Thank you for standing by, and welcome to the Pilbara Minerals December 2021 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. If you wish to ask a question via the phone, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Ken Brinsden, Managing Director and CEO. Please go ahead. Thank you, Rachel, and welcome to everybody joining on the call, and welcome to those who are participating via the webcast, especially those shareholders that have taken the time to join in. It's much appreciated. Here in the Perth Pilbara Minerals head office, I'm joined by Dale Henderson, our Chief Operating Officer, and Brian Lynn, our Chief Financial Officer, both of whom you'll hear from during the call. Also in the office here with us, Alex Eastwood, our Chief Commercial Officer, General Counsel, and David Hann, our Investor Relations Specialist. Thanks to everyone for joining. Well, the backdrop to the quarterly call is one of strong demand, accelerating price, and in part, Pilbara Minerals responding, albeit with some production challenges evident, and especially during the December quarter. We've been continuing to work on the acceleration of Pilgangoora production in a very, very busy quarter as we started production at the Ngungaju Plant. That is, to remind you, the former Altura facilities. We brought on the Pilgan Plant improvements project, which is complete and now fully tied in, and we continue to ramp up the production at the Pilgan Plant. In support of all that, a lot more site activity. That includes relatively significant growth in mining volumes, which you can see in the production tables within the quarterly. Albeit still having to go higher as we support production growth, both in the short and the medium term. Customers obviously want more product. You can see that with respect to pricing. Pricing is quite incredible, and that's something that I'll come back to talk to in more detail during our commentary. Yeah, incredible results on our BMX platform with respect to spot sales. Very strong pricing, especially in China, which, just reminding everyone, is the world's largest lithium raw materials market. That's now spreading to international markets with pricing hitting record highs virtually every week. That's translating very well to spodumene, which is part of what, again, I'll explain in more detail. The reference prices at a headline lithium chemicals price and how that's playing to the value in the spodumene. I'm going to explain a bit more detail there so that you understand some of the dynamics in the market. The ramp up in production continues, albeit slower than we would like. Just to remind everyone, we're taking Pilgangoora production from approximately 330,000 spodumene concentrate tons per annum to 580,000 spodumene concentrate production. Big production growth, and with that has come some challenges. But as always, the Pilbara Minerals team is working incredibly hard and carries some fantastic skills that we've learned over the years about how to bring that production on. Still targeting 580,000 spodumene concentrate tons at the run rate by the middle of this year. However, both plants are still in their ramp up phase, and it's that issue, combined with the effects of, you know, difficulties in the labor market and then more recently, community transmission of the COVID virus here in Western Australia. That means there is some risk to our ability to produce as hard and as fast as we would like. Nonetheless, you know, a lot of work going on, as I said, and the Pilbara Minerals team carries all the right skills to make it happen, and we're obviously doing the best that we can. The POSCO downstream joint venture was executed during the quarter. We're now going through the completion criteria for the final formation of the joint venture. In parallel, POSCO themselves have started the early works at the Gwangyang site, and they've confirmed that they'll start the significant construction works during the current quarter. We're looking forward to their progress over approximately the next two years, as we head towards Pilbara Minerals' first hydroxide production in joint venture with POSCO. Coming up, Dale will explain a bit more about what we're up to in both production and as we ramp up the plant and also production growth to the medium term. Brian will follow up with some more commentary about cash flow generation and a little bit of a follow-up to the cost story. On that note, Dale, over to you. Thanks, Ken, and good morning, everyone. I'll offer my commentary on three parts. Firstly, a little bit about the operations. A quick touch on the reserve update that we did during the quarter. Then to finish, I'll provide some insight into the projects space and expansion plans which we've got coming up. Starting with operations, as Ken described, it's been a growth quarter, bringing on two operations, starting to ramp those up both simultaneously. Growth quarter, but we've definitely had some growing pains, and Ken mentioned the labor shortages, which are happening across the state. Pilbara has not been immune to that, and we have found some of those pains end to end through our operations. That being said, the quarter still had fairly solid production at 84,000 tons at the low end of our guidance. Recovery, 62% average across both operations. Yet again, slightly below where we wanted it to be. Now stepping through the subsets of the operation. From a mining perspective, it was a quarter of moving more waste that was as per the plan, but not quite the volumes we wanted to achieve. Again, a function of some of the labor shortages our mining contractor is seeing. One of the consequences of this was slightly compromised ore in terms of feed ore to the plant, which translated through to slightly lower recovery than we had planned. Consequence there around mining movement. As part of the response to mining during the quarter, Pilbara instigated our own mine fleet and mobilized our own small owner-operated fleet to support the south pit operation, which principally serves the Pilgan Plant. We kicked that off during the quarter, and then we're pleased to report that started well. Moving from mining and stepping into each of the processing plants. With Pilgan processing for the quarter, average of 65% recovery versus the plan of 35. As mentioned earlier, slightly off where we wanted it to be. The improvement project package, which is the debottlenecking project for that plant, was construction complete, commissioned, and we're really just moving through an optimization phase as we look to ramp up and increase throughput through that operation. From a cost basis, higher than we wanted where we want it to be. A consequence of increased mine movements, some mining contract performance challenges that I mentioned. In the plant space, the ore feed being slightly off where we wanted and some delays around commissioning for both plants, including some extended shutdowns. In summary, quite a few contributing factors playing through to a cost impact. Brian will speak to this in a little bit more detail later in his section. Moving from Pilgan processing plant and now speaking to Ngungaju. The December quarter was the quarter where we hit the ignition switch, so to speak. Our first concentrate from the core circuit coming through in early October. That operation, we're moving it through a staged ramp up with core circuit first, floats to follow. Float circuit, we're on track to effectively start that ignition switch of the circuit in this quarter. Ramp up slower than what we wanted where we wanted it to be. Some maintenance issues contributing there. All said and done, good to get the wheels turning, and production starting to flow from that operation. Last thing on the ops update, production guidance. You'll note from our update that given the labor challenges and some of the ramp-up challenges we've had, we're commencing a review, and we'll look to revise our guidance as part of our half-yearly results when they come out in due course. That concludes the ops update. Moving to part two on the reserve. Just a note there that during the quarter, we did do a significant reserve upgrade. This was the combination of bringing in the Altura reserve and resource into the existing Pilbara Minerals one. Big increase, 47% upgrade from the prior year to 162 million tons. Huge reserve upgrade, which of course supports the ramp up we're doing and the progressive expansion plan. Lastly, the expansion plans. Where are we at? Historically, we had talked about expansion in terms of stage two and incremental stages of stage two. We've dropped that naming convention and chose to revert to more simplified labeling so that everyone benefits. The P680 project, as it's now called, is the next incremental expansion beyond the ramp up that we're in the thick of at the moment. This is to provide 100,000 tons additional to our total production capacity, bringing us up to 680,000 tons per annum. Where are we at with this project? We're in the closing stages of study works and targeting an FID in the June quarter, all going well. Beyond that, it's the P1000 expansion project, which is, as the name suggests, stepping up to 1,000 kilotons per annum in aggregate production from the operations. We're targeting an FID for that expansion in the December quarter this year. Lastly, in the project space, the midstream project, which to remind everyone is the production of the value-added high purity lithium chemical salts. The scoping study is in a finalization stage at the moment. We're also completing the economic evaluation for that and looking to announce that. Beyond that scoping study announcement, we positively disposed to moving forward with that project with our partners Calix, ultimately to commercialize that project and that approach and bring what we think is a superior product to market. Watch this space, and we look forward to updating on that accordingly. That's a wrap for ops, reserve, and projects. At this point, I'll hand over to Brian. All right. Thanks. Thanks very much, Dale, and good morning or good afternoon, everyone. If I think about the financial impact of the quarter that we just had, I sort of put it in sort of three different aspects. One is obviously a very positive price environment. Very strong operating margins generated. With some of the operating challenges that Dale just gone through, we've obviously had some impact in terms of higher unit operating costs. In terms of the physicals, we produced just over 83,000 tons of spodumene concentrate, and sold about 75,000 tons of concentrate that was produced from the Pilgan plant and about 3,600 tons of concentrate that was produced from the Ngungaju plant. That comes through to an increase in inventory of about 5,000 tons, and we closed the quarter with closing stocks of about 16,000 tons, which represents about half a month's worth of production. In terms of price and operating margin, I think everyone's aware it's been quite an extraordinary improvement in pricing over the last quarter. We averaged a price of somewhere between $1,175 and $1,800 a ton on an SC6 basis. Just as a reminder, that compares to pricing of $850-$900 a ton that we achieved for September. That's quite an extraordinary uplift in pricing. With that pricing environment, clearly, we generated a much stronger operating margin. Our margin was about $1,150 per dry metric ton for the tons sold from Pilgan, the 75,000 tons from Pilgan. With that strong operating margin, there's been a significant increase in the company's cash position. The September cash position was about $137 million, and that obviously we quote cash, but the LCs as well for shipments that occurred in the quarter. September, we had $137 million, and at the end of December, we now find ourselves with $245 million. That's an increase of just under $108 million. Where has that increase come from? The cash operating margin that the Pilgan plant was able to generate represents just under AUD 116 million for the quarter. We also through the tons that we sold at Ngungaju, even though, you know, Ngungaju is still in ramp-up and commissioning phase, we actually still generated a positive cash flow of about AUD 2 million following the sale of the 3,600 tons from that particular operation. Capital spend across the business was just under AUD 27 million, and that's obviously money spent on the Pilgan plant improvements, on the restart of the Ngungaju operation, the commissioning, and also on the [visual waste mining] that's currently being undertaken. But that was largely offset by the drawdown of debt. During the quarter, we took the opportunity to increase our debt facility with our banks by $20 million. That was done deliberately to help us fund the restart of the Ngungaju operation. That $20 million agreement was signed up during the quarter, and the monies were drawn down in December. That represents about AUD 27 million. We also paid about AUD 2 million in interest costs on the debt, and we also paid a cash sweep under the debt facility of about $2 million as well. At the end of the quarter, we end up with about $245 million of cash, and that represents a net cash position, so net of debt of around about AUD 68 million. Clearly this quarter has been a significant for the company and places the company in a much stronger financial position than we were at the start of the quarter. The obvious one downside, if you like, for the quarter from a financial point of view is the unit operating cost. The unit operating cost clearly has been impacted by the challenging operating environment that we faced during the quarter and was $587 a ton, which was about a $142 a ton higher than the unit operating cost for the September quarter. That increase of $142, about $56 of that really relates to royalties. Obviously, if the selling price environment is going up, we are paying a much higher royalty. That AUD 56 of that increase related solely to the fact that we are having to pay higher royalties as a result of receiving a higher selling price. The remaining AUD 86 is really attributable to the fact that we're generating lower levels of spodumene concentrate production. This, as Dale alluded to, really was as a result of plant shutdown to facilitate the tying of the of the plant improvement project at Pilgan. We had some unplanned downtime events to address some maintenance and equipment issues that needed to be rectified. We also ended up with a lower recovery, as Dale mentioned. This is really due to the fact that the ore feed being presented to the plant wasn't as optimal as it should be. Then we were also impacted by the fact that there's just a lack of mining production and maintenance personnel in the market, which impacts how the operation gets run. Now, if I think about those cost increases, you know, they are, I think, unique to the challenges that we're currently facing. I don't think they are necessarily something which is gonna be a permanent increase. Other than the higher ore feed costs, which are linked to the selling price, my expectation is as we achieve steady-state production from the operations, that those costs will come back to the levels that we had guided to previously. However, as Dale mentioned before, we are currently undertaking a review of our production and whether we need to revise our production guidance. If there is any impact of that production guidance on unit costs, then clearly we will be making a disclosure at the same time in late February when we release our half-year accounts. I think that that's everything I wanted to go through. Ken, I might hand back to you. Yes. Thank you, Brian. Thank you, Dale. A bit more commentary about the market, and in particular, apologies in advance for delving into a little bit of detail about the pricing environment, but I think it's particularly important to explain how that works so that you have a greater understanding of the opportunity that the current market represents. Obviously, given where price has got to, there is a growing disconnect between available supply and surging demand. Surging demand is driven by, you know, all those things that represent opportunity in electrifying the global economy. The lithium-ion batteries are now key to that, so hence the growth in demand. On the supply side, without wanting to put words in other producers' mouth, I don't think their experience is necessarily any different to Pilbara Minerals. It is tough to bring on additional capacity in an environment where you were previously being punished. Very low pricing environment have meant that every producer had slowed down. I think it's highly likely that on the supply side, there will be challenges, and it's probably the case that the supplier response is already being overstated. It's against that challenging environment that the price is surging. It's kind of perverse, but for the very same reason that Pilbara Minerals had a challenging production quarter, you are likely to see pricing increase because the supply response is insufficient. I hope that makes sense. On pricing itself, and delving into a little bit of the detail, Platts reported China domestic pricing in battery-grade lithium carbonate of CNY 386,000 per metric ton, lithium carbonate equivalent basis. So that's over $60,000 a ton in China. Now, people will tend to want to dismiss that price because it's, I think, somewhat unfairly described as a spot price. But what's actually being discovered in that price survey is the real price being paid by the same relationship, i.e., a long-term seller and a long-term buyer who are constantly renegotiating the price and volume. So what it is. Well, I think what it represents is the real price that the chemical conversion industry receives in China. You know, bearing in mind that China is the world's largest lithium raw materials market. I think all the evidence points to that price being a real price because it's also driving international pricing, which typically has longer dated contracts. International pricing is already approaching $50,000 a ton. For those that wanna characterize it as a spot price, I think that's a little bit of a misrepresentation. It is the price that the chemical conversion industry receives. Why is that important? This is where the spodumene supply base ultimately has its day in the sun, and I think Pilbara Minerals is particularly well-placed to participate in that pricing environment. What it means is that if a chemical converter is receiving 60,000, over 60,000 $ a ton for their battery-grade carbonate, if you deduct the VAT and you deduct the cost of chemical conversion, they have approximately $50,000 left to spend on their raw materials. $50,000 left to spend on their raw materials, of which spodumene is obviously a key component. What that means is that the chemical conversion industry can pay a lot more for spodumene, and in my view, they likely will because there is no alternative. They already have chemical conversion capacity, of which there is oodles in China, but there is insufficient spodumene to backfill the chemical conversion capacity. The net effect of all that is that they will pass their margin upstream, which means spodumene pricing is already very strong, but in my view, likely to get stronger. I know everyone thinks that sounds like a pretty extraordinary scenario. Have a think about this. It's not iron ore. Spodumene is not iron ore. Spodumene and its derivative chemicals are part of an industrial mineral supply chain turning into a specialty chemical supply chain for which most players will already be contractually bound. They are contractually bound to sell chemicals to a cathode material player or a cell maker, maybe in China, but equally probably Japan and Korea. They are contractually bound, but they don't have the raw material. What that means is that they will pay virtually anything for the raw material. The dynamic in, you know, that I'm describing is one that's very different to what most people might be used to in natural resources market. Because, you know, if you took iron ore as an example, that's a very large liquid pool of available product. That's not what's represented by an industrial mineral supply chain where people are have built purpose-built, you know, chemical facilities to match a combination of input raw material feed for a defined quality to a customer who's probably a longer-dated customer downstream. All those dynamics create something that's very unusual in the pricing world when there's such a bad disconnect between available supply and surging demand. That's what's going on in spodumene markets. Quite incredible. I think Pilbara Minerals is really well placed. We're probably outperformed as it relates to price received in the December quarter. The March quarter is already looking very, very strong. We've guided for between $2,600-$3,000 per ton CIF China on a 6% spodumene basis, because we see lithium chemicals pricing being very strong, which represents a key peg to our spodumene price. Yeah, incredible times, but nonetheless, Pilbara Minerals will be having its day in the sun. That's the detail in the spodumene market. The other means by which we look to take advantage of that is through the BMX platform. The BMX platform will typically handle excess product from our Pilgangoora production, most of which is coming through the growth in Ngungaju production, which is coming. We've only been producing through the HMS circuit so far. We're continuing to chip away at that and the flotation circuit with the expectation that the flotation circuit starts during the latter part of the current quarter. In which case, we should have more product available for the BMX platform, and we're looking forward to the price discovery that that fleshes out. To close, in summary, it's a challenge bringing on the two plants and the expanded capacity that they represent, especially in light of the tight labor market that WA currently suffers from. We're all looking forward to the border's opening because it ultimately it should provide some relief to those tight labor market conditions. Firstly, while that was a challenging quarter, it's not just Pilbara Minerals' experience. We expect that just about every resources company is going through similar issues, including the other lithium raw material providers. What does that point to? Well, it points to, at least in part, constrained supply, which points to probably higher price. We think we are really well placed to take advantage of that in the coming quarters. I'm confident in the team and their ability to bring on the remaining capacity, in which case we will have a very, very good year. Rachel, I'm gonna throw back to you. I'm sure there'll be plenty of interesting questions on the phone call, but equally some that'll come out of our webcast. Yeah, look forward to people's questions. Thank you, Rachel. Your first question comes from Alistair Harvey from JP Morgan. Please go ahead. Good day, Ken and team. Just a couple from me. Perhaps just starting with the recovery across Pilgangoora. Just wondering with Ngungaju, when do you think what's kind of the expected maximum recovery you think you'll be able to get there once you bring the floats online, and what sort of timing do you think we might be able to see that across? In the detail there, Pilgan was compromised by the new equipment being brought on as part of the improvements project and the effect of a less than optimal blend. That we experienced recovery at Pilgan of sort of 65% versus 75%. At Ngungaju, the recovery is materially lower while we're using just the HMS circuit, with the transition or the nominally 30% recovery until we bring on the float station circuit. Target recovery, the average view over time with a fully optimized circuit is likely in the order of high 60-70% as compared to Pilgan being 75% for argument's sake. Yeah, that's really helpful. Thanks, Ken. Just secondly, just on the FID for P680 and P1000. I'm wondering how long after FID, if they are successful, could works begin, just given the tight labor market you're seeing and just any commentary you have on perhaps percentage increases in CapEx you've been seeing relative to prior studies. Yeah. I'll turn it to Dale for that one. Yeah, sure. I'll as to the timing around starting execution of those projects post FID. The good news is for the P680 could be fairly quick. As that project is effectively an expansion to the HMS circuit. The function of engineering, timing, long leads. We think construction could be as soon as six months starting as soon as six months post FID. We wouldn't expect likely the ramp up of that till maybe nine to 12 months post FID. That's largely driven by our estimates around long leads. As to capital increase and cost increases, we've definitely observed escalation across the board from the W.A. environment, steel prices and the like. We haven't translated that through quite yet to the CapEx forecast for these particular projects. Of course, we will do that as part of the FID decision. Hope that answers your question, [audio distortion]. Yeah, thanks, Dale. Just maybe with the P1000, do you think that will have a longer build timeframe after FID, just given that's a bit bigger? One of the questions we haven't resolved yet is actually the staging of that particular part of the expansion. It's possible that we might choose to forward order long leads. The long leads for both those two expansions really drives the critical path, not so much in our view, a labor constraint. It's more long leads and as it relates to the P1000, the good news there is we already have the HPGR for that circuit. So for us it would be really around looking at ball mill timing and the float cells principally. All the other things are largely in hand, so we could be well placed potentially to move fairly quickly with that one. Great. Thanks, Dale. If I can just sneak one last one in. Just wondering if you guys have a rough split of Pilbara's product that goes into hydroxide versus carbonate converters, and whether or not that's changed substantially since we've seen these bigger increases in carbonate pricing versus the hydroxide price. Yeah. Our customers, the contracted customers do a mix of both, so it's very difficult to determine exactly how much goes into the carbonate chemical suite versus hydroxide. But to be honest, in today's environment, you could be a bit ambivalent about it because any primary hydroxide producer, i.e., straight from run-of-bank to hydroxide, is probably switching hydroxide to carbonate, a very low cost process of carbonation to take advantage of the carbonate price. So, actually in the scheme of things, they're doing that for roughly the same cost as the cost of chemical conversion to carbonate anyway, because the primary hydroxide route would typically be a bit cheaper. So from our point of view, we're not overly fussed kind of one way or the other where it's ultimately being consumed. Given the price differential between carbonate and hydroxide, that's very much a likely market response, twisting hydroxide to carbonate. Great. Thanks, Ken. Thanks very much, guys. Appreciate it. Thank you. The next question is from Mitch Ryan from Jefferies. Please go ahead. Good morning, guys. Just sticking to a side note, but just trying to understand. We've heard one of your recent talks to the effect that they'll be ramping up their lithium hydroxide refinery over the coming years and the off-spec products are now looking to use again as a platform. Apart from that, just wondering if that would be a material earnings, if that would be material for earnings for you? Yeah, good question, Mitch, and it's hard to disagree with the logic that says the more volume and the more price points that are established on such a platform, the better the combination of price transparency and market development for more sophisticated market tools to emerge. Broadly speaking, we're supportive of an objective that creates more product pricing on things like the BMX platform. We're very open to those discussions, and it won't surprise you that those discussions, you know, are already underway. Seems like a very logical model to deploy. The industry is absolutely crying out for stronger price transparency. In light of that, I guess that you wouldn't necessarily be looking for a material commercial benefit. It would be more about the improved transparency of the market would benefit all players involved, I guess. That's right. Rising tide floats all boats. Yeah, it's pretty much that logic and ultimately it's gonna be good for the market as a whole to get more sophisticated sort of pricing methodology out there. We're not interested so much in the commercial potential in that model, just broad participation across all products. And in fact, Pilbara Minerals itself is also keen to put more price points on the platform by, you know, varying spodumene grades and over time, midstream products and who knows? Maybe our own lithium chemicals over time. That's it there. it there. Thanks for taking my question. Thank you. The next question comes from Jack Gabb from Bank of America. Please go ahead. Thanks, hi, Ken and team. Just a couple of questions from me. I guess firstly, just on the labor challenges and particularly with respect to some of the stripping, I guess this year was gonna be a bit of a catch up year for stripping rates. I'm just curious, is this gonna pose a challenge at some point? Is it gonna create a bottleneck for you as you look to expand or are you? Have you got quite a lot of headway on that? I'll just follow up with one more question. Thanks. Yeah, Jack. A couple of introductory comments on that subject, and I'll hand to Dale. Yeah, you're right. This year is all about catch up, and we had about sort of 15-18 months worth of higher than life of mine strip to catch up. That's necessitated mobilizing more fleets and larger fleets. It's been constrained by labor, that's part of the challenge. Dale, is there anything else you wanna add? The only thing I would add is with the acquisition of Altura presents more opportunities in terms of access to all. Without question, there's a heap of material to move waste movements, but we do have multiple areas to draw from. That puts us in fairly good stead as we think about various mine plans, et cetera. That's all I'd add. Perfect. Thanks. Then just one on pricing. Can you give us a sense of the range, I guess, of your pricing that you actually receive across your contracts, ignoring the BMX for a second, within your guidance, and then secondly, within that guidance as well, are you including any material volumes from the BMX platform at this point? For Q1. Thanks. Jack, on second question first. In fact, what we've described in the quarterly $2,600-$3,000 a ton represents an estimate of contracted pricing based on what we see today. It's only contract pricing excludes whatever might yet occur on the BMX platform. I might just add that there's probably a risk to further upside as a function of the speed with which chemicals have accelerated. Oh, yeah, sorry. The first question, actually it's relatively tight contract pricing across the customer group. There's really no material difference emerging in respect of the various pricing models. They've pretty much approximated each other within a couple of hundred dollars, you know, of each individual contract. They do vary over time 'cause they do use slightly different sort of pricing modeling, but it's in the detail. They all reference lithium or typically all reference lithium chemicals, potentially in a slightly different way, but the net outcome of the pricing is pretty tight. That's really helpful. Thanks very much. I'll leave it there. Thank you. The next question comes from Peter Kerr from the Australian Financial Review. Please go ahead. Dale and Ken, t hanks for your time. Just wondering on the border, I assume you're not gonna join the exodus of all the other WA-based CEOs who are coming east. Secondly, with the 5 February delay, did that upend any plans you had in terms of, you know, did you have particular markets on the East Coast you were targeting as of Feb six? Yeah, how do you sort of cope now with that, with that sort of indefinite uncertainty? Yeah. Good question, Peter. I can assure you there was lots of tears in the Brinsden household, with the border being shut post February five, given kids in their locations and the desire to catch up with them. With respect to work, no, not my intention to move to Melbourne or Sydney, not anytime soon. Did it disrupt plans? Well, it's an indirect impact of the border that it constrains short-term labor supply. So that actually gets to the heart of a lot of the issues that we've been dealing with, and especially while we're ramping up the two plants. When we've got to do a shutdown, you typically can't get the labor, at least not in the way we used to create the peak load that's required to get the jobs done quickly. So a shutdown that should have taken 36 hours takes, you know, 72. A broken ball mill coupling takes sort of 56 hours to fix when it should have taken 24, you know, that type of thing. That's really one of the key issues. Our contractors, the mine contractors feel it as well. They typically have a slightly higher sort of transitory workforce, and they're highly mobile. What's happening now is everyone's fishing from the same pool in that contractor space, and it's leading to lots of, you know, some challenges accessing labor and hanging on to labor for our contractors. So yeah, if the border's being continued to close creates challenges in that peak personnel and the extent to which our contractors can retain their personnel. So yeah, it's a big issue. The sooner the borders open and we get the, you know, the mobility back in the workforce is really the key. Presumably you think the negative impact of those labor challenges is greater than the COVID impact will be when it starts spreading through your workforce, you know, as it is over here? Definitely some risk to the production environment for WA mining companies, no two ways about it, but it should be relatively transitory. I measure it in months, you know, a couple of months, not six to 12 months. [audio distortion]. Thanks, Ken. Thank you. The next question comes from Adam Baker from Global Mining Research. Please go ahead. Gooday, Ken Brinsden and team. Just a question on the mine grades. They've been above reserve grade of 1.18% for quite some time. Just wondering, you know, what your mine plan is saying about, you know, coming back to meet reserve grades, you know, how far off are we from that? Yeah, good question and pick up, Adam. We've been reasonably clear historically that Pilgan or the original Pilgangoora operation was always mining a slightly higher grade in its first four years, roughly, of production. That's just a function of the way the ore presents at Pilgangoora, so nothing particularly sort of tricky there. The lower reserve grade also has resulted from the addition of the south pit, i.e. the former Altura operations, which again was always a lower reserve grade than the original Pilgangoora reserve grade. That also explains some of the gap. We've been in production now for two or three years, so we've got another year or two worth of slightly elevated grades and then they'll start to revert more to the reserve norm. Sure. Thanks for that. To the second one, yeah, you mentioned that, you know, there's gonna be a potential review to guidance over the half year result in February. I'm guessing there'll be some impact to the second half financial year 2022 guidance, but just wondering how likely this is the impact to the target of 540 to 580 thousand tons of spodumene by mid-year. More discussions to come, given that we've got about another four weeks prior to the half year results. There's several things going through our mind there, and the next three or four weeks will probably be formative. The first is the effect of the continued plant ramp up. There's a big gap between the historical production of 360,000 spodumene concentrate tons per annum compared to where we're going, 580,000 spodumene concentrate tons per annum. Our guidance is sensitive to the speed with which we can bring on that capacity. We really need another three or four weeks to see how we go with the plants, and the work that's already happened and integrating the combination of new equipment, especially Nugget 2, where we're bringing on the flotation circuit. That's part one. As to absolute production capacity, i.e., 580,000 tons, well, you know, we're still confident about hitting that run rate in the middle of the year, as a function of both plants and their performance. The bit that we're sensitive to is the remaining ramp up. Lastly, it's worthwhile mentioning the borders and COVID. You know, there's obvious community transmission going on here now. Mining companies are going to start feeling that. We are a bit sensitive to what that impact might do. Now, indirectly, it's already hurt us because we've struggled to get peak people, as I described. But it's possible there's also production impacts from the community transmission and how that relates to our available workforce. Give us another three or four weeks, mate, and we'll have that largely cleared up and we'll provide a more definitive guidance. Awesome. Thank you. Thank you. There are no further telephone questions at this time. I'll now hand over to Nicholas Read for any webcast questions. Thanks, Rachel. We have a number of questions that have been logged online for the team here. Firstly, some questions from John Bosworth. He says, "Could you please expand on the company's Strategy and the initiatives that have been put in place to deal with the current skills and labor challenges and risks in WA. Yeah, good question, John. Yes, of course, there has already been actually significant response. The first thing is to have taken on some of the challenge ourselves. Pilbara Minerals has commenced its own mining fleet. The logic in doing that, it's multifaceted, but one of the key drivers is the relative acceptability of longer-term employees by Pilbara Minerals as compared to our contractors. It's all to do with the way the workforce works here in WA. Most employees, not all, but most employees would say longer-term employment with an established company is a safer bet. I think we also trade on the benefit of being involved in the new economy in mining, battery raw materials, which is seen as the future and hence that brand has a better attraction and retention status. That's the key thing that we've taken on ourselves, and so far, so good. We haven't had too many dramas accessing people ourselves, but certainly our contractors have. There has also been work done with respect to retention. For example, the way we pay our people, the bonuses, the net benefits. We've done work on our camp. You know, there's lots of things that have happened that should have the desired effect of both attracting and retaining people over time. With respect to our contractors, well, we've done a bit more sort of innovative thinking with them. Again, rosters, you know, the camp and in certain circumstances, the way they're incentivized with a view to helping attract and retain people. The one key challenge which we still haven't really broken the back of is the peak labor that I described. When you need, you know, large numbers of personnel for shutdowns and/or breakdowns. That is an area that's still of concern. Again, not a challenge that we're dealing with on our own. It's a very broad issue for the mining companies here in WA generally. I hope that makes sense, John. Thanks, Ken. Two others from John. He asks the pullback in the share price over the last week or so, how much of that would you attribute to the broader global market correction, and how much to investor concern about the risks and challenges that have been discussed today? Secondly, can you update us on how the company is thinking about dividend policy given the strong performance financially in recent times? Well, with respect to Pilbara's share price, I think it's largely traded in line with its peers. I don't think there's anything particularly special that's gone on there that relates to Pilbara Minerals specifically. It wouldn't be unusual to have a pullback when lithium stocks had run as hard as they had, but also taking into account broader sentiment issues in global markets. The specter of inflation, you know, clearly led to a bit of a risk-off attitude. I would attribute most of the share price movement, you know, to that effect. Second question- Dividends. Dividends. Yeah, well, as described by Dale, we have a lot of growth ahead of us, which we think represents a you know a reasonable reinvestment in our business. That's important, and ultimately depends on what the price does. Price versus you know cost will be one of our assessments as to whether dividends ultimately become part of the story for the medium term. More to be discovered in that regard, John, before we can be definitive about dividend stream. Thanks, Ken. A question from Rob Clark. He says: With respect to your impressive balance sheet strengthening, does your midstream project warrant more resources, and can you look at ways to increase the speed to market of this product? Also, can you please clarify if the product is being targeted directly at Chinese LFP cathode makers? Oh, okay. Yeah, both good questions. Well, we very much like the midstream product and Dale said, I think your words were something like a very competitive product or a compelling product for the market, something like that. Right? I can't remember. Anyway. I agree wholeheartedly. It is a compelling product for the market, and recutting the spodumene supply chain is going to be a big part of the future of our industry, because there are more efficient solutions. We're working about as hard and as fast as we can on that project. Really happy to be working with Calix and their smart team. It's still got engineering development to be undertaken, and it's very difficult to short-circuit that. More work to be done and probably more to be said about that as we look to publish the first round of engineering in the coming weeks. I think that's pretty much it. Yep. Great. The next question is from Hayden Bairstow at Macquarie. He says, is the long-term production target post the expansion still approximately 1 million tonnes per annum, or have you made some changes to long-term recovery assumptions? Secondly, what percentage of sales in 2022 are likely to be on the BMX platform? Long-term production, Hayden, is still targeting beyond 1 million tons per annum of spodumene concentrate. Broadly speaking, you know, that should happen in the latter part of 2023, early part of 2024 onwards. Now more work to be done from an engineering and a delivery point of view. We have no doubt that Pilgangoora as a production center has that capacity, and it will be a very important part of global supply. Very much still in the picture. With respect to recovery, it's actually nothing's changed with respect to our views around recovery. Consistent with previous commentary, slightly lower recoveries at Ngungaju, just as a function of the way that plant works in comparison to Pilgan. A slightly lower head grade overall likely to be fed to Ngungaju over time. Recovery is still the same and the flotation is still a very important part of the future at Pilgangoora, whether at Pilgan or at Ngungaju. Okay. Sales. Sorry, sales to the BMX platform. Yeah. Well, there's still some uncertainty. That's a function of how quickly we can bring on the remaining capacity at Pilgangoora. From a production point of view, it's still relatively early days because we're only relying on HMS in the transitional ore. The flotation circuit construction is well advanced. We're into the cells now and still expecting that those cells will be fired up. From a construction point of view, we're finishing off the last of the construction in the cells to align it with our flotation techniques, and a view that they'll be commissioned from later in the March quarter. The question is how quickly we can bring that on to bring on additional capacity. Because it's that capacity, and then whatever we can stretch Pilgan to, that becomes excess capacity to go to the BMX platform. It's difficult to be definitive, to be honest, Hayden, about what ultimately gets sold on spot this half. Once the plant is at full capacity, so 580,000 tons, then approximately 200,000 tons of that is available, you know, at our disposal to sell as we choose. At the moment, we would choose to sell by far the majority of that to the BMX platform because pricing is going to be very strong. Chemical conversion industry is going to give away their margin to secure spodumene supply, in which case spodumene supply, you know, or pricing, will surprise to the upside. Thanks, Ken. There were a couple of other BMX questions. I'll just group them together and apologies if we're going over the same ground here, but one was, can confirm, are you expecting a BMX option this quarter? Yes, that's our. Yep. The second one, if all goes well with the Ngungaju plant, can you give some sort of estimate of how many BMX sales and tonnages in total would be expecting for this calendar year? Yeah, I guess similar to my previous comments about the speed with which the Ngungaju plant comes on. I could be more definitive about once the capacity's been built out, because then you would have approximately an auction every three weeks, roughly, as represented by the total excess capacity that makes its way to the spot market. Great. Thanks, Ken. A question here from Mr. Mills. He says, as the company moves relatively quickly to P680 and P1000, what concerns should there be or are there with shipping movements to markets given global shipping challenges and increased costs? Oh, yeah. Well, our experience is that we don't have difficulty accessing vessels. There's enough trade and vessels available in our sector that we don't in particular have difficulty accessing the vessels themselves. It's just the cost of attracting the vessels that's the issue. There has been some relief, a little bit of relief in this quarter with respect to shipping costs. We peaked in shipping costs at about $70-$80 a ton. Average shipping costs, Brian, from memory were about 55 or something of that nature. Yeah. Yeah. Yeah. Yeah. It's come off slightly, which is indicative of more vessels being available. Again, make the point that it's not so much that you can't get a vessel, it's just the cost of the vessel itself. Thanks, Ken. Just a couple of market related questions to wrap up. First one from Mr. Zinghini. He asked if you can offer some commentary on the impact on the lithium market of some recent developments we've seen, for instance, the Rio Tinto project in Serbia and also some of the political changes in Chile and any potential ramifications of those developments for lithium supply. Yeah. Well, the first thing that comes to mind, and no disrespect to the analyst community, but it's easy to put supply numbers in a spreadsheet. It's not so easy to deliver them on the ground. By the time you're doing that, a lot more complexities come into play. You've heard from Pilbara about difficulties of bringing in additional capacity. Well, we're not on our path alone. Bringing on spodumene supply and lithium units globally is challenging, and especially when you think about the combination of volume growth and quality. Each of those are going to be overestimated in our view, in which case markets will continue to be tight for quite some time. We've heard many analysts say over the years that the lithium markets will be oversupplied, that there's plenty of lithium in the world, but there's not plenty of lithium in the world that fits the right combination of location, quality of supply, accessibility to infrastructure, in the right jurisdictions that don't otherwise suffer from geopolitical challenges. Yeah. I mean, it's a complex world of an industrial mineral supply chain that doesn't want to be complex, but naturally is. Thanks, Ken. One final one. It's a related question, but a good one to wrap up on. This gentleman says, "Major car manufacturers are talking big numbers for EV production through to 2030. Is there enough lithium to achieve those production forecasts? I don't wanna be trite, but car makers have been asleep at the wheel. They haven't been paying enough attention to the raw material supply base in battery raw materials in the last five years. It's coming back to haunt them because insufficient incentives was placed in the market when it was really required, and especially sort of in that period three to five years ago, to get to where we need to be today. Not enough capital flowing upstream, not enough definitive offtake agreements that tie up the supply chain. Not enough interconnected agreements that motivate the supply chain to be interconnected. Each of those things represents a serious challenge to the industry that should have been solved some years ago, but now needs to be solved and will take some years to get right. Excellent. Thanks, Ken. That's all from me. Okay. Thank you. Nick, Rachel, it sounds like we're all done. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.