyons with Jarden.
Ben Lyons
Dale, truly useful getting your insights into the marketplace, a lot favored. I am most probably extra to your present advertising conduct. We are already a complete month into the June quarter. So are you able to make any remark about your gross sales conduct all over April? So for instance — and that is one query, however it is a multi-parter. Have you ever resumed spot gross sales the use of that GLX platform? And are you able to make any remark about whether or not the April pricing has been in line or less than the ones vegetation in speedy markets indices that most of the people generally tend to take a look at, which I put it about 4,100 to 4,200 on an SC6.0 foundation?
Dale Henderson
Sure. Excellent query at the gross sales pathways. So the fast solution is, because it pertains to spot gross sales, we’re leaning extra against type of closed delicate sort means in this day and age. Right here we have not achieved any BMX gross sales since ultimate yr. And I feel I would be expecting we will most probably proceed with the closed delicate means for gross sales. If the marketplace is going — flips again into fever pitch, I may just see a situation the place we most probably go out the BMX. So it is the place we’re — that is the method we take into consideration it nowadays.
Because it pertains to section 2, when it comes to April pricing, clearly, I will be able to’t give away an excessive amount of there. And I admire that the problem any person having a look on the trade would have at this time that I see that there’s a very vast unfold round what the fee reporting companies are reporting. Now inside that, what I would say is, our goal is to stay, in fact, pairing our gross sales with the ones hydroxide members who take part within the more potent margin a part of the marketplace. In order that would be the goal at this level transferring ahead. However as to the place does pricing opt for the quarter. As we famous, we are type of nondescript on that. We’re going to see how the quarter is going and stay up for reporting on the finish of the June quarter.
Ben Lyons
All proper. K. May direct the second against, I assume, each you and Luke. Luke, welcome. Clearly comes with nice credentials, extremely certified, et cetera. Just a little fairly atypical, despite the fact that, in your CFO to additionally grasp different board positions in indexed ASX firms. Simply possibly whether or not you’ll be able to type of make any feedback, Luke, across the allocation of your time. I am certain you have got the aptitude, obviously, however simply the way you type of means the ones conflicting calls for in your time.
Dale Henderson
Sure. Thank you, Ben. I may on that one. Glance, at first, with the entire executives we’ve got engaged, it is been — the place we’ve got engaged 5 executives in general in a brief time frame, all of the ones executives, there is a lengthy strategy of ref tests, screening and just about the entire roles, it used to be a global seek, together with that one for the CFO, which Luke gained out. Now with every of those executives, they, in fact, produce other commitments. And as a part of that, there may be transition plans to be labored via. Now transition plans do not occur in a single day. And — however in fact, there are issues in movement.
Sure. As a industry, we are — in fact, we are mindful of creating certain the executives are absolutely trustworthy, middle offered to Pilbara. We are not looking for them distracted or their time subtle over their different pursuits, and that is the reason the case throughout the entire executives, however there’s a little bit of a procedure to paintings via to try this.
And we are overjoyed to have Luke, rather well credentialed, certainly. He involves us excited and enthused to truly transfer the dial for us. So being a bit of of an oblique solution there made, however I sought after to type of define the method is without a doubt on our radar, the cut up, and we are running with Luke on that time. Thank you in your query too.
Operator
Your subsequent query comes from Levi Spry with UBS.
Levi Spry
Possibly simply sticking at the learned value query. So the learned value did pass over mile somewhat bit. Possibly — so a 2-part query. The second one section could be round extra on what Ben used to be speaking about. However at first, simply on grade. So are you able to communicate round what grade you propose to provide this quarter and within the brief to medium time period?
Dale Henderson
Sure, the grade will proceed to focus on the low 5s, 5.2 to five.3, normally, we — and simply to remind everybody, we’ve got regularly transfer down the grade curve to maximise yield from the mine to get extra lithium devices to marketplace. In order that manufacturing technique shall be unchanged within the close to time period.
Levi Spry
Sure. Nice. And so simply at the different section. So had been there changes within the March quarter value won? And simply when it comes to just like the read-through value bargain, I have in mind you mentioned recutting one of the vital value results pre-Christmas. And now the tollings came about, nevertheless it did not relatively paintings that point. However are you able to simply communicate to what the opposite large piece there will have been as opposed to the ones indices that we have a look at that discussed the ultimate quarter, no longer this quarter.
Dale Henderson
K. I am not certain utterly — let me have a crack on the query, however welcome to stick to up if I have not relatively hit it. So when it comes to the offtakes in fact, discuss to the lion’s percentage there of manufacturing dedication. We went via a number of industrial pricing negotiations, which a question, in fact, we pondered in the ones contracts overdue ultimate yr. We are actually transferring into the following segment of that, which is a serve as of that timing, which is predetermined in the ones contracts. So we do not know the place the ones results will lead. However it is at all times a negotiation. As to which our worth issues we can use, sure, as I mentioned previous, there is a little bit of a large unfold. So we will see how we cross with all of that, and we will replace sooner or later. Does that solution your query?
Levi Spry
Sure. Roughly. Simply possibly only a easy one, so that you discussed the important thing pay adjustment that is going down, this era, this quarter, bobbing up. Used to be there any ultimate quarter? Or what used to be the materiality of it ultimate quarter?
Dale Henderson
Do you need to take that?
Luke Bortoli
Sure, certain. Sure, there used to be an adjustment within the ultimate quarter. It is in Observe 9 within the announcement and used to be additionally disclosed on the December quarter.
Operator
Subsequent query comes from Tim Hoff with Canaccord.
Timothy Hoff
I simply sought after to invite a few questions across the middlings product. Used to be that quantity incorporated within the shipped tonnes? Or is that in truth excluded?
Dale Henderson
Tim, no, it wasn’t.
Timothy Hoff
Very good. And when it comes to that product technique, is that one thing you are going to stay going ahead?
Dale Henderson
Sure, Tim, I feel — sure, that will be the goal. On the finish of the day, our complete working technique is geared round maximizing worth for our shareholders. So — sure, if that lever works for us, we will proceed to drag it.
Timothy Hoff
Very good. After which simply after all, the plant used to be working at 82% availability. Is the objective there 100%? Or is {that a} general availability?
Dale Henderson
It is beautiful — no longer many operations had been run at 100% availability. So we goal excessive 80 percents. And in time, we need to get that even upper. So we need to be within the most sensible quartile on our availabilities. However sure, that is our objective.
Operator
Subsequent query comes from Mitch Ryan with Jefferies.
Mitch Ryan
You might have known as out type of that you are having a look at downstream partnering projects. Clearly, that is in early levels, however are you able to simply give us a few of type of the important thing metrics that you are assessing the ones proposals on? Is it simply value? Or are there different parts that you are assessing them on?
Dale Henderson
Mitch, we are handiest initially of the method, however to discuss one of the vital parameters, which we might assess or take into consideration, can be, clearly, round in the end, if it is a downstream proposition in combination, capital value, value of manufacturing and making sure the pricing, i.e., the facility to ship high-end battery-grade product as a result of, in fact, that every one speaks to margin.
Two can be about provide chain integration, i.e., is it positioned in an current battery hub ecosystem? Or is it being proposed in an rising hub? 3 can be alignment on sustainability. 4 can be across the technical experience and demonstrated revel in in with the ability to function all these amenities. And the ultimate one would most probably extra round executive toughen. So it is the explicit dwelling house, does it yield IRA toughen or Eu subsidy toughen or different forms of toughen. Widely, the ones are the standards we might believe as we have a look at those other partnership alternatives.
Mitch Ryan
And the truth that you are assessing those, will have to we learn anything else into that when it comes to your midstream product focal point and undertaking? Or do you suppose that they are able to coexist?
Dale Henderson
It is without a doubt a part of the pondering, Mitch. Sure, with the — however the factor with midstream, it must earn its stripes. We nonetheless signify it as an R&D undertaking. However we have now were given a watch on it when it comes to — and pondering across the lengthy recreation as to end up that neatly, how can we migrate our industry into that fashion. So the fast solution is, sure, it is a part of the pondering.
Operator
Our ultimate query comes from Kate McCutcheon with Citi.
Kate McCutcheon
Are you able to simply elaborate at the feed or manufacturing problems within the quarter? It kind of feels like you are operationally neatly forward of comrades. And there are nonetheless some problems with feed high quality. So I am focused on that. One of the marketplace has a false impression that mining laborious rock lithium is straightforward. So focused on feedback round the ones problems.
Dale Henderson
Sure. So at first, that may be a false impression. Mining laborious rock is hard, I’d consider you. At the ore mineralogy, there are variabilities of that via our operation or via our ore our bodies, and we proceed to paintings on that and make stronger the working out of that. After which as we stabilize and be told extra in what is popping out of the bottom, it stabilizes via to the processing vegetation. That is a part of our geometallurgy program of labor. I may not get into the element of the issues that we are running on. That is one thing that I do not need to do right here. However we’ve got were given systems at paintings in that area that may yield restoration enhancements into the long run and that program is up and working.
Kate McCutcheon
K. After which only a fast one to stick to on. So that you mentioned recoveries for [indiscernible] 68% in Ngungaju plant, and that is the reason underneath deliberate. Are you able to supply some colour on what the web site is extensively aiming for? What can be a excellent sector restoration? A excellent one?
Dale Henderson
Sure, completely. So for the Pilgan plant, we need to be into the 70s and our long-term objective is to be 75% and past. And for the Ngungaju plant, it is the excessive 60s. And once more, in a similar fashion to the geometallurgy program of labor, we’ve got additionally were given one that is simply particularly on restoration, to make the vegetation extra tough, relying no matter mineral feed is fed to them, in order that they transform extra tough and, once more, proceed to make stronger their restoration. So numerous paintings to do and numerous attainable upside.
Operator
I will now surrender to Pilbara Minerals’ Leader Business and Prison Officer, Mr. Alex Eastwood, to supervise webcast questions.
Alex Eastwood
Thanks, and hi, everybody. We now have relatively a couple of wide vary questions. I do know we’re seeking to stick with a point in time, so I will attempt to consolidate a few of the ones questions.
The primary query we have now is, has the Board thought to be a list at the New York Inventory Alternate or every other U.S. exchanges? There is a couple of questions alongside the ones strains, Dale.
Dale Henderson
Sure. Now and again, the theory has been mentioned, however that is in no way one thing we have now put any significant effort into. And that’s the reason one thing I feel we might discover within the close to time period. Possibly sooner or later down the observe, that is in no way now.
Alex Eastwood
Subsequent query round urge for food for M&A process within the lithium area, and are we open to obtaining different battery steel property as opposed to lithium?
Dale Henderson
Sure. In order it pertains to M&A, I’d signify the ones as being early in our adventure round pondering via our inorganic expansion technique. In the long run, in time, we need to be geared as much as capitalize on alternative. However as I mentioned within the opening, we can step in the course of the technique. That is precedence 4 down the record. We have were given an excessively complete plate handing over an natural expansion — our natural expansion technique. In order we glance to successfully double our operation over the following type of 18 months plus our downstream, plus midstream and our downstream three way partnership with POSCO, et cetera, et cetera. In order that stays the focal point. And — sure, M&A is definitely down the record.
Alex Eastwood
A couple of questions in regards to the Calix JV, and simply normally soliciting for a bit of of an replace on that. And likewise when it comes to marketplace engagement, what — how has the pattern merchandise being won by means of the marketplace? What offers us self assurance that there shall be a marketplace for extra middleman product?
Dale Henderson
Sure, no drawback. So — because it pertains to the midstream undertaking, the staff are busy running via the following point of research, which helps the FID resolution at the demonstration plan that we’ve got flagged to make that FID overdue on this quarter, within the June quarter. So — sure, staff’s busy underway of progressing that. Because it pertains to comments from the marketplace on samples, that is been extensively — sure, certain, supportive. The staff are running via with counterparties working out the element truly round impurities importantly, value, et cetera. So — sure, not anything has given us reason for fear in any respect.
Alex Eastwood
A query, in all probability for Luke. Relating to the $2 billion of money held for the quarter, what is the reasonable rate of interest earned? And is there scope to get upper rates of interest?
Luke Bortoli
Thanks for the query. It’s been creeping up. This present day, the weighted reasonable hobby source of revenue charge is roughly 4%, and there shall be scope to trace marketplace charges over the years.
Alex Eastwood
Thank you, Luke. A query centering round exploration at Mt Francisco. Is there any plans anytime quickly to proceed with that, truly simply round [indiscernible]?
Dale Henderson
No. No plans within the close to time period on that one.
Alex Eastwood
Sure. Query about — I feel you almost certainly lined a bit of of this, however how important the POSCO JV corporate — our JV is to the corporate. And what kind of issues would we bear in mind in making an allowance for transferring our hobby from 18% to 30%?
Dale Henderson
Sure. So the POSCO three way partnership could be very important for our industry. At the start, we’ve got dedicated 315,000 tonnes of our manufacturing profile. In order that’s roughly 50% of the run charge we produce nowadays, and shall be 30% as soon as expanded to the 1 million tonne in step with annum profile on mid ’25. So it is a large a part of our manufacturing profile. However importantly, it is a manner in which we are making margin no longer handiest via our spodumene pay attention supply, however then we are getting the add-on of the margin cue of the lithium hydroxide manufacturing via that three way partnership industry. So it is about larger margins. It is usually about larger balance.
The POSCO three way partnership is 100% wholly dependent at the provide from our operation. So there is a codependency, which exists there, which we really feel makes our industry extra tough and reinforces the rules, such that inevitable cycles, Pilbara shall be one of the crucial mainstays of the trade, and we will sale via the ones down cycles, which undoubtedly will happen every so often.
And finally, I would upload that POSCO is beautiful spectacular as a industry. They have got were given, clearly, a world presence with being an truthfully a hit in metal. And because it pertains to this new power, inexperienced power and inexperienced fabrics by means of transferring powerfully into the gap, of which the lithium element is a one puzzle piece that they are pulling in combination. So they have got daring ambitions to take a big place, and we are overjoyed to be hopped up with them as they blaze that path. So a large number of pluses for our three way partnership with POSCO.
Alex Eastwood
A query round — a couple of questions round dividends, basically would we be reconsidering our dividend coverage in gentle of buildup and money reserves, such such things as buybacks. If no longer, is additional attention been given to diversification via acquisitions, which I feel we’ve got truly — we’ve got lined. Actually simply the questions round — will there be a metamorphosis within the dividend coverage?
Dale Henderson
Sure. No — thank you for the query. So the capital control framework that we put to marketplace used to be handiest within the December quarter ultimate yr. So it isn’t that way back. And sure, as time strikes on, sure, we can periodically be reconsidering that capital control framework which, in fact, units out how we take into consideration dividends and the opposite proceeds use, which come from the industry. So brief solution is, sure, we can rethink that over the years, and we will make that review in response to the well being of the industry the place we are at with our strategic priorities and the macro outlook.
Alex Eastwood
There is a query about — given important money waft we have now every quarter, which is very important, is there sufficient marketplace purchaser hobby to justify spending cash for a imaginable P1500 growth sooner or later?
Dale Henderson
I find it irresistible. Luke, is it imaginable to head P1500?
Luke Bortoli
To respond to that, we wish to do the paintings on that query. And — however is it at the drafting board to believe?
Dale Henderson
Sure, it is at the drafting board as an concept that we will have to proceed to do the whole lot we will to profit from this unbelievable Tier 1 asset. In order that begins in the beginning round drilling out the asset to complete extent. And as disclosed within the quarterly, we are busy progressing a drilling program there, which — we’re positive will yield extra lithium devices. That is truly the primary a part of name is working out what is within the flooring.
After which the second one a part of the equation is to then optimize manufacturing capability relative to lifetime of mine doing optimization. So relying how we cross with the drilling, there’s attainable alternative to boost manufacturing, however it is too early to mention to what point lets push manufacturing to.
Alex Eastwood
K. I observe time is working out, so I will prohibit to 1 extra query. Relating to long term expansions, are we anticipating economies of scale with value discounts?
Dale Henderson
Sure. The fast solution is sure. Transferring to a bigger operation and does supply scale and alternatives. And that’s the reason — because it relates very a lot to the processing capability in plant. However I’d additionally upload that given our lengthy lifestyles mine and the excessive volumes that we produce, endured capital funding round value down investments is there, and we see relatively a protracted record of alternative starting from various kinds of energy for — energy provide for the industry to scale back energy prices; two, having a look to transport from triples to quads for haulage; 3, the best way we outload our port, probably transferring to bulk outload amenities at [indiscernible] transferring clear of retainer bins, then there would be the endured focal point on lithium restoration that Vince spoke about previous.
We’re within the industry of concentrating Lithia. In order that will at all times stay a focal point. We need to stay construction on that. That can all play to scale back prices. So the record is going on. So, sure, lots extra value to come back out I be expecting within the years yet to come.
Alex Eastwood
Thank you, Dale. Apologies, I don’t have to everybody’s questions. There are a couple of, however we’ve got lined, I feel, the vast majority of them. And those we have not lined, we do have e-mails from the shareholders who have made the ones questions so we will solution them in the course of the customary shareholder enquiry line.
Dale Henderson
Thank you, Alex, and thank you, everybody, for dialing in nowadays, and we stay up for updating our subsequent quarter. Thanks very a lot.