PLS Q Call Notes 25/7/23
- No hurry to move past Pilgangoora asset.
- P680 primary rejection expansion for the next 100kt is a 17% step up in produced volume on track.
- Recovery improvement due to hygiene practises, shutdown cycle, better feed availabilty.
- Crusher/ore sorter delayed by 2 quarters, due to re-directing resources to primary rejection works.
- That's required for P1000, not 680.
- Don't need the crushing capacity for 680 so they've prioritized the primary rejection facility.
- Production capacity should be double in a year and a half from where it is today.
- Offering 300ktpa spodumene which could feed multiple hydroxide trains for partnering process.
- Long term contract offer. 70 parties interested. Shortlisting down.
- Long term - still believe in long term structural deficit.
- June Q pricing - downdrift, stabilized. Market commentators in 24 hrs discussing thinly traded volumes - volatile as a result. Very few data points causing outsized responses. Worth touching on the futures contract last Friday - for Jan onwards contract - that contract went lower than exepcations and market response was outsized in their view. PLS cautions the data points on these exchanges, small contracts and small volume movements. Demand from their customers, no issues moving products, flys out the gate. They've got an abundance of offers to sell products. Noise around market trades, assurance from their market there is no issues.
- "Best market, best time, best asset"
- Macq Question - spod pricing - any changes in market, discounting, as product grade falls? Or is it just a monthly timing/shipment/pricing index quesstion.
- It's the latter. Not a case of discounting. It's reference points and time that dictates price.
- Macq Question - re: growth - they have honed the lithium recipe at the mine site, it's just copy+paste for expansion, more upside to come as team does suite of improvements to ink out more and more recoveries (naturally). Ore sorter and P1k will improve recoveries further.
- UBS Question - re: price - how do we go about forecasting price from PRA's and view 5.3/5.4 grade.
- A: Pricing always a struggle, some Q were positive surprise and some like this slightly under. This is principally around timing. Each offtake - all commercial relationships cant divulge specifics. Minor variations that play through. Timing is key. Can't divulge anymore.
- UBS Q - what pricing are you seeing right now? Stable pricing. Pricing is exposed to pricing outcome prevailing market. Rise in chemicals pricing is rise in realized price. And conversely so. Bit of crystal ball gazing.
- UBS Q - partnering process - nothing new.
- CITI Q - LFP mix growing, is carbonate considered?
- A: Not wedded to a chemical, open to all opportunities - too early to provide any guidance. Worth adding concept re: mid-stream - that too would be part of the discussion with who we partner with. The partnership would be multi-decade, they would need to consider what intermediate supply chain with salts would look like.
- CITI Q: 5.3% moving foward? Shame if its the new 6.
- A: Keep product grade where it is, north of 5% somewhere where we are - maximizes recoveries. Continue this as long as we can. Customer/market supports that at the moment. Will continue to do that. Gives them more upside in terms of produced volumes with 680/1000. 5.2/5.3% gives that upside.
- CITI Q - re: exploration spend.
- A: Modest spend, less than $20m for year ahead.
- Q from someone else: Recoveries increase to 70% - what does grade profile look like in next 2 years? Lower IO as you move into pit.
- A: Guided 75% recovery long-run average. Long run head grade 1.2%. Haven't been at 75% consistantly of late but have been improvements. They do have some levers coming as part of expansion program which enables more levels for the team.
- Q: re downstream lithium opportunities key benefits/risks that give conviction in this strategy as opposed to something China based.
- A: Wrestle with this idea as many diff ways to do it. To date, JV with POSCO that ticked the boxes. POSCO is example of ticking the boxes. As to where to we go with partnering process, they are looking globally at all the options. Each proposition has different attributes. Supply chain intergration, hub or not, reviewing commercial return to SH, alignment re: sustainability/objectives. Gov support being reviewed i.e. IRA. Technical knowhow also considered are but some of the key parameters.
- Q: RBC - re: POSCO JV why is train 2 ahead of train 1, what's the difference.
- A: Train 2 uses elctrodyalisis process, they are different tech in both trains. Other train is conventional sulphate. Why 2 different trains - it's all about cost/production. Conventional sulphate requires more chemicals where electrodyalisis requires more electricity. This hedges the technology and works through which might be best for the future.
- Q: RE: P680 - A: Labor/Resourcing issue - not driven by long/lead equipment.
- Q: JPM - cash tax paid in Q, lighter than expected.
- A: In the Q there was $121m tax paid, since April income tax is payed monthly.
- Q: pricing/volume dynamic - A: not trying to play the market, as we produce we will sell it, any surge in production is just logistics, shipment timing, no strategy on our part to play the market timing.
- Q: storage capacity - A: no shortage of space, can store as much as we want. Liquidating product as soon as we can though. Some storage limitations at PH but 60kt storage. On site no shortage if we chose to.
- Q: What drove delay in crushing/ore sorter - A: WA market is tight in construction/engineering - definitely present. Not an impact on P1000. Team has factored it into expectations.
- Q: what % of spod do you need to convert to mid-stream product. A: Demo plant by proportion would need <20-30ktpa for 2-3kt product.
- Q: Sodium ion batteries threat for demand? Short answer no.
- Q: Are we looking to M&A - A: getting underway to consider inorganic growth opportunites, they consider assets/businesses. That's what the M&A team get to do.
- Q: LTR building renewable power mine, BHP announcing de-carb for their mine.
- Q: how do you feel about MC - A: we are very cheap atm but of course he'd say that. What is the long-term price for lithium is the question everyone grapples with.
- Q: What is a primary rejection facility - A: All ore that comes out of mines has deleterious material, very early in the processing plant at the start of flowsheet, it rejects a lot of bad material at the front - cleans up what comes further into the operation, it improves unit cost.
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