Liontown Resources Aktie

Welcome to the Liontown March quarterly call. [Operator Instructions] I will now hand over to Tony Ottaviano, Managing Director and Chief Executive Officer of Liontown.

Thank you, Luca, and good morning, everyone. Before I launch into the presentation, I'd just like to introduce who else is going to accompany me on this presentation. There's Ryan Hair, Chief Operating Officer. We've got Greg Jason, our CFO; and we've also got Grant Donald, our Chief Commercial Officer. I'll start by saying this is a defining quarter for Liontown. So if we go to the next slide, please, Luca.

There are five things I want you to take away from today and mirroring what's been said on this slide. So firstly, cash on hand grew by $33 million this quarter, closing at $424 million. Operating cash flow alone was $55 million, and Greg will show this in a later slide. And for the first time since production commenced, the operating cash flow funded the business in full.

After capital investment in the asset and net financing flows, we will still end the quarter well ahead. This is the strongest financial quarter since production commenced. It's also worth noting that the Port of Geraldton was closed for several days at the end of the quarter due to the cyclone threat by Cyclone Narel. That delayed two of our shipments, slipped into April and the other departed in late the last day of March.

The cash receipts associated with that 31st of March shipment was approximately $64 million. So the underlying cash generating capacity of the business this quarter was even stronger than the reported $33 million. Secondly, the market conditions are strong, and our realized pricing reflects that. Our average realized price for the quarter was $1,845 per dry metric ton on an SC6 equivalent basis, up 87% quarter-on-quarter. The structural setup in the lithium market is compelling, and we're now capturing this through our contracted sales. And again, Grant will go through the market in some detail in his section.

We are delivering on plan. We've achieved our 1.5 million ton per annum underground run rate target early in the quarter, ahead of schedule. The ramp-up is tracking to plan. The orebody is performing as modeled and the grade reconciliation against the resource model remains strong. And again, Ryan will go through this in some detail in his section.

Fourthly, costs remain on track. Unit operating costs for the quarter were $981 per ton, and we're within our FY '26 guidance range. We're continuing to manage the ramp-up, the transition through a variable feed mix and the fuel crisis by ensuring our business optimization focus remains strong and disciplined.

And finally, the pathway to 70% recovery is now confirmed. We have demonstrated 70% recovery on clean ore, underground ore as we had planned and as we have identified to the market. This is sustained across the first 3 weeks of April. The plant is performing as designed and as expected.

Now let me go through a little bit more detail in the next slide, please. This slide gives you the quarter at a glance. And as the subtitle says, we are delivering on all fronts as the underground ramp-up continues.

Let me walk through each of the tiles for you. We've had production of 96,000 tons. And as we highlighted in our half year results, Q3 had fewer calendar days, and we ran a planned plant shutdown during that period. So production is on track. We've had sales of 84,000 tons across 5 parcels. We finished the quarter with significant inventory in port, around 26,000 tons of saleable contract. And as I mentioned earlier, the inventory build reflects the Cyclone Norel impact at Geraldton. It's a timing issue, not a market issue.

Pricing, I've already spoken about the $1,845 a ton and the cost -- unit operating cost of $981 per ton, and this is a fully loaded unit operating cost, right? It has leasing costs in there, inventory movements. It's a fully loaded unit operating cost. Consistent with our prior disclosure around unit operating costs, we want to make sure that we are being compared on an apple-for-apple basis. It's an 8% increase on Q2, reflecting the transitional feed mix and the ramp-up. This remains within our FY '26 guidance range.

Finally, the cash. And again, the headline number of $424 million is the $33 million of positive net cash flow generated this quarter. And I've already mentioned around the operating cash flow for the first time fully funding our business. As the banner shows, FY '26 guidance is maintained across all metrics: production, costs, all-in sustaining and capital expenditure. I'll now move on to Ryan to give us the health and safety and environment update.

Thanks, Tony. So I am on site today, Kathleen Valley, so apologies in advance if there's any unintended background noise. Our renewable power penetration held at 85% for the quarter, reflecting the investment in our wind, solar and battery hybrid system and reducing our exposure to gas and diesel. On safety, whilst our TRIFR has moved from 11.55 to 10.53, that movement is well within normal variation on a quarter-to-quarter basis. We're not reading anything into it, and we are continuing to stay focused on building a safety culture that prevents injuries and reduces high potential incidents. A healthy level of safety observations is a leading indicator of engagement, and we want to continue to see this indicator and the quality of safety interactions continue to build.

Next slide, thank you. So I'll now walk through the operational story for the quarter, starting with mining. As Tony indicated, we hit our 1.5 million ton per annum underground run rate ahead of schedule. The target was set for the end of March. We achieved it early and sustained it through the quarter, 402,000 tons mined, up 31% on Q2. As we've highlighted previously and as Tony mentioned, the orebody continues to perform as expected with grade reconciliation and stope dilution outcomes in line with expectations.

Our fleet capacity continues to build. An additional jumbo and additional haul truck arrived and went into production during the quarter, lifting both development and haulage capacity. This improvement and increase in fleet capability will continue, particularly as we get into developing the new development areas for the expansion in the Northwest Flats orebody. Looking forward, ongoing level development will unlock wider ore zones.

The next material step-up in our extraction rates is expected in Q2 FY '27 as we ramp towards the 2.8 million tonne run rate by the end of FY '27. Next slide, thank you.

Turning now to the plant. The plant performance this quarter reflects exactly what we expect at this point in the open pit underground transition. Plant availability was 90%, reflecting the planned shutdown schedule. Combined with fewer calendar days in the quarter, we processed 614,000 tons and producing 96,000 tons of concentrate.

Global recovery for the quarter was 61%. Through Q3, the underground open pit feed split was similar to Q2, but the quality of the open pit material was lower than the previous quarter, leading to a slightly lower recovery.

As Tony did mention in his opening remarks, at the quarter end and into the first part of April, while processing clean underground ore, the plant delivered 70% recovery, exactly what it was designed to do.

As we've said in previous updates, plant recovery is fundamentally a function of the feed mix. Looking forward, the feed mix will be predominantly underground with the remaining open pit stockpiles blended in during FY '27. -- and quarter 4 of this year. Turning to the next slide,

I'll explain the recovery trajectory in a bit more detail. So on recovery, if we look reading left to right, across the full March quarter, the underground mix was 48% and recovery, as we've said, was 61%. For the whole of the March period -- months, I should say, underground stepped up to 60% of the feed and recovery lifted to 64%. And in the first 3 weeks of April, underground was 67% of feed and recovery had been running steady at 70%. These results are very clear. As underground ore becomes the dominant source across Q4 and beyond, which it is now, we expect to sustain that 70% recovery target. It validates the recovery pathway that we have been outlining for some time and underpins our confidence in delivering FY '26 guidance, which we reiterated today.

With that, I'll hand back to Tony to talk about guidance in more detail.

Thank you, Ryan. So guidance is maintained across all metrics, as I alluded to in my opening. Concentrate production guidance between 365,000 to 450,000 tonnes is maintained and so are the unit operating costs and all-in sustaining costs. This is against a backdrop of fairly challenging conditions through the geopolitical unrest and the headwinds we're receiving from the various fuel-related input costs. There are 3 forward-looking statements that I'd want to is worth flagging. Firstly, the feed mix is transitioning. -- underground ore, as Ryan has explained today, is expected to be the dominant feed source in Q4, and we're already seeing this trend accelerate. In the first 3 weeks of April, we've seen the recovery improvement.

Second point that I want to note is the FY '26 guidance is being maintained despite the geopolitical headwinds, which I've alluded to. And -- but I think -- the rising fuel prices have had minimal impact on Q3 costs. But our business optimization focus remains strong and disciplined, as I said in my opening, and we will continue to look at ways of mitigating any of those headwinds to the best we can.

Thirdly, and this is an important point, we're reviewing the 2027 costs through our budget process. And that's ongoing right now, and we're working through both the geopolitical issues and how they have an impact on FY '27 budget, but also the interaction of the planned brownfield expansion that we mentioned in our announcement the other day around the early works. How that interaction goes with a brownfield expansion in an operating plant, and we will establish that as part of our study work and its impact on the budget when we announce the scope and the feasibility study at the end of September quarter.

Then on the early works piece, the early works and long lead procurement has just been announced for the Kathleen Valley expansion. These are additional to the current FY '26 guidance on CapEx. They're not embedded in the unit cost or capital numbers we issued at the start of the year. We expect the $15 million to $18 million that we've mentioned, expansion-related capital expenditure in FY '26, separate from the figures on this slide. And I will cover those numbers in a little bit more detail in the expansion slide. So to the next one, please.

I'll now hand over to Greg Jason, our CFO.

Thank you, Tony. Good morning, good afternoon, everyone, depending on where you are in the country. I'm going to begin with this cash flow slide. As Tony said, quarter 3 was the strongest financial quarter we've had since production commenced with operating activities funding all investing and financing cash flows to give us a net cash flow of $33 million. Operating cash flow improved significantly again from breakeven in quarter 2 to $55 million for this quarter. We had $165 million of receipts, which was a $37 million increase on the prior quarter. and it reflected the higher realized prices. As Tony also said, we'd have had another $64 million in the quarter Cyclone Norel hadn't delayed a shipment until 31st of March, and we subsequently received AUD 64 million in April.

Production and other operating cash costs decreased to $113 million, and that reflects the completion of open pit activities and the fact that the underground mine is still ramping up to $2.8 million by the end of FY 2027. And so therefore, the amount of mining cost hasn't taken the place of the open pit that's come to an end.

We had $22 million of growth CapEx in the quarter, a very similar amount to Q2 and again, predominantly related to underground development. $4 million of sustaining CapEx was a couple of million dollars higher than the prior quarter with different projects being executed across those 2 quarters.

We received a $10 million refund from EFA and that reduced a security bond arrangement with Zenith for the Kathleen Valley Power Station. There's still $10 million of bonds related to that. We closed the quarter with $424 million of cash, 26,000 tonnes of salable product in inventory. I know it's old news, but we also recorded the LGES conversion of debt into equity. There was $482 million of liabilities in debt and derivatives at 31 December that were removed from our balance sheet in February. So our net cash at 31st of March was AUD 61 million. And of course, that puts us in a really strong position for the continued ramp-up, the expansion that we talked about in the announcement yesterday and other growth projects. Could you please move to the next slide, which is the quarterly financial metrics.

So looking at the other metrics beyond the cash, our revenue increased by just over 50% to $197 million. The increase in realized price significantly outweighed the reduction in tonnes shipped during the period. The cyclone also caused a 12,000 tonne parcel to be delayed from March until April. And so there was almost $30 million of revenue that moved from March to April because of that delay. Tony talked about the increase in realized price, 87% on an SC6 equivalent basis. The Aussie dollar equivalent was a bit lower because of appreciation of the Australian dollar relative to the U.S. And as always, the realized price $1,845 reflects the contract mix, the exposure to different indices with the mix of QPs, some of which are forward and some of which are backward looking. had a $71 increase in the unit operating cost to $981, and that's fundamentally driven by the lower production tonnes, which in turn was driven by the feed mix, as Ryan talked about.

Fuel prices had a minimal impact on unit costs during the quarter. Our supply is contracted. It has not been interrupted to date. Like everyone, we continue to watch it closely. And we are maintaining full year guidance of unit operating cost of $855 to $1,045. All-in sustaining went up by $192 to $1,251. The unit operating cost impact of $71 flowed into that. We had almost $80 per tonne higher induced by the higher price driving higher royalties, a couple of million dollars of extra CapEx in sustaining and the lower tonnes accounts for the rest of the difference. I'll now pass to Back to Grant to Tony to talk about the market outlook.

Thanks, Greg. If we can go to the next slide. Thank you. Look, the market has been very strong during the quarter. We've seen significant physical tightness in the market, which is demonstrated by the drawdown in weekly lithium carbonate inventories as you can see in the chart on the top right here. Even more pronounced when you convert this from total tonnes to days of inventory as the market has grown, Typically, the market sat at around 40 to 45 days' worth of inventories. We're now down below 1 month, well below 1 month of inventories. And this is, I guess, against the normal seasonality you would see in this time of year, as you can see from the chart in the yellow line that's deviating from the prior years. This has been exacerbated by some supply disruption, which continues to create uncertainty, both in terms of volume and also in terms of restart time lines.

Brownfield restarts will start to come in towards the second half of this year. This is really the only source of new supply with any near-term prospectivity with greenfield supply taking 3 to 5 years of permitting, financing and construction to come into the market. On the demand side, we've, as I said, seen very strong demand from customers, and we're just back from a trip to China where I think the demand continues to be extremely robust with an ability for us to place many more tonnes than we actually produce in this current outlook. I think importantly, we're also seeing a significant increase in pack sizes across vehicles in China and globally. And this is actually accelerating lithium demand over and above pure EV sales growth.

We have also, I guess, benefited from the uncertainty and increased fuel prices in terms of that having an impact of driving increased EV demand. We've seen that in local markets, but we've also seen that phenomenon globally. And this is, in my view, not just a short-term factor that goes away when oil prices go back to normal, but is a fundamental step shift in demand profile for EVs and electrification. And with that, I'll hand back to Tony.

Thanks, Grant. So a good segue, strong market here's the commitment we've made as a company to the early works for Kathleen Valley expansion. So yesterday, we announced we were proceeding with the early works and long lead item procurement for the Kathleen Valley expansion. This is ahead of FID, which we plan to publish at the end of quarter 1 FY 2027. Now there's 2 elements to this. There's a strategic rationale, which I'll talk about in a minute, but there's also a risk mitigation rationale. Committing to the long lead items and mobilizing the team now mitigate schedule risk and equipment pricing risk in a tightening market. And we've seen the impacts already start to percolate through from the fuel crisis. We want to get ahead of that. It supports a robust capital cost estimate and FID by having some of these early things put away and position us to execute immediately once the Board approves the expansion.

The committed program is set on this particular slide. It has 6 elements covering the ball mill, which is a critical piece and part of the critical path, predevelopment drilling, underground development at Northwest Flats, which we've been flagging to the market for some time about the optionality that gives us, plus accessing it from the bottom of the open pit as this diagram here indicates. There's also Stage 1 of the permanent mine services area, which was a piece of infrastructure that we deferred during the downturn in an attempt to preserve capital. And then there's the third past pump that we want to put in to allow us to feed both Northwest Flats and Mt Man simultaneously.

Now there's the capital component. We've mentioned that these early works is between $15 million to $18 million, and we're going to commit about $77 million of capital expenditure ahead of FID, right? And further capital and operating cost details will provide you in the FID announcement.

Then finally, the strategic logic. I mean, expansion at Kathleen Valley is currently our most value-accretive growth option. These commitments lay the foundation that the growth will -- for growth and demonstrate our confidence in both the market and more importantly, the operation. So if I go to the final slide, please.

So just to recap the overall presentation. I won't go through each of these, but just to say that if I -- in closing, Liontown is now a producing cash-generating self-funded Tier 1 lithium operation. We've simplified our balance sheet. The market is structurally tightening, and we have a defined pathway to expansion with the early works program underway. The team is now building for what comes next. We entered the June quarter with genuine momentum. So on that point, I now turn to some Q&A, and I'm happy to answer it with the team.

[Operator instructions] Our first question comes from Austin Yun of Macquarie.

Just 2 questions. The first one is on the run rate to see it's already running at 1.5 million tonnes underground. How should we think about the continued ramp up? Is that a step change? Or is it kind of a linear from now to your target?

Austin, I'll let Ryan give you his response.

Yes. Thanks, Austin. So I think the best way to think about this, Austin, is that over the next 2 quarters, we will be consolidating this run rate. So we've -- I think part of what we wanted to demonstrate was that in fact, if you do the math, slightly ahead of 1.5 at the 1.6 rate for the quarter. We'll consolidate that over the next 2 quarters as we continue to develop at the levels below. And so as we've said in the announcement from quarter 2 FY '27, you'll see another step change. And from that point, think about it as fairly linear. So we'll have developed those levels, and then that will continue to ramp to 2.8 by the end of the FY.

Second one is just on the recovery performance. I understand this quarter was impacted by the mix and the early numbers that is already showing a margin improvement in April. I just keen to understand when you switch to 100% of the clean high-grade underground, what's kind of achievable recovery rate you'll be looking at? Can we get close to 75% to 80%?

Yes. Thanks, Austin. It's a good question. So look, what I would say in answering that is that what we tried to provide that in that slide, which shows the 67% underground and 70% recovery that is actually a blend. So that's actually got effectively 2/3 underground, 1/3 open pit material and 70%. So I think it's fair to extrapolate from that at 100% clean ore that it is higher than 70%. I think you'd be fully aware of our numbers around that kind of mid, maybe into the high 70s. I still think that the plant is capable of doing that. And on any given day, on a clean underground mix, the plant does demonstrate that. Again, for those who run these types of plants or who observe how they run, doing that consistently is what we're focused on. And so I think in the longer term, you can assume that we'll be higher than the 76 and trending towards the DFS numbers over time.

Our next question is from Stuart Howe of Bell Potter Securities.

Just on guidance is unchanged for production. And if you look at year-to-date, it implies quite a wide range for Q4. Just wondering what are some of the risks apparent to maintain such a wide range for Q4?

Thanks, Stu, and for the question. Look, for us, we've got 3 quarters of actuals. So you've got one more quarter left, and we can extrapolate basically where we'll fall within guidance to us. We are still transitioning, as Ryan has already mentioned, and we're still ramping up. So we're quite confident with that guidance.

Okay. And just secondly for me, on fuel supply, you noted that it's all secured under contract and remains uninterrupted. I guess. Can you talk a little bit more about this? Is there anything to give us further comfort that you will have security supply and perhaps some sensitivities if you've arranged any?

Okay. That's also a good question, Stu. I'll break it up into 2 parts. I'll answer the first bit, and then I'll get Ryan or Greg can jump in on a few metrics. For us, what is crucial, and I think it's been a systematic strategy from the get-go. We wanted to partner with major strategic partners in the supply and construction of our operation. So our fuel contract is with Viva. And so they're a Tier 1 producer, and therefore, we've got confidence in their schedule. Equally, our transportation is done by Qube, primarily for our product, and there are a number of others that do the supply of our consumables to site. Again, Qube has the size and the scale to manage their fuel supply. So we're very confident that they will continue to produce. So partnering with these large partners under proper contracts has served us good to this stage. Now in terms of some of the financials, maybe I'll turn to you, Greg.

Yes. So when we look at the diesel as a small component relative to the overall business because of the renewable power generation that we have. But nonetheless, we do have that cost. And it was a couple of percentage points of our cost base before the Middle East crisis drove price increases. And on a dollar per tonne basis, approximately $1 per liter on diesel or Jet A1, which impacts the aviation for the charter flights somewhere around $25 to $30 per tonne unit operating cost finished product. So that's for as long as it prevails.

Our next question is from Jacob Li of Barrenjoey.

Could you please provide some early color into your thinking around pathway to 4 million tonne per annum expansion 4 million tonne per annum is still the number. I guess my question is in 2 parts. First, you talked to a capital-efficient incremental debottlenecking process previously. Apparently, you've got key approvals and major infrastructure in place with some additional tonnes you can unlock from Mount Man and Northwest Plat, which were part of your original 3 million tonne per annum plan before a full expansion. Then I guess what about other lead items to 4 million tonne per annum in addition to ball mill paste pump you already committed to, i.e., ventilation raises, paste fill plant works, water, et cetera. In the last update, I think we talked about $100 million for the process plant and $150 million for the mine development. Is that still the right ballpark? So sorry, I don't want to sort of front run this. Just wanted to get some early color into your thinking around your pathway to 4 million tonne per annum expansion, please?

Okay. Well, there was a lot in that question. So thank you for that. What I will say on the CapEx side is -- and I'm not going to do any early predictions. We're going to let the guys do the work, guys and girls do the work and properly given how dynamic the market is, properly scope this and properly analyze the capital and operating costs. So we'll give you that when we're ready in Q1 of next year, financial year. In terms of how we -- what's the ultimate number? Well, again, that's part of the study, right?

And capital costs, what I will say is when we publish those numbers you quoted, that was in the DFS, that's 5 years ago. So I'll leave it to you to decide whether there's any inflation on that number. And in our capital costs, there will be costs associated with the expansion -- there's costs in these early works around accelerating. And when we did the Northwest Flats piece, it wasn't just to service the 3 million tonnes. It was also to develop the operations for the 4 million because we were going straight from 3 million to 4 million. So when the downturn came, we mothballed Northwest Flats. So I think to answer your question in conclusion, you're going to let us do the work first.

Yes. Okay. And just a follow-up. Is there opportunity to sort of unlock 3 million tonnes per annum in the next 1 or 2 years before the full expansion was probably my question just now.

Okay. Sorry, as I said, there was a lot in that question, so I apologize if I missed that bit. I think the nature of this expansion that we've already identified to the market is this debottleneck, unlock capacity, debottleneck, unlock capacity. And things like buying some more flotation cells, which is part of the area that needs upgrading, we will deliver that. Putting the ball mill will deliver that. So if you say to me, is there a possibility to go to 3 million tonnes in the next couple of years? Well, it all depends on the underground ramp-up because we've said the underground ramp-up will be at 2.8 million tonnes per year run rate at the end of financial year '27. So we're mine constrained until that point is reached. And then beyond that, we will unlock more capacity as we unlock more capacity from the underground.

And our next question comes from Ben Lyons of Jarden Securities.

Maybe just further on that last question. You have to talk about the mine constraints, but you've still got a heap of the OSP material. From memory, it's around about 1 million tonnes that you've still got on hand. And presumably, you just balance that versus that sort of 1.5 million, 1.6 run rate that's coming out of the underground. So you can still run the plant, let's call it, I don't know, 2.5, 2.6 capacity, allowing for your shutdowns and maintenance. Is that the right way to think about it, just a consistent processing of the OSP, which supplements every ton that comes out of the underground for the next 12 months or so?

Thanks, Ben. Not exactly. The stockpile of OSP has been reduced substantially in order to get to us to where we are now. So we're going to be less reliant on OSP stockpiles going forward. And therefore, that's why there's a gradual -- that's why we're saying FY '27 end of FY '27 for 2.8. So it won't be supplementing the feed right up until that point.

Okay. Cool, do you have a sense for -- is it like maybe 800,000 tonnes remaining or 600,000, 700,000?

I'll let Ryan answer that.

Yes. So at this stage, we've got a little under 400,000 tonnes of OSP remaining. And post sorting, bearing in mind that part of the sorting process separates the ore and waste. And so the actual accept feed will be somewhat lower than that. So it's probably circa 200,000 to 250,000 tonnes. So as we've -- as Tony has indicated, we will continue to feed that OSP accepts material through the plant. And that will kind of be blended in with the underground, but that will not last until we fully ramped up the underground mine, Ben, I hope that makes sense.

As we have no more questions in the queue, I'll now hand back to Tony for closing remarks.

Thanks, Luca. In closing, for me, -- the numbers this quarter reflect timing and not trajectory. The cyclone closed the Port of Geraldton, which would have made our numbers even stronger than they are today. And we're looking forward to the next quarter and the next 12 months. There's a lot of work going to be planned with the expansion and further growth. So we're very strong, and we're fully committed to the next phase of our operations. So thank you, everyone, for listening, and I thank my team for the hard work that's gone into producing today's materials and the results.

Welcome to Liontown's Half Year '26 Results Call. Following the formal presentation, there will be a Q&A session for investors and analysts. Participants can ask both text and live audio questions during today's call. [Operator Instructions] I will now hand over to Tony Ottaviano, MD and CEO of Liontown.

Thank you, Michelle. Good morning, everyone, and thank you for joining us today. With me today, we have Greg Jason, our Chief Financial Officer; Ryan Hair, Chief Operating Officer; and also Grant Donald, our Chief Commercial Officer.

If we can go to the first slide, please, Michelle. The important information. I want to start here by framing where we are as a company because this half has been a real inflection point for the business.

Firstly, Kathleen Valley is delivering as designed. We completed the transition to 100% underground mining during the first half and generated over $208 million of revenue, more than double the prior corresponding period. The underground mine is scaling, and we've got some more information on that, that Ryan will go through. The plant is performing, notwithstanding we are feeding at lower-grade material from the OSP, and we're finishing the remnants of the open pit mine, and we're shipping our product to customers all around the world now.

The first half financial result reflects what should reflect for a company that's still in ramp-up period. The statutory loss of $184 million, Greg will go into further detail about that. But I'll unpack it that the number becomes -- it doesn't reflect the operating performance of the business. And I'll just break it down into 3 constituent parts.

Firstly is a derivative charge. That's a noncash item that's directly related to the convertible note, and Greg will speak to that a little bit later. There's a $90 million depreciation charge, which is part of the open pit. We finished the open pit. It's over a 3-year period, and so we have to depreciate it over that 3-year period. And this is some capitalized commissioning costs as we call commercial production in our plant.

But the key takeaway is that the earnings profile is getting better and for the right reasons. We're now feeding a higher-grade iron ore into the plant and blending it with our open pit and OSP material, and recoveries are lifting. And we're realizing higher prices. They continue to strengthen in the second half, and all 3 of these push for us to deliver better margins.

The market is also helping. We're now seeing BESS emerging as a second demand engine alongside EVs. And when we look at when we approved this project back in 2023 or 2022, we've got a different environment from the market perspective. Permitting, financing and construction all take years to put into place. So near-term supply response is going to come from brownfields expansion and restarts. And that's good news for us because we're already producing, which brings me to the 4 million tonne expansion study underway at Kathleen Valley. This is a brownfield growth option from an operating asset where -- and there is one of only very few around the world that can bring on additional tonnes to the market as quickly as this option can.

That's the setup. I'll now hand over to Greg and the team to go through the details. So over to you, Ryan.

Yes. Thanks, Tony. So if we just go to the next slide. Thanks, Michelle. So this slide summarizes where we are operationally, and the headline is that the transition to 100% underground mining is complete. That is a significant milestone. Open pit mining delivered 917,000 tonnes of ore during the half with the final ore delivered in December. Underground ore mined totaled 533,000 tonnes, highlighting the speed of the ramp-up. The plant processed just over 1.2 million tonnes at an average grade of 1.3% lithia. Recoveries continue to trend upwards, averaging 61% for the half. Concentrate produced came in at 193,000 tonnes at a weighted average grade of 5%. Every metric is heading in the right direction. The inflection point from here is clean ore and grade. As underground ore becomes the dominant mill feed, we expect recoveries and production to continue to improve.

With that, I'll hand over to Greg.

Thank you, Ryan. Good morning, everybody. Can I please have the next slide? Great. So I'll talk through some financial highlights here and then give you some more details later in the presentation. You can see the production and sales up as both Tony and Ryan have discussed. At a realized price level, we've got 18% improvement period-over-period. We have changed the calculation methodology to be more in line with what our peers are doing. We were previously reporting realized prices simply being the period revenue divided by the tonnes shipped.

What that meant was you've got some mark-to-market or provisional-to-final pricing adjustments that relate to prior periods and to the extent that there's pricing data after the end of the reporting period that needs to be picked up in quotation periods that was being missed. So now what we're doing is we're representing the estimate of the realized price only for the tonnes shipped in the period, and $888 is the result. Just to help you translate from the Q1 and Q2 numbers that we previously reported. We had said that Q1 was $700. And on this method, it's $691. And we had stated Q2 as being $900. And on this method, it's $985. So we'll keep that method going into the future.

Talking about unit costs, you can see the increase to $985 per tonne. This was almost all driven by mining costs. In the first half of FY '25, we were processing material that came from the open pit, the large ore load there, large body clean feed, lower unit cost. And in the first half of '26, we were blending OSP material. So that has high levels of contamination and hence, impacts recovery. We also have the premium cost of the crushing and sorting of OSP that fell into the half and not the prior, and we transitioned into underground as well, which has a high unit cost of mining relative to that previous open pit material. And so the net effect is what you see now. You can see that the increase on all-in sustaining is about another $45 higher. That is the impact of sustaining capital kicking in. We had a new plant freshly commissioned in the first half of '25. And in the first half of '26, we've now got sustaining capital programs underway driving that result.

Moving down to the P&L section. We more than doubled the revenue, and this followed both the tonnes and the improvement in price. Underlying EBITDA was an $8 million loss. The first important point about here is notwithstanding the improvement in realized price, it was still a subdued price for the period. And the prices that you see now in the market really don't impact us a lot for the first half of '26. Many of our contracts have got backward-booking QPs and hence, full exposure to the pricing as it was.

Secondly, we've got the ramp up and the unit operating cost impact that I spoke about before and the transition from open pit to underground. We also had a capitalization of production cost in the first half of '25 because we had not yet achieved commercial production for the processing plant. That was declared start of last calendar year, and hence -- and that was $39 million.

So a big difference period-over-period. And then the D&A impacts once you get to the next line, the underlying net profit, negative $89 million. It has higher D&A with the open pit coming to an end, amortized over a short period. We had capitalization of interest for the same logic around having achieved commercial production in the first half of '25, and ultimately, that gets us to the $89 million. And then when you go to the statutory result headline, there is a significant impact from LG. That was all about revaluing the derivative on the books for their convertible option. It was noncash, and you should think of it as, as the share price went up, the accounted cost of discharging that liability with equity went up. So we had to recognize that in the half.

The conversion occurred on the 4th of Feb. You're going to see a $58 million gain coming through the books in the second half, and that represents the difference between the total liability we had at the end of December being the derivative plus the debt and the market value of the shares that we issued on the 4th of Feb. 239 million shares at $1.77 being the closing price. So you'll see $58 million in the second half. We closed with $390 million. That's news we published in January, strong position as we entered the year. I'll talk more about the balance sheet a bit later in the presentation.

Next slide, please, Michelle.

Great. Thanks, Greg.

Over to you, Ryan.

Yes. Thanks, Tony. So safety still remains our core operational focus, particularly as we scale the underground. Our lost time injury frequency rate held at 1 through the half. The total recordable injury frequency rate increased to 11.55, reflecting the trend we flagged during the last quarterly presentation around manual handling injuries across our contractor work groups. The targeted actions around field leadership and contractor oversight continue. Safety observations at just over 3 per 1,000 hours show sustained workforce engagement in proactive hazard identification.

Our hybrid power station delivered 82% renewable penetration for the half, which reflects our ongoing commitment to low carbon intensity production. And $11.7 million in expenditure on Tjiwarl businesses through the period reflects the strength of that partnership and our genuine commitment to meaningful local employment and value creation.

Now turning to underground production on the next slide. Thanks, Michelle. The 37% quarter-on-quarter increase in ore mined to 308,000 tonnes in Q2 reflects -- continues to track well against the planned ramp-up. As we noted last quarter, the mine achieved a 1 million tonne per annum run rate in September. And for the December quarter, the overall run rate was just under 1.25 million tonnes, leaving us well placed to achieve the 1.5 million target by the end of this quarter. Development is progressing well, opening additional work fronts across multiple levels. Reconciliation to both resource and grade models has been good. Stope performance and dilution continued to remain in line with expectations, and infrastructure continues to perform well. The summary is infrastructure is in place and working well. The ore body continues to meet expectations, and we are ramping to plan.

Now moving to the plant.

Next slide, please.

The plant continued to perform in line with expectations as we progressed through the planned transition in mill feed composition. As I mentioned, just over 1.2 million tonnes processed for the half at 92% average availability, stable and reliable performance. Lithia recovery averaged 61%, continuing to trend upwards, reflecting deliberate feed sequencing and ongoing circuit optimization.

The feed mix is the key story here. In H1, open pit ore still comprised around 60% of the feed. In H2, that shifts to approximately 75% underground. And by FY '27, we're targeting over 90% underground feed. As clean higher-grade underground ore becomes a dominant source of plant feed, recoveries will continue to improve.

With that operational summary, I will provide -- I hand back now to Greg.

Yes. Next slide, please. This chart shows you the waterfall between first half '25 EBITDA and first half '26. We've talked about the increase in revenue, largely driven by the tonnes. We've got the increased cost of sales, excluding D&A with the ramp-up in tonnes as well, plus the impact of the higher operating cost. I mentioned the $39 million difference that was capitalization in first half '25, and that's the walk down to the negative $8 million.

Could you please go to the next slide, which looks at the net loss after tax. So same concept here from minus $15 million in first half of last year to minus $184 million. Of course, we got the carryover of the EBITDA from the price line. The LGES is a $148 million turnaround. So we booked a gain in the first half of '25 on the fair value of the derivative, but we booked a charge in first half '26, hence the $148 million. We did get a turnaround on the FX. The rate went south in first half '25. So you've got lower Aussie dollar debt, and the reverse happened in '26, additional D&A around the tonnes and the capitalization of the interest not occurring or lower level in the first half of '26. So that gets you to the $184 million.

Could you please go to the next slide? We started the period with $156 million. We closed with the $390 million. So $178 million of receipts. The difference between that and revenue, you can see a corresponding difference in an increase in accounts receivable. That's just a timing issue, $237 million of production costs has gone up, of course, with the high level of activity. The sustaining capital of $16 million, I mentioned that before, that we're now sustaining given we're past the commissioning of the surface infrastructure and a big chunk of growth capital. That was dominated by underground capital development plus associated underground infrastructure and completion of the paste plant. You can see the equity raising from earlier in the year, and that's where we get to the $390 million.

Could you please go to the next slide? So this LGES conversion has given us a real balance sheet reset. We've got notice in late January. The conversion occurred on 4th of Feb, and it took $482 million of liabilities off the books. The offtake agreement with LG is still in place. It's a 15-year agreement. It's unaffected by the conversion and the change in shareholding. We still have the LISP and Ford Debt, which is covenant-light. The forward repayments were rescheduled from last year until September of this year. And that's just over $11 million per quarter, so that begins in September. And the $15 million of LISP, we will repay in equal halves over FY '27 and FY '28. That's quarterly payments as well. You can see the debt maturity profile of the Ford and the LISP money. So starting the year with $390 million, conversion of LGES, resetting the balance sheet to put us in a great position to start the year, keep going with the ramp up, look at the growth opportunities and consider diversification. I'll hand back to Tony.

Thank you very much, Greg. If I can go to the next slide, please, Michelle. And that sort of sets us up for the next few slides that I want to take the listeners through. Let me come back, and I think it's important that we look at this slide to show as history has unfolded and what does the future potentially hold. But if we can talk about -- this chart tells a specific story.

You can see the 2 previous spodumene up cycles, roughly 15 months and 18 months, respectively. And you can also see where we are today where prices have come off the bottom and the market is tightening. And the question is, how can we actually respond when the market needs them? And I mean, the strap line says it all. The supplier response will favor existing producers. So there will be a greenfield lag. If their projects are not shovel-ready today, that will take longer to bring on, at least 3 years.

So new projects face years of permitting, financing and construction requirements. So unlikely to deliver tonnes in this next upswing. So the brownfield projects have an advantage. Existing operations with infrastructure and approvals in place will respond materially faster. And the way we are looking at our project, we are going to progressively debottleneck and deliver incremental tonnes as we move the expansion alone, which brings early cash flow in, but also it happens to manage our capital profile.

So I will leave you in this slide by saying the bottom strap line, which is we are uniquely positioned as an existing producer with the infrastructure and optionality ready to respond decisively.

So if we move then to the -- our specific project. Next slide, please. So the 4 million tonne brownfield expansion. I mean we spoke about this in our quarterly review. The 4 million tonne is really a refresh of what we presented as part of our DFS. We're going to bring into this refresh all the latest understanding and knowledge of our operations so that we can fine-tune the design criteria. We know the areas that we need to target. They were stress tested as we start to operate, and then we'll look at what do we do to give us that incremental debottlenecking to unlock those tonnes. So an expansion is expected to reduce our unit costs as we amortize our fixed costs and we increase scale. And as I mentioned previously, Liontown has a competitive advantage. We are a recent developer, and we've got all our key approvals in supporting infrastructure in place, and we're expediting time lines. So we will bring this to the Board in the first quarter of FY '27, and it's subject to the Board's approval and the way the market is unfolding at that time.

So if I go to the next slide, please. So just this final slide. I mean, we're delivering the transition, and the earnings are improving, as I said. And you can see by the right-hand side of this slide the mine plan comparison -- sorry, if we just move to this final piece.

I mean I won't repeat what I said at the start. Kathleen Valley, we're delivering as designed. We've gone through the ramp-up phase, and we produced a series of financials that reflect that ramp up. But the more important point is earnings trajectory are improving as the ramp-up progresses and the market tailwinds that we're getting. And we've got a real live option in the 4 million tonne expansion that we're refreshing that will set us up to capitalize on an improving market.

So if we go to the final, just in closing then. Before I open up for questions, I want to acknowledge the team at Kathleen Valley and what they've delivered in this transition, both safely and on schedule. They've done what we said they would do, and that's what matters for me and the Board. And I want to also acknowledge our shareholders who have stuck with us. The story is simple here. We are through the hardest part. The transition is complete. The balance sheet is cleaned up, costs are coming down, prices are going up, and we've got growth options. So we're in a very strong position as we look forward. So thank you, and I'll take questions from here.

Thanks, Tony. [Operator Instructions] Our first question comes from Hugo Nicolaci from Goldman Sachs.

Congrats on continued strength and ramp up of the project. Look, firstly, on the debottlenecking piece, it sounds like things are progressing quite well already on restudying that if you're ready to go to the Board in the September quarter. I was just wondering if you could provide a bit of commentary around how you're seeing the cost piece there relative to previous expectations. I think historically, you're sort of talking to low hundreds of millions to debottleneck the plant and sort of similar magnitude to build the next mine to support that. Do you want to just comment in terms of directionally up with the sort of magnitude of how much those costs have maybe increased since you last looked at those, please?

Well, clearly, Hugo, thanks for the question. We're looking at that right now, right? And we're very alive to the market context. When I mean the market context, I mean the market context for construction and the supply of equipment. So the previous estimates that we provided the market was $100 million for the plant and $150 million for the mine, right? So we'd like to think that, that's the same order of magnitude, but I don't want you to hold me to it until we finish the study.

Yes, that's clear. And then maybe just one in terms of the cost piece. I appreciate the underground mine is still not commercial yet, and that's still targeted for the June quarter this year. Are you able to just give a bit of a breakdown in terms of where your mining costs and processing costs are sitting at the moment and then where you expect them to get to as things continue to ramp up?

Okay. Ryan, do you want to take that? Or do you want me to handle it?

That's fine, Tony. So I think Hugo, we've previously made some commentary in relation to the underground mining costs, which are kind of in the order of $100 a tonne or delivered, and costs kind of sit around about that. When you've got that data, you can probably infer then the processing cost given we've been kind of pretty transparent around the overall unit operating cost. Directionally, when we spoke in the quarterly presentation, we spoke to the fact that we'll obviously give further guidance around FY '27 as we go through that kind of budgeting process.

But I think the thematic that we've previously spoken about where as we mine into the lower levels of the mine at larger stopes, which means that the same cost to kind of get those tonnes out is distributed across more tonnes will directionally lower the unit cost of mining. And similarly, as we put more clean ore, clean underground ore specifically through the plant, recoveries will improve.

Production will, therefore, follow. And the denominator, being production, being bigger, will have some fixed cost dilution impact. So all things speak to directionally what we've spoken before about the value of the larger stopes and the increased recovery in production all still trending unit operating costs lower. But as I said, we will provide further guidance as we go through our internal budgeting process in the lead up to FY '27.

The next question is from Levi Spry from UBS.

Maybe one for Ryan. I guess just now partway through, good partway through the March quarter, can you just give us a bit of an update on the 1.5 million tonnes and I guess, the 70% recovery target, just how the ramp-up of both those are going?

Yes. Thanks, Levi. I appreciate the question. So look, 1.5 million out of the mine, we're very confident in. As you said, we're most way through the March quarter at this stage. And so still very comfortable with the way that the mine is performing and the way that the equipment ramp-up and ongoing development of the mine is giving us further work fronts and further opportunity to extract more. So I'm still very confident in that. And beyond that, beyond the 1.5 million to the 2.8 million at the end of FY '27, again, we're still on track for that. As I said in my opening remarks, the mine continues to perform pretty much exactly as we had planned it to. So nothing on the horizon that we're concerned about there other than ramp-up always has quite a bit going on, but as I said, the team has it well in hand.

In terms of the plant, we're still very confident in the plant's ability to run for extended periods of time. So good availability, good throughput. In terms of recovery, as we've said I think a few times before, 70% recovery is very achievable when we're on clean underground ore. And whenever we run underground ore through the plant, we get circa that level of recovery. In fact, only 2 days ago, we had a plus 70% recovery on some slightly contaminated underground. We mixed it with some of that OSP -- assorted OSP material that Tony was referring to. And so plenty of data points to support underground delivering that type of recovery.

In terms of Q3, we are processing more open pit material than we had planned or certainly back when we originally came out with the budget 12 months ago. And you might recall, at the end of the last quarter, we had indicated that we had extracted more ore out of the open pit. So with that additional ore in the open pit, we therefore had larger stockpiles, and we've been processing that through this quarter. So the predominant feed type at the end of the quarter will only just be converting to underground by the end of the quarter. So we'll expect to see more of that consistent 70% recovery as we head into Q4. I hope that answers the question, Levi.

Yes. Perfect. And then just back to the 4 million tonne expansion studies schedule FID. Can you just sort of play the time line movie with that one, I guess, versus the ramp up to 2.8 million in FY '27? How are you thinking about ramping up to 2 point -- sorry 4 million from underground mining as opposed to the plant?

So Tony, I'll take this, if that's okay?

Yes, yes, yes.

Yes. So I think probably the easiest way to think about this, Levi, is that the 2.8 million case, I guess, continues if you think about that as kind of line item in your spreadsheet, if you like, that will continue. In order to get to the 4 million tonne case, we'll be doing a couple of things in parallel. The first is that if you refer back to the slide where we had that 4 million tonne case, and I don't know, Michelle, whether you can go back there. But there was a section of the Mount Mann deposit, which as part of the recalibration in November '24, we deliberately went past, and we can now go back and start to extract ore out of those upper levels in the Mount Mann orebody. So that's point one, and that will be incremental over and above what we had put in the 2.8 million case.

And then the second thing is that the other thing that we had chosen to do in November '24 was defer the work in the North West Flats deposit. And what we will do is start to extract ore out of that deposit. And the option we've got now, which we didn't have at that time was directly go from the bottom of the open pit and take that ore directly out of the North West Flats deposits. So that will also happen in parallel.

So if you think about the 2.8 case, you add on some additional Mount Mann and some additional ore out of North West Flats, which is now easier to get that at coming from the bottom of the open pit, then both of those should happen in parallel, as I said, with the 2.8 million case.

And with all that in mind, we are anticipating that the underground mine ramp-up will, broadly speaking, match the debottlenecking that Tony spoke about when he was talking about the plant work that we'll do to incrementally unlock capacity out of the plant. So it's roughly over the same period of time. And as Tony was indicating, brownfield expansion is always going to be quicker than greenfield. So if you said a greenfield was going to take 3 years, then we'll be probably more in the order of a couple of years rather than 3.

The next question is from Hugo Nicolaci from Goldman Sachs.

Firstly, just a follow-up, Ryan. I just wanted to clarify that $100 a tonne mining cost. Is that what's being expensed? Or is that the total cash cost, including the sustaining development capital?

I might hand to Greg on that one, but my -- yes, Greg, maybe you'll start and I can provide some color?

Yes. It doesn't include...

Go ahead. Total cash. Yes, total cash.

Great. So that -- it doesn't include the development spend?

It doesn't include the amortization. It is the cash cost of the mining. Tony?

It doesn't include sustaining capital. It doesn't include sustaining capital. The development cost.

Yes. Well, maybe the way to provide color on that is that -- so if you've got the actual cash cost of the day plus what is relatively minor sustaining cost, then that's included in the $100, but the development cost of which you may spend a significant amount of time and money, obviously, the work we've done to date, getting to that zone of the orebody, it doesn't include that. So it's -- so it does include the minor sustaining. So things like increased vents, sort of pasting costs and those kind of things, it does include that, but not that development cost. Hugo, does that makes sense?

Yes.

Next question is from Andrew Harrington from Petra Capital.

Could you elaborate on your customer wagon wheel? Like where is your quarterly shipping destination? Is it all China or half China? And how do you see that going forward?

I'll hand that over. Thanks for the question, Andrew. I'll hand that over to Grant Donald, our Chief Commercial Officer.

Yes, sure. So look, in previous presentations, we've included our offtake chart just to show where the volumes are going. So I'd refer you back to that. But broadly speaking, our main offtakers are for Tesla and LG. As we've said previously, the 4 tonnes in the first 18 months are going to Chengxin, which is a Chinese refiner with a facility both in China and in Indonesia. And from '27 and '28, that will go to Canmax in China. The LG volume and the Tesla volume have traditionally gone to China. But obviously, it's well known that Tesla built their own refinery in the U.S., and that's the plan for the ultimate destination for that product once that one is fully ramped up.

Okay. And a broader question in terms of with the Middle East war. Do you expect any changes in terms of your, say, fuel costs? And I guess, are your customers saying anything differently or more urgently to you? Or what things do you think may shift if this goes on that positively negatively to you?

Yes. So Andrew, I might take a portion of that question, and then I'll ask Grant to finish it off in relation to customers. But in terms of fuel and diesel specifically, I mean, we are 80% renewable. That gives us a very big, big advantage. So most of our power is generated by renewable sources. So on average, our total diesel cost is about 4% to 5% of our overall cost base. So it's not a significant amount. So we're pretty confident from that perspective. And I'll hand over to Grant to talk to you about the customer impact.

Yes. Look, I mean I talked a little bit about where most of the volume is going. At this point, we haven't got any sense from customers that there's any issue from taking a ship from Australia to China. It's a relatively short voyage, less than 2 weeks. So I expect that trade to continue. We have seen some disruption from Africa into China, and that has sparked some interest from customers who are exposed to Zimbabwe volume to secure more volume, but that's a different issue.

That is all the questions from the queue. I will now hand back to Tony for closing remarks.

So thank you very much, Michelle. Thank you to the listeners. Thank you to the people asking those great questions. Thank you to my team for putting today together. Leanne, Jared, Ash and Claire and the team, I really appreciate it. So yes, let's look forward to the second half.

Welcome to the Liontown Resources December Quarter Results Call. Following the formal presentation, there will be a Q&A session for investors, analysts and media. [Operator Instructions]

I will now hand over to Mr. Tony Ottaviano, Managing Director and CEO of Liontown Resources.

Thank you, Michelle, and welcome, everybody. Thank you for attending Liontown's quarterly presentation. With me today, we have Grant Donald, our Chief Commercial Officer; Ryan Hair, our Chief Operating Officer; and for his first quarterly with us, I welcome Greg Jason, our new CFO, who's been in the role for a month, and it's his first presentation for Liontown. We will support Greg in the course of the presentation given he's just fresh in the job, but I'm sure he's got most things covered.

So let's kick off. We have the first information slide, so please. And then we'll move to this first slide.

I mean the best way I can describe this quarter is is that it represents a genuine inflection point for Liontown. We've delivered our mines transition, and the open pit is done on schedule. Kathleen Valley is now Australia's first and only underground lithium mine, and we're completely focused on scaling and ramping up the underground production, and we're on schedule for that, too, and Ryan will go into that in deeper detail in his presentation.

Now let me walk you through now what the quarter actually demonstrates. Underground ore has been increased by 37% quarter-on-quarter. We're adding equipment, we're opening new mine fronts, and the ore body continues to reconcile the plan. This production momentum is real. On cost, both unit operating costs and all-in sustaining costs have improved by 17% and 22%, respectively. That's operating leverage coming through as we scale, and this will accelerate as volumes continue to build. We've achieved neutral operating cash flow for this quarter, which is a significant milestone given we're still in transition. We finished with $390 million in cash. This gives us both runway and future optionality.

The plant has high availability and is delivering. Recoveries have improved to 63%, up from 59%, and the pathway to 70% is in front of us, and it's driven by feed mix. As underground ore becomes the dominant feed, recoveries will follow. And again, Ryan will talk about that in his slides. So with the mines transition complete and cash flow improving, we're well positioned for the lithium recovery, and that's the story of this quarter.

So if we go to the next slide, please. Well, let me put some of the numbers around that improvement. Production came in at 105,000 tonnes, up 21%, a solid result, but the real story is the trajectory as we scale towards 1.5 million tonne run rate by March -- end of March. Sales were stronger at 112,000 tonnes, up 45%, as we cleared inventory and we moved to the -- up our shipping run rate. Pricing has lifted to AUD 1,365 a tonne. That's USD 900 a tonne on a U.S. -- a SC6 equivalent basis, up 28% on the prior quarter. Consistent with our standard QP pricing methodology, we have embedded price upside that will be realized in quarter 3. Revenue hit $130 million, up 91%, our strongest quarter since operations began [indiscernible] our production plus pricing leverage delivers. Finally, the direction is clear, production up, revenue up, margins improving, and we're achieving this before the full benefit of the lithium price recovery flows through our contracts.

So now, I'll move over to Ryan.

Yes. Thanks, Tony. So I'll just have a look at the safety and ESG slide. Thanks, Michelle. So safety remains our core operational focus, especially as we're scaling the underground operations. Our total recordable injury frequency rate increase reflects a higher number of manual handling injuries across contracted work groups. We've implemented targeted actions to strengthen field leadership and contractor oversight. Preventing high consequence incidents through strong field leadership is the priority. This is reflected in the leading indicator, safety observations per 1,000 hours increase showing sustained workforce engagement in proactive hazard identification.

Our hybrid power station performed widely through the quarter, 85% renewable penetration, reinforcing our commitment to be our low carbon intensity operations. We continue to focus on building an inclusive workplace, and we were thrilled to have supported the completion of our first apprenticeship by Tjiwarl community member at site, reflecting our genuine intent to meaningful local employment and skills development.

Now moving on to our operations summary. Thanks, Michelle. Completing the open pit on schedule has been a key milestone of Kathleen Valley. This has been an outstanding achievement. The original plan was conceived back in 2022 and has been executed flawlessly. Of particular note is the additional ore mined in the last quarter, positively impacting strip ratio and costs and highlighting the quality of the ore body and is a testament to the focus of the team. A sincere thank you to the whole open bit team, including our mining partner, IMC.

Over its life, the open pit played a strategic role beyond just ore production. The waste rock support construction of the ROM pad and the tailings facility, and the open pit ore -- early commissioning of the plant, which accelerated validation of the flow sheet and the operating envelope. Resulting for ore and OSP stockpiles, including the additional ore mined in the quarter, enhanced our FEED flexibility. We will continue to optimize sequencing into the plant as higher grade underground ore becomes the dominant source of plant feed, which will give us further flexibility during the ramp-up. Now with the open pit complete, we can turn our full attention underground supporting improved operating leverage as we scale.

So now moving to underground. The 37% increase in ore mine is tracking well to the planned ramp-up. In the last quarter, we noted that the mine achieved a run rate of 1 million tonnes per annum in September. For Q2, the overall run rate was just under 1.25 million tonnes per annum, leaving us well placed to achieve the 1.5 million tonne per annum run rate by March. Importantly, development is also progressing well with just over 2,100 meters in Q2, opening additional work fronts across multiple levels in the mine. As Tony mentioned, reconciliation to both resource and grain models have been good, which confirms the consistency of the Mount Mann ore body. As per last quarter, stope performance and dilution continue to remain in line with expectations. We've mobilized additional haulage capacity and expanded support infrastructure during the quarter. The summary is infrastructure is in place and performing well. We already continues to meet expectations, and we are ramping up to plan.

Now moving on to the plan. Again, as Tony indicated, the plant performed in line with expectations as we progress through the planned transition in [ no feed ] composition. Tonnes processed increased with fewer shutdown days in the quarter and ongoing circuit optimization, increasing the net throughput per operating hour. Recovery improved 4 percentage points in absolute terms to 63%. This reflects both a deliberate feed sequencing decision during the open pit underground transition as well as ongoing since optimization. The feed mix moved from 35% underground in Q1 to 45% in Q2. Open pit ore will continue to comprise roughly 50% of the fleet in Q3 before progressively transitioning to predominantly underground feed during Q4.

The next slide puts this into context. We've shown versions of this picture in previous updates. The first half of FY '26 builds the foundation. We completed planned maintenance, delivered process improvements, achieved a run rate of 1 million tonnes per annum underground and completed open pit mining on schedule. The second half is the inflection point. We're scaling to 1.5 million tonnes per annum by the end of Q3. And we are showing visually in orange the additional ore mined in the open pit being processed in Q3 before the shift to predominantly underground feed in Q4 and beyond. Our recovery total of 70% at the end of Q3 remained as clean ore becomes that dominant feed. In FY '27 and beyond, we reached a sustained 2.8 million tonne per annum run rate underground at the end of '27. And remaining open pit stockpiles will be processed opportunistically, again, as you can see, with a slight orange area in the graph. Resulting improved plant recoveries drive increased production, which deliver lower unit cost.

With that, I'll hand back to Tony to talk in more detail about guidance.

Thanks, Ryan. Okay. So if we go to the next slide, please, Michelle. Right. Let me give clarity on what we expect for the rest of the year. We've been consistent in stating that our FY '26 is a transition year. Again, open pit was completed, underground is scaling and becoming the dominant feed source for the mill. We have the ingredients to hold firm on our guidance. At the end of Q3, we expect the underground production to reach around the 1.5 million tonnes, as Ryan has already mentioned. And the 70% recovery target remains unchanged. This is clearly a function of the feed mix, and the mix is shifting in our favor. Production in Q3 will account for planned maintenance and fewer operating days. That's scheduled and shouldn't be a surprise.

The key point is that cash flow will improve from here every ton of underground ore that replaces open pit delivers better grade, better recoveries and a lower operating unit costs. And that's structure. Our guidance remains unchanged, as it's stated in the diagram or in the slide. And we're looking beyond this year, unit costs will trend lower in FY '27 as we reach steady state in the underground mine at 2.8 million tonnes, that's when the operating leverage really compounds.

So if we go to the next slide, please. Now I hand over to Greg to present his first financial performance.

Thank you, Tony. Good morning, everybody. It's a great time to join Liontown. I've joined an amazing team, and I look forward to working with them to deliver the strategy for our shareholders.

So starting with revenue, some of this Tony has gone through, $130 million, it's the strongest quarter we've had since operations began. About half of that increase was driven by the increase in tonnes shipped and half was driven by the increase in realized price. We had slight tailwinds on our back, but they had a negligible positive impact quarter-over-quarter.

As Grant and Tony have discussed in previous teleconferences, the Liontown offtake agreements are anchored to a range of pricing indices that includes spodumene, hydroxide and carbonate, and there's a range of quotation periods that are both backward and forward looking. The backward-looking QPs create a lag effect unrealized price increases and the forward-looking QPs are favorable, and prices are increasing, and we're already seeing uplift start to come through between provisional and final pricing during Q3. We expect to realize further increases in the realized price during Q3, given the indices have continued to decline since December. We finished the quarter with $130 million of cash, a very strong balance, and I'll provide some more commentary on that when we get to the next slide.

So moving now to unit costs. The operations team has delivered a 17% reduction in unit operating costs at AUD 910 per tonne sold. This was well within the FY '26 guidance being of AUD 855 to AUD 1,044. Importantly, it fell below the realized price of AUD 1,159 per tonne at the actual Lithia grade delivered. The reduction in unit cost was driven really by 3 key things: We had a very low strip ratio in the final quarter as the open pit came to an end, and so the unit cost of open pit was significantly lower. Underground mining led to the improvement in recovery, and we also had less OSP ore being processed, which contributed to that factor. And then finally, we're realizing economies of scale the operation continues its ramp up to steady stack production.

All-in sustaining costs also benefited from a reduction in sustaining CapEx with no capitalized waste from open pit operations as they came to an end. We note that underground capital development is being reported as growth CapEx at the front-end loading of that activity, and that will remain the case until we declare commercial production, at which time it will then be reported sustaining capital and go back into the all-in sustaining compilation.

Could you please move to the next slide, Michelle? So talking about cash flow and cash balance. Key highlight was obviously delivering and effectively breakeven operating cash flow. At the same time, as ramping up underground mining and transitioning the plant feed from open pit to underground ore. Cash receipts of $128 million were broadly aligned with $130 million of revenue during the quarter.

Cash costs increased to $122 million, and this reflected a decrease in open pit mining costs, the ramp-up in activity for the underground mine and ocean freight selling costs and royalties all increased with higher sales volumes and pricing. Growth capital of $22 million was predominantly underground development, consistent with Q1, sustaining capital reduced materially. It's a combination of the open pit activities coming to an end and not capitalizing costs there and just a lower number of projects in that period.

Financing costs of $5 million were broadly unchanged from Q1, and hence, the net result as we closed the year with $390 million of cash and 14,000 tonnes saleable concentrate. This positions us very well to take advantage of market conditions, see growth with continued focus on costs, capital discipline and shareholder returns.

I'm going to speak briefly about the LGES convertible notes. You have seen the announcement came out this morning, whereby LGS issued us with a notice to convert 100% of their notes into equity. This will significantly strengthen Liontown's balance sheet upon conversion by reducing debt and the associated derivative liabilities. On a pro forma basis, using the underlying debt values and gross debt will reduce from approximately $760 million to $360 million, our net debt will reduce from $370 million to net cash of $30 million, and gearing ratio reduces from 50% to 24% on a gross debt basis or 33% to 0 on a net debt basis.

Notwithstanding the conversion that will occur in H2, the accounting standards require us to fair value the option component at December '25. And while still subject to review by our auditors, we expect to recognize a noncash fair value charge in half and P&L of approximately $105 million. The primary driver of the higher fair value was the increase in Liontown's share price over the half from 30 June. A further fair value adjustment will be recognized on the conversion date to align with the final auction value.

I'll now hand over to Grant to talk about the market health.

Thanks, Greg. We can go to the next slide. Great. Thanks. So a quick recap of our offtake book here to make it easier to follow. You can see in the graph on the right-hand side that make up -- to fund the project, we created a suite of offtake contracts with strategic customers, and we have really taken a portfolio approach in our management of pricing exposures with contracts in aggregate referencing spodumene, carbonate and hydroxide, as Greg mentioned.

Now these prices don't always move in lockstep, but they do tend to move together when viewed over a longer horizon. And in this quarter, spodumene certainly led the price move upwards with chemicals following at a slower pace. But this is not always the case. And you can see the opposite, particularly in falling markets.

If we move to the market side, I'll talk briefly on some of the key figures. If we look in the rearview mirror count, the year '25 was really a breakout year for both EV sales with 3 months of the year actually exceeding over 2 million global EV sales for the first time, ending the year with over 20.7 million EVs sold, which is 20% up year-on-year. But of course, the big new story for the year was another year of outperformance for Battery, Energy, Stationary Storage, or BESS, which grew by 51% in 2025. These strong growth figures across both BESS and EVs pushed global lithium ion battery demand to almost 1.6 terawatt hours, almost 30% higher than the prior year.

In this last quarter, we also started to see the emergence of a lithium supply land deficit, which has caused strong move in prices over the past quarter, and this has continued into January. The expectation of continued deficits in 2026 is likely to provide further price support. And as you can see in the bottom chart here, while the moves off the bottom may have taken some market participants by surprise, history would suggest there's still further room to run.

And with that, I'll hand over to Tony.

Thanks, Grant. Now let me turn over to growth and specifically how we think about deploying capital as cash generation improves. We're not chasing growth at any cost. Every capital decision we run through this framework. First, we fund sustaining capital for -- operations, and that's a nonnegotiable as we require to maintain our business. And having a maintenance background, this is very near and dear to my heart.

Beyond that, we have 3 priorities that continually compete for capital growth: Realizing Kathleen Valley's full potential, that's the first pillar of our strategy; followed by debt management, and you saw the announcement today; and then shareholder returns.

We -- on the debt management, we still have the forward facility in the WA government loan, but maintaining the balance sheet strength gives us the flexibility through the cycles. And on the shareholder returns, we get the cash -- as cash generation improves, dividends and potentially other mechanisms become part of our conversation. I'm sure our Chairman will demand that. We're not there yet, but that's on the horizon. The framework matters because the market is rerating with you. So we're seeing that, and as we see that, the framework ensures that we allocate the capital properly, not just spend it because it's there.

So if we go to the next slide, please. So this should be familiar to most of the listeners on the call today. And what it reinforces that we're well positioned for the lithium recovery and providing that lithium recovery is sustainable. We've kicked off a study to refresh the 4 million tonne expansion cost that we had in our original DFS. And a lot of that is around ensuring that the DFS expansion is current with all our latest knowledge from our operating experience that we've gained over the last 12 to 16 months.

This is a brownfield expansion, however, an operating asset. There's a certain amount of already invested infrastructure, and that all our approvals are largely in place. This dramatically reduces our execution risk and time to market compared to a greenfield project somewhere else. The capital intensity is also lower because we've already made foundational investments, as I already mentioned. Incremental capital for expansion is far more efficient than starting from scratch.

And as we get the scale, we then -- it impacts our unit costs as we move forward. So we have a competitive advantage because we've recently been a developer. We've got a lot of that experience. We know how things done. There's a lot of stuff that's fresh and current so we can move that and apply that to our expansion.

So looking at the mine plan on the right, I thought if people recall, when we published our strategic tenant in November 2024, we said that there was a certain amount of tonnage that we would park. As market conditions improve, we'll go back. So that is a potential area of examination that we're now looking at. In addition, we've completed the open pit. So we've got access to Northwest flats through the bottom of the pit. That's another area that we're prosecuting as part of this study refresh.

So to be clear, each expansion is subject to the study outcomes, a sustained market improvement and finally, board approval. We're not committing to capital until the conditions are right, but we are preparing so that when we move, we can move quickly.

So if I move to the next slide, please. So finally, just to recap as we bring all this together. The December quarter represents an inflection point. The mine's transition has been delivered. The costs are within guidance. And cash flow is improving. We've done that, what we've said we will do. The open pit is completed on schedule, and the underground mine is ramping up. Recoveries are improving as the feed mix becomes dominantly underground, and costs are reducing. We need to ensure that as this price improves, that we maintain our operational credibility. So the focus on operational excellence is front of mind for us. We're scaling production as a recovering market. So every price increase flows through to the bottom line as we expand volumes. The leverage is significant. And we have optionality with a strong balance sheet now that we've converted our convertible note with LG, and the expansion study is being refreshed. Capital allocation framework is in place, and we can be opportunistic without being reckless.

I want to acknowledge the Liontown team and our contractors. This has been a demanding quarter by completing the -- while simultaneously scaling up a fairly large underground and we've delivered it. So we need to continue to deliver every day. Our focus is clear: execute the underground ramp-up, optimize the operation, generate the cash and create the value. Thank you for everyone for listening, and happy to take questions

Thanks, Tony. [Operator Instructions] Our first question comes from Ben Lyons from Jarden Securities.

Tony, I was waiting for the beep. I might start with the growth and that rapid pivot that you've made back from austerity back towards growth. Firstly, what sort of time frame have you allocated for the expansion study? And then secondly, I was just hoping to dive a little bit to the possible capital intensity of what ultimately will be brownfield expansion. And maybe you can just paraphrase what components of the nonprocess infrastructure have already sized to that 4 million tonne case? Like obviously, the paste plant is an obvious one. You're going to PPA, I assume, can really accommodate the incremental power draw. You've got the massive dent infrastructure in place already, and that processing plant is best of breed. So you might just need a bit more sort of milling and tank capacity. But yes, just trying to get a better perspective on the likely capital intensity if you pull the trigger on the 4 million tonnes.

Okay. Thanks, Ben. There's a lot in that question. So hopefully, I can cover off everything, and I'll also lean on Ryan as well. Look, I want to stress that no commitment per se has been made. What we're doing is we're dusting off that study that was done in 2021 and ensuring that it is development-ready, fit for purpose and includes all the understanding that we've built in the last 16 to 18 months of operation. So we want to be able to be ready. So if the market is definitely sustained improvement that we can be in a position to pull the trigger.

In terms of duration, I mean, the team have just kicked that off. But typically, I would say that we wouldn't see anything until the end of the financial year and into the new financial year before we sort of announce anything specifically. So therefore, I don't want to talk too much around capital cost because we don't have a definitive number because we've only just kicked it off. So we'll hold on that particular point. Is there anything else on the embedded optionality that we've got in terms of infrastructure?

Look, I think, Ben, you covered off pretty well in so far as the infrastructure we've already invested in and the type of things that we'll have to have a look at. As you said, milling is going to be a key one. Flotation sale or 2 might be the other thing. That's fundamentally what we've got to look at in the plant. There's some mining services infrastructure, which we'll have to have a look at. Obviously, the [ acceleration ] of whatever we might need to do in mining. And then you mentioned nonprocess infrastructure as well. And as you quite rightly pointed out, we've got a lot of that in a place -- post plant and the like.

Ventilation is another one.

Ventilation. So that the issue -- the things we'll have to look at is to make sure we've got water [ usage ] combination, probably the 2 kind of main ones. But as you can tell that a lot of it's in place, and there's a few kind of known constraints that we need to have a look at if we're going to be running at circa 4 million tonnes

Yes. Okay, cool. That's helpful. Maybe just one quick follow-up on that. I seem to recall that the initial concept was, I think, 4 declines. But now you've mined out the open pit, you're talking about possibly accessing one of the ore bodies through the bottom of the pit. Just whether the concept is to have sort of the 4 declines in place the 4 million tonnes of annual material revenue?

Yes. Yes, the concept is still to pursue the 4 declines. But if there's an opportunity that is capital efficient to get into the ore sooner because what we've said in our presentation is that we don't want to sort of -- if we decide to expand, we want to give progressive capacity uplifts. Not just sort of sit at 2.8 and then, bang, you get 4. We want to incrementally increase capacity. So if we can get access to earlier tonnes through the bottom of the pit, then that will be highly value accretive. So that's why we're sort of looking at everything again because we've now got far more options and levers to pull that we did back in '21.

Yes. I think, Tony, 2 points on that. The first is that -- and I think we've included that in the note that goes in the quarterly that Kathleen's pit is around about 150 meters deep. So if you think about it, we've already mined down that far. So it actually gives us -- it's much closer to the ore body in both depth and also in terms of horizontal distance as well. So as Tony has indicated, it does provide some good optionality.

The second thing is, and Tony has touched on it, to be clear, the expansion is less of a big bang expansion and much more about almost incremental debottlenecking as it comes to the plant, which supports Tony's comments about being able to release capacity incrementally rather than a traditional study, FID, amount of time before you actually get those incremental tonnes. So that's certainly the approach we're trying to take with the [ study ] exercise at the moment.

The next question is from Levi Spry from UBS.

Yes. So you're just following up on, I guess, the growth optionality and as you optimize the infrastructure in the ore body progressively, incrementally. What does that mean for how you view a sustained market improvement in pricing? Will the gold price sort of we learned through this last cycle? And given that maybe some of these are incremental capital steps, help us think about how -- what you need to see to commit to that?

Well, I think I've been on record in saying, Levi, that given the volatility that we see, look how quickly, the lithium prices scaled up since December as an example. We've got to be able to have it confident as a Board that we're seeing this price recovery. And the supply and demand signals are strong over a longer period of time. Whether that's 6 months, 8 months of consistent price improvement, that's something that the Board will have to subjectively make a decision around, right? But it can't be 6 weeks. So while we're doing the refresh of the study, we will be monitoring the market dynamics and fundamentals. And the Board will make a decision if it feels confident that the market has turned and turned in a positive and sustained way. But we don't want to start everything once we say oh, look, it's here.

Yes. Okay. And just on to the realized pricing piece. Just trying to understand, I guess, the lag on the way up. Can you just remind us of the pricing mechanisms behind those pieces of offtake that you've laid out there on the slide?

Yes. Sure. Levi, it's Grant here. So we have one contract, which is Q lag, and that's the traditional Q lag you see in iron ore, so kind of 4 months back. So you know the price when you put on a vessel, that's not unusual for cargoes going into Japan and Korea, for example. Then you've got the spodumene price through the renegotiation of the Tesla contract and the carbonate exposure this year from those offtake tonnes that were resold to [indiscernible]. And then from next year onwards, that will be spodumene index-linked.

Thank you. The next question is from Stuart Howe from Bell Potter Securities.

Tony, just on the expansion case again, and you spoke to sort of conditions arise and sustained improvement. I was just wondering, would you look to secure additional offtake arrangements to underwrite that expansion and potentially lock in some pricing?

That's a good question, Stu. I think in our previous quarterly call, we gave some feedback around our visits to Mainland China. And when we were starting to see the real increase in demand when refiners and other players in the battery value chain were looking for additional tonnes. So we don't -- we haven't seen a customer that hasn't inquired about those expansion tonnes. So we will look at that in a very strategic way and see how it pans out. But the interest is there for those expansion tonnes. But again, because the interest is there, it's got to come with the right pricing environment.

Right. And then just secondly, on the balance sheet. And obviously, the converting of the note vastly simplifies your debt positions to the extent you've been effectively net cash. But just wondering how you think about your liquidity going forward? Do you go back to the banks and look at -- back to the syndicates potentially for a replacement of the Ford facility. What are the options you see around your balance sheet?

Well, Stu, the Ford facility is a very attractive debt facility. We've said that numerous times. It's a very competitive coupon rate. It's 1.5% above bank bill swap rate. I mean you don't get a home loan at that rate at this stage. And it's very, very low covenant. So it's hard to see us, at this stage, getting a better deal elsewhere. But we'll be open to it and we'll continually track and assess our capital structure in the context of our capital allocation, and therefore, if the situation arises where we want to do something, then we will look at our capital structure accordingly.

The next question is from Reg Spencer from Canaccord.

Congrats on a quarter. It looks like everything seems to be [indiscernible], touch wood, in terms from an operational standpoint and from a market. Most of the other guys have covered off on the questions I had. But maybe just on pricing, maybe this is one for Grant. That auction you guys ran late last year was a great price discovery tool. Will you continue to run options like that, noting that you look fully committed from an offtake standpoint? But if we see any lulls in the market for whatever reason, may you run options like that again?

Yes. Thanks, Reg. For sure. I mean when we announced that first auction, we did note that we would continue to do auctions throughout the quarter 2026. We have deliberately, as a company, retained 10% to 20% of our book for spot, and exactly for these reasons to try and help that price transparency and create open markets for people to bid for cargoes. And that will continue to be a very key strategy for us as we move forward. And it could actually be what we end up [indiscernible] to do for any expansion tonnes if we do move ahead to create a bit more flexibility in the book.

Will you guys likely release the outcomes of those auctions? I know some other companies stopped doing that, but from my perspective, it seems to be a great little product for the market to be able to get a reminder as to what's actually going on and where pricing actually is relative to what price reporting agencies might put out there.

Yes, it's a good question, mate. Look, again, we made clear in that announcement that it's kind of business as usual when we run these options going forward. And therefore, we won't be necessarily reporting every single one to the market in a stand-alone ASX release. But you can be sure that the whole purpose of doing this is to create credible, tangible pricing data points to feed into the PRAs to make sure that the price actually reflects fundamentals. And every single time we do a transaction, it will be reported to all of the PRAs to ensure that, that's taken into account in their assessments.

Yes. So indirectly will be published by the PRAs.

Okay. So that gets reflected somewhere so we'll say it one way or another.

The next question is from Austin Young from Macquarie.

Just a quick question to follow up on this expansion plan. You mentioned that you will take a stage approach and unlock the capacity. Just kind to understand how should we think about the sequence. Is that coming from the underground first so you want to all more so? Or you will start to looking to increase the rotation of the site capacity?

I think the way we would tackle it, Austin, and I don't want to preempt the team because they've just kicked this off. But intuitively, you'd start with the longest lead items, right? So things like the bore mill, understanding what we need there and then placing an order would be first cap off the rack. And then what we need in the underground, given the lead time it requires to do the development work in the underground and in the open pit, if we're going through the bottom of the pit. So those are the sorts of things we would prioritize. And then subsequently, the other stuff can be done within that time frame. So if it's ordering [ 2 ] flotation cells and installing them and getting an improvement in recovery while we're waiting for the ball mill, the team will prioritize that. So that's work that will be done as part of the next phase.

Just a quick follow-up on that, assuming like a scenario where you -- all of your capacity for [indiscernible] first coming to a tight like market, would you consider OSP product as through to the market?

DSO?

Like you mean DSO?

Sorry, Yes.

Okay. Look, I have turned my mind. I saw some recent press on that by some other party. Look, at this stage, DSO doesn't really factor into any of our planning. Last time we looked at it, I mean the prices were much, much higher. But at these sorts of prices, I can't think we make the economics work to [indiscernible] But anyway, we haven't actually turned our mind to it. I'd rather be selling process on to be convinced.

Yes. I think to add to that, Tony, I mean, we built a process plant. Last time we looked at it, Austin, it was really around early cash flows in the context of building a project when we staffed at open pit mining earlier because we needed the waste rock or infrastructure build. So it's quite a different unique set circumstances. Our business is not selling DSO. So we'll leave that to the Africans.

Next question is from Glyn Lawcock from Barrenjoey.

I'm still just a little bit unclear about the 4 million tonne expansion and the timing. I heard you just kicked off the study. You probably won't come back to the end of the fiscal year, early next fiscal year, but everyone is now talking about turning capacity back on or are there expansion cases, which is obviously not good for the market cycle. But when could you actually get there? I understand you want to do a bit of debottlenecking that maybe you can creep beyond the 2.8. But when would it go to FID? And when could you conceptually get to for if everything -- if the stars are aligned.

Well, it comes back to this point around has the market turned and turned in a sustained way. It's a difficult question to respond to, Glyn. We might do the study, refresh the study, find out what we've got to do and then the market comes back off and we just put it back on the shelf, right? So at this stage, it's all hypothetical. If I decide to -- go ahead.

I was just going to say, let's just assume the market needs it. What's the best case you could do?

I think given underground development would be the probably the rate determining step, I would think it will be an 18- to 20-month program to get to the full pass uplift, but we would see smaller increments along the way.

That's from when you FID or you're talking about [indiscernible] today?

No FID yet.

And when could the earliest you get FID, do you think, again, assuming everything goes well?

Well, again, it's a hypothetical. I mean I don't want to be saying if we say -- I'd rather not answer it, Glyn, to be honest, because again, I'm just sort of speculating.

I was just curious.

Glyn, what Tony already said is we wouldn't expect to have the results of that study until the end of this financial year. So I mean I assume that's delivered, that would be the soon as you could ever make an FID.

Okay. That's cool. I just wanted to -- preliminary -- to get more work. And then, Tony, you're sitting on another asset, which market puts no value on [indiscernible]. I mean, is that something that exercises your mind again now? Or is now a good opportunity maybe in this market to offload it? Just how do you think about that sort of off to the side, obviously?

That's a good question, Glyn. We've got a lot of talented people that have now concluded their work as part of the open pit. And some of those folks will turn their mind to what [ Boldania ] could look like. So that's work that we're going to kick off and do in a slow burn.

Next question is from Andrew Harrington from Petra Capital.

Great spread outcomes expected over the next couple of quarters with where prices are looking at the they stay that way. I mean, obviously, performance and price are the combination. You haven't really spoken a lot about price. You seem reticent. I know it's volatile, but I guess that's the key element here in your stock performance. What are your customers saying? Have they shifted in the last week or in the last month? Or did they shift last year? How does this come about?

Do you want to take that?

I'll take this one. It's Grant here. So look, I guess I covered a little bit in my market side that -- the market is starting to anticipate supply/demand deficits into '26, '27, '28. You can see that SC Insights chart that I included on my slide on Page 16. What that means is you typically see inflection points in the psyche of customers ahead of that move. And I would say that happened in the last quarter last year, so the December quarter that we're talking about today. And it's very clear when we went to China in the very beginning of that quarter, that customers were focused on growth and getting access to more resources to enable that growth. So we expect that this expected deficit will continue to support prices throughout '26 and beyond. And we're trying to make sure that we're well positioned to participate in that as we move forward.

Okay. And my second question would be around M&A. That's something that we've spoken about in previous calls. What is your outlook on that? Or is that off the table now?

On the growth front, I think we've gone into some detail around where the focus is initially. It's organic growth. The best and most value-accretive option is to develop Kathleen Valley to its full potential. So that's one primary focus. And then we continue to opportunistically focus more broadly around inorganic growth. So we will continue to do that. Grant's got a very small team that does this, and we'll continue to focus on opportunities if that makes sense.

The next question is a written question from Hugo Nicolaci from Goldman Sacs. Following LG devoting their debt to equity, can you confirm what happens with the capitalized interest so far? Do you have to pay that back this quarter with the issue of new shares?

Yes. Greg here. The capitalized interest also converts and effectively gets repaid in shares. It's not a cash repayment of interest.

The next question is also a written question from Ben Liu from DMT. First off, congratulations to the team on the execution. It's been impressive. Just on tantalum, can you give a brief update on how the byproduct is tracking and how meaningful it's coming on the cost offset as underground operations stabilize?

Yes, Ryan here. So I mean, we made a very conscious decision at the beginning of the project, not to contract our attach to them so that we could focus on ensuring we maximize recovery in lithium, which is the main focus. But we did make the investment in a significant tantalum plant, which allows us to capture that byproduct revenue. We have consistently been selling that on spot and making money from that. And our focus will continue on that basis at the moment, while we make sure that we manage that transition to full ramp up on the underground and steady-state production of 4 products.

Next question is from Tom Lin from BIZB. Tom says: "Congratulations on a good quarter. There has been previous mention of interest in brands as a way to diversify. Given the move to relook at expansions, what's the current thinking is [indiscernible] and M&A more generally?"

Thank you. I'll take that. Look, the demand outlook is very strong. And we believe that all forms of lithium units will have a place. So we believe as a pure-play lithium producer that we need to have an understanding and a skill set in both of those areas. We've got a very strong skill set in hard rock, and we want to build our understanding and skill sets in brine. So the focus is dual.

Any more questions, Michelle?

No further questions.

Okay. Well, I'd like to thank everybody for attending the call. Appreciate your time. And I thank my team, and we look forward to 2026.

Good morning, ladies and gentlemen. My name is Tim Goyder, and I'm Chair of Liontown Resources Limited. I would like to begin by welcoming all of our shareholders and supporters and acknowledge the traditional custodians of the land on which we operate, including the Tjiwarl people on whose land the Kathleen Valley Operation sits.

It is now 11:00 a.m., and I'm advised that a quorum is present. I therefore declare the meeting open. I would like to advise that all shareholders in the room should now have registered to vote and have signed the attendance register. If you have not registered or have not received a voting card, one of those, please do so now at the registration desk. This year, we are webcasting our AGM so people who are unable to join us in person are able to follow the proceedings.

This is not a hybrid AGM, so viewers online will not be able to participate in the formal business. However, for those watching online, the webcast does have functionality to submit questions, which we can address at the conclusion of Tony's, CEO, address.

If you have any questions, submit them online, and we will endeavor to answer them. For those in the room, a roving microphone will be available for you to participate in Q&A.

I would like to introduce my fellow directors, Tony Ottaviano, Ian Wells, Jennifer Morris, Shane McLeay and Adrienne Parker, together with our Company Secretary, Clint McGhie. Our executive team are also here in attendance.

In the front row, we have our Chief Commercial Officer, Grant Donald; Interim Chief Financial Officer, Graeme Pettit. And I also welcome for the first AGM, our new Chief Operating Officer, Ryan Hair; and new Chief People Officer, Lisa Breen. Wendy Turner is here from Computershare to oversee the polling process.

The company's auditors for the financial year ending 30 June 2025, Deloitte, are present and will be available to answer any questions relevant to the conduct of the audit, the preparation and the content of the audit report, accounting policies adopted by the company and the independence of the auditor in relation to the conduct of the audit.

We now move to the formal part of the meeting, which will be followed by my Chairman's address and a presentation by our Managing Director, Tony Ottaviano. As the Notice of Meeting and the explanatory memorandum have been made available to all shareholders, I propose that the notice convening the meeting be taken as read.

I confirm that as Chairman of the 2024 AGM, I signed last year's minutes as a true and correct record of the proceedings at that meeting. I advise that valid proxy totals for each resolution are displayed on the screen behind me.

A number of the proxies received were left open to the proxy holders' discretion. For those that were left to the Chairman's discretion, I intend to vote in favor of all resolutions as stated in the Notice of Meeting.

The first item of business is to receive and consider the company's annual report for the year ended June 2025, which includes the financial report, the directors' report, auditor's report and sustainability report.

The subject of the company's annual report is now open for discussion. Are there any questions in relation to the company's annual report? Are there any questions to be put to the auditor relevant to the conduct of the audit, the preparation and content of the auditor's report, including key audit matters, the accounting policies adopted by the company or the independence of the auditor.

I thought we get one on the fees -- we haven't -- but thank you. Thank you very much for your participation, for your work and the big report we've got these days. We note that there is no requirement for shareholders to approve the annual report.

Ladies and gentlemen, we have 7 resolutions to deal with today. In accordance with the ASX guidance, voting will be conducted by a poll. Wendy Turner of Computershare has been appointed as returning officer for the poll. I will now call on Wendy to explain the voting procedures.

Thank you, Mr. Chairman. We will now conduct the poll on the motions #1 to 7. Firstly, if there's any person present who believes that they are entitled to vote but has not yet registered to vote, would you please raise your hand for assistance. The persons entitled to vote on the poll are all shareholders, representatives and attorneys of shareholders and proxy holders who hold a green voting card.

On the reverse of your green voting card is your voting paper, which details the motions being put to this poll. I will now go through the procedures for filling out the voting papers and if you are a proxy holder, sorry, and have only directed votes for and/or against, as shown on the summary of votes, which will be attached to your admission card.

All you need to do is put your name on the voting paper and lodge it in the ballot box. You must lodge your voting paper for your votes to be counted.

If you are a proxy holder with open votes, you need to mark a box beside the motion to indicate how you wish to cast any open votes. Shareholders also need to mark box beside the motion to indicate how you wish to cast your votes. Please ensure that you print your name where integrated on the voting paper.

And when you finished filling in the voting paper and please lodge it in the ballot box. Please raise your hand if you require any assistance during the voting.

And I should now hand back to the Chair to open the polling. Thank you, Mr. Chairman.

Thanks very much, Wendy. The resolutions will be displayed on the screen behind me. I do not intend to read each resolution in full as they are set out in the Notice of Meeting.

I declare that the polling process is now open. Resolution 1 regarding the adoption of the remuneration report is displayed on the screen behind me.

The Corporations Act provides that a resolution for the adoption of the remuneration report must be put to vote at the company's AGM.

As shareholders will appreciate that the vote is nonbinding, but of course, disuasive. Are there any questions in the remuneration report? So please cast your votes for Resolution 1.

Resolution 2 relates to the reelection of Shane McLeay as a director and is displayed on the screen behind me. Shane is a Non-Exec Director. Further details of Shane's background and experience can be found in the Notice of Meeting and in the company's annual report.

Shane is required to retire in accordance with the constitution and therefore, seeks reelection at this AGM. Shane offers himself for reelection and the directors of the company other than Shane recommend shareholders approve reelection. Are there any questions on the resolution? Please cast your votes for Resolution 2.

Resolution 3 relates to the reelection of Adrienne Parker as a director and is displayed on the screen behind me. Adrienne is a Nonexecutive Director of the company. Further details of Adrienne's background and experience can be found in the Notice of Meeting and in the company's annual report. Adrienne is required to retire in accordance with the constitution and therefore, seeks reelection at this AGM.

Adrienne offers herself for reelection and the directors of the company other than Adrienne recommend shareholders approve her reelection. Are there any questions on the resolution? Please cast your vote for Resolution 3.

Resolution 4 relates to the issue of short-term incentives for financial year '25 to Tony Ottaviano is displayed on the screen behind me. The resolution seeks shareholder approval under Listing Rule 10.14 for the issue of up to a total of 510,636 performance shares to Tony Ottaviano under the company's employee securities incentive plan on the terms and conditions set out in the explanatory memorandum. Are there any questions on the resolution? Please cast your votes for Resolution 4.

Resolution 5 relates to the issue of long-term incentives for financial year '26 to Tony Ottaviano and is displayed on the screen behind me. The resolution seeks shareholder approval under Listing Rule 10.14 for the issue up to a total of 2.6 million performance shares rights to Mr. Ottaviano under the company's employee securities incentive plan on the terms and conditions set out in the explanatory memorandum. Are there any questions on the resolution? Please cast your votes for Resolution 5.

Resolution 6 relates to the increase in the maximum total aggregate amount of fees passed to nonexecutive directors to $1.5 million per annum displayed on the screen behind me. Are there any questions on the resolution? Please cast your votes on Resolution 6.

Resolution 7 relates to the proposal to change the name of the company to Liontown Limited. Are there any questions on the resolution? Please cast your votes for Resolution 7.

There are no further resolutions to be considered at today's meeting. Please place your completed voting papers in one of the ballot boxes circulating the room now.

Would you please indicate by raising your hand if you require more time to complete and lodge voting paper or you need a pen?

[Voting]

It looks like we're done there. So the voting process has now been completed. Thank you very much. I therefore declare the poll closed.

Ladies and gentlemen, that concludes the formal business of the meeting. Thank you for your participation. The polling results will now be scrutinized and be announced to the ASX shortly. I will now move on to my Chairman's address.

So fellow shareholders, welcome. It's good to have you here and there's some familiar faces here and what a day. The stock is now $1.52 and we now capital $4.2 billion, which is fantastic considering what we've gone through over the last 2 years.

I won't go [indiscernible]. Anyway, so they got me on a tight rein. The past year has been one of transition for Liontown. Today, we stand with a strong balance sheet and a world-class operating mine at Kathleen Valley. And last quarter, we had $420 million in the bank. Coupled with a first-rate workforce, the company is well positioned to take advantage of the improving lithium market.

Having completed our first full year of operations, we have shipped over 360,000 dry metric tonnes of spodumene concentrate to customers around the world.

We're currently operating Australia's only underground lithium mine. The transition from open pit to underground mining will be complete by year-end, at which point Kathleen Valley will be 100% underground operation.

The transition will increase productivity and output as we ramp up to full production of 2.8 million tonnes per annum. Underground mining gives us several advantages that open pit mining cannot match. It allows us to surgically target ore, leaving waste rock behind. That means cleaner feed to the processing plant, which in turn delivers higher recoveries and better concentrate grades.

Underground mining is also inherently scalable. In November 2024, we made the decision to adjust the mine plan to prioritize high-margin ore. This allowed us to limit capital and operating costs during a depressed lithium market while retaining the optionality to return to the 4-million-tonne mining rate when market conditions improve.

We believe our process plant is truly best-in-class. In recent months, our operations team have pushed the plant hard, processing highly variable feed at times containing up to 40% gabbro waste rock from low-grade stockpiles.

Despite this variability, the team continues to produce a consistent salable product to our customers. In August, the company strengthened its balance sheet through a 2-tranche institutional placement and a share purchase plan raising $372 million. The capital raising was strongly supported by both Australian and international institutions as well as our retail shareholders.

The recapitalization positions us to complete the underground transition and provides us with the optionality to pursue acquisitions that align with our long-term strategy.

We are not content to remain a single asset company. Our strategy has always been underpinned by 3 key pillars: fulfill the potential of Kathleen Valley, evaluate downstream opportunities and grow Liontown to its full potential by expanding our portfolio.

Bringing Kathleen Valley to full potential alongside pursuing accretive growth opportunities will be central to creating long-term shareholder value. Tony will shortly speak to what this future growth could look like.

But one theme remains clear, global demand for lithium continues to grow. This year, we welcomed 3 new executives to Liontown.

In August, we appointed Ryan Hair as Chief Operating Officer. Ryan brings more than 30 years of mining experience, most recently as CEO of Covalent Lithium. Last month, we welcomed Lisa Breen as our Chief People Officer. Lisa is a highly regarded human resources leader with experience at MMA Offshore and Austal.

And next month, Greg Jason will join as Chief Financial Officer. Greg brings 25 years of C-suite experience across resources, manufacturing, financial services, defense and logistics.

This will be the executive team that leads Liontown through this transition and into our next phase. They are supported by an outstanding operational team across this business.

To our CEO, Tony Ottaviano, thank you for your leadership. It's one of a kind, isn't it? Under this guidance, Liontown has developed into a world-class company, and we are only just getting started.

To you, your executive team and all 317 employees, thank you for your continued dedication. To my fellow directors, thank you for your guidance and support throughout the year.

Your contributions have helped position the company for long-term growth. I would also like to acknowledge and thank the Tjiwarl people, the Traditional Owners of the land on which Kathleen Valley operates. Our partnership is one founded on respect and collaboration.

We value the community support and look forward to continuing to share in the success of Kathleen Valley in the years ahead. I also want to thank both the West Australian state government and the federal government for their support.

During a challenging period, the state government provided a loan and port fee waivers under the Lithium Industry Support program. At the federal level, the Commonwealth equity investment through the National Reconstruction Fund played an important role in supporting our capital raise.

We also appreciate the ministers from both levels of government who visited Kathleen Valley to see our operation firsthand. Finally, to our loyal shareholders, thank you for your ongoing support, commitment and unwavering belief in Liontown.

Absolutely unbelievable. Thank you. Your Board remains 100% focused on delivering and building shareholder returns. The team will be available to answer your questions after the presentation, and we look forward to speaking with you over refreshments once formalities are concluded.

I'll now hand over to Tony for his presentation, where he will provide further detail on our operations and outlook. Thank you.

Thank you, Tim. Good morning, and welcome, everyone, joining us today. For me, I look forward to these AGMs. It's the one opportunity management and the Board get to really engage with the shareholders.

There are companies that see this as a burden, whereas I see it as a positive, no better feedback than that of a shareholder. FY '25 was a transformational year for Liontown.

We became Australia's first underground lithium mine. We delivered on every major commitment, and we did it through one of the toughest periods this industry has seen so far. Today, I will focus on 3 critical areas.

First, our FY '25 execution. We achieved first production in July on schedule. We commenced underground mining on schedule in April.

We generated nearly $300 million in revenue and $55 million in EBITDA in our first year of operations. Second, our FY '26 transformation strategy and transition. We're making strategic investments today that will drive structural cost improvements into the following years, FY '27 and onwards.

Thirdly, our growth vision. Kathleen Valley is world-class, but it's just the beginning of what we're building. By the end of this presentation, you'll understand why Liontown is exceptionally well positioned to create substantial long-term shareholder value.

Let's start with the foundation. Kathleen Valley is a world-class ore body, one of the largest in the world in the top 10 at 155 million tonnes and a 1.3% grade.

This translates to a mine life exceeding 25 years at our planned production rates. But the resource size alone doesn't define Tier 1 status. Location matters profoundly. Western Australia provides political and regulatory stability, world-class mining infrastructure, deep pool of skilled labor and a strong environmental governance.

When Tier 1 customers like LG Energy Solutions, Tesla and Ford evaluate supply partners, jurisdiction risk is paramount. This combination, an exceptional resource in an exceptional jurisdiction enabled us to execute and deliver through the market downturn.

I feel this chart captures the performance story. During FY '25, spodumene prices collapsed 44%. Today, spodumene prices have rebounded to above $1,000 a tonne. But for the past year, prices fell to levels of $600.

They reached this low and at this level, at least 30% of what's in the market is not economic. So 30% of the cost curve is below that price. That's why this is not sustainable. Yet given this backdrop, Liontown's share price fell only 21%, outperforming the commodity by 23 percentage points.

More telling, since June 30, we've surged 110% compared to the spodumene price of 79%. This outperformance reflects growing market confidence in both our operational delivery and the long-term fundamentals of Kathleen Valley.

Some milestones which you see there, first production in July, September, we shipped our first cargo. December, we delivered our first cargo to our foundational customer, LG, who's in the audience today.

April, we commenced our underground mining. August, we did that important capital raise of $372 million, which Tim talked about. And in November, we launched our first auction. The market expects flawless execution. And when the commodity price is not your friend, then the only thing the market recognizes is operational excellence. So that's what we've got to deliver.

Now let's talk to the market. Despite near-term volatility, long-term fundamentals, as Tim said, remain compelling. Electric vehicles sales exceeded 2 million units monthly for the first time in September this year, marking a 23% year-on-year growth based on Rho Motion data. Bloomberg forecast EV sales reaching 39 million units by 2030. That's a CAGR of 14%, and I believe that's conservative. Other forms of transportation are adopting batteries, including commercial and heavy-duty trucks. And we saw this firsthand when a group of us went to China about 4 weeks ago. That segment of the market is growing rapidly.

So it's not just passenger vehicles, it's commercial vehicles. And then you have these low altitude vehicles, which are another segment, the eVTOLs and the drones rely on lithium batteries.

Geographically, China continues its robust trajectory. Europe is rebounding strongly, and the rest of the world, and that is a huge segment is accelerating rapidly. But here's what analysts underestimated in our view.

And we've been saying this for some time, stationary battery. Benchmark [ Materials ] Intelligence estimates that BESS will contribute 25% of the total lithium demand through to 2029, yet forecast vary widely.

And I'd like to sort of draw your attention to this second graph. So the blue bar is what the market, the street consensus is saying around stationary batteries.

The bar on the outside is the biggest battery producer in the world in CATL. So that's their forecast, right? And then there's another forecast there in the middle.

But the point that I want to make here is the difference, the error band between the blue bar and the world's biggest producer is 765,000 tonnes on an LCE basis. That's the error in the forecast. And just to put that in perspective, that's half of this year's production.

So to me, this one is a huge driver, and I think the market is starting to understand this. Where are these batteries used? Well, large-scale grid storage investments are accelerating globally to enable renewable energy penetration but more importantly, to improve grid Reliability.

Data centers are representing an emerging demand vector, and we're getting inbound interest from data centers. There are people that actually construct them, and we'll be having a session with a large player in the coming weeks, just to understand where they're seeing their demand for batteries going.

But as demand grows, the influence of a single mine and particularly a single player will diminish, supply will remain tight because the industry hasn't invested during this downturn. But Liontown has invested. That positioning matters as the market tightens. So if I go to our first year of performance.

Let me walk through this with you. We produced 294,000 tonnes, I mean that's including 6 months of ramp-up in the plant. We had exceptional plant reliability at 89%, and the concentrate sales, we nearly sold 300,000 tonnes of production in our first year.

We had, at the time, $156 million in the bank, $300 million almost in revenue and a good cost structure, not considering that it was in our ramp-up year, where you don't have the economies of scale.

Our sustainability strategy for the long term, this is something we work on every day. Our Sustainability Committee has enrolled. We had a very good meeting around this, and we will continue to prosecute what we think is the right thing to do as a mining executive and as a mining company.

Now FY '26, our transitional year. Why is it a transition year? And what does it mean for value creation? As Tim mentioned, underground mining commenced in April 2025, exactly on schedule. We invested significantly in enabling infrastructure such as life-of-mine ventilation Australia's largest paste fill plant. We did this day 1. We didn't wait 5 years before we built it like some companies do.

We invested in this upfront. We're now ramping up to 1.5 million tonnes by the March quarter with an open pit operation coming to a conclusion in December this year. Why does the underground transition matter? There are 4 fundamental reasons.

First, higher grade ore, the underground material average is about 1.4%; better grade, better recovery. And when you get better recovery, you get better plant performance and you get a lower cost base.

Secondly, the recovery gives us confidence. Our trials that we did with the underground material gives us that foresight to be able to forecast that we'll achieve our design parameter and recovery levels of 70% and then beyond that.

Thirdly, structural cost improvements. As I mentioned, the better recoveries deliver this, but also as we mine deeper into the underground, the larger stopes, and they're very large, will give us economies of scale because if you've got the same fixed costs going into a stope, but you want to mine 80,000 tonnes of it instead of [ 4 ], you can see you can spread those costs over more tonnes.

And lastly, operational flexibility. Underground mining allows us selective extraction, our production rate adjustments based on market conditions while preserving the resource value. As Tim mentioned, our processing plant is performing exactly as designed, reliably producing high-quality, specification grade concentrate at scale.

We've derisked the flow ship, and we continue to do this through our optimization. Now we'll move to the financial strength. Our balance sheet supports the transition strategy, a $420 million cash at the end of September, substantially gives us that operational flexibility as we ramp up the underground.

It gives us our funding arrangements of low covenant and low cost backed by Tier 1 customer relationships. Ford have agreed to defer the loan payment for -- until September 2026, providing additional flexibility for us.

The capital structure aligns perfectly with our strategy, execute the underground transition, optimize the operation systematically and maintain optionality for disciplined growth.

I do want to mention the Australian National Reconstruction Fund, the $50 million investment they made during that raise. I mean that was a fairly profound investment by government that helped crowd in an additional $300 million of private equity into our company.

Now, Liontown to its full potential. I mean Tim touched on it, but it starts with Kathleen Valley. We need to successfully execute the strategy of Kathleen Valley, the most value-accretive path for us upfront is to deliver Kathleen Valley to its full potential.

So subject to market conditions, we want to grow Kathleen Valley to the $4 million and maybe beyond. And we're dusting off those works as we speak to feed into it all the known information that we've got from the operating in the plant rather than theoreticals that we had during the feasibility study, and we'll understand what that expansion phase will look like.

But it's got to go beyond Kathleen Valley. We don't want to stay a single-asset company. We need to grow. We need to give diversity of earnings, and we need to look globally. Now the Board is committed. We had a strategy session only a few weeks ago. We understand what we need to achieve.

We're extremely aligned and we're going to push that. Countercyclical investment is what we need to do. Our vision is to build a diversified globally relevant battery materials business with sustainable participation across the lithium value chain.

Now let me bring this all together. FY '25 proved we can execute under pressure, and we delivered Australia's first underground lithium mine. We shipped 283,000 tonnes generated nearly $300 million in revenue and $55 million in EBITDA, all while maintaining a strong balance sheet, all delivered through a severe commodity market downturn.

FY '26 represents opportunity through this transition phase. We've calculated all the investments we need, we've put them in, and we're going to push the superior recoveries and a lower cost structure. FY '27 and beyond is where the sustained value compounds, consistent production, good margins, growth optionality and strategic partnerships, all give us a competitive edge.

We have every element required for success, a world-class asset, a proven team, Tier 1 customers, a strong balance sheet and a disciplined strategy.

Now before I go on the video, I just want to acknowledge a few people. Firstly, Adam Smits and Jon Latto, both who are instrumental in getting us to where we are today. So I'd like to thank them for their contribution. And Tim's already welcomed Ryan, Lisa and Greg, into our next phase. So I welcome them to the company.

To our Board, thank you. We meet tirelessly and we're very aligned in collegiate; to our stakeholders, thank you for your participation during the year and to our shareholders, for your continued support and commitment.

I do want to do a specific call out to a few shareholders. Tim and I regularly get letters and e-mails from shareholders. And to be frank, they keep us going. There's been some dark times, but those letters from shareholders who are supporting us every single step of the way is uplifting.

And it gives me as a CEO, the ability to then turn to my team and say, they're backing us. People like -- shareholders like the Anisimoff, Dean Oakley, [indiscernible] who's not here today, but they're all -- and there are many people in this room that speak to me regularly. So I thank you.

The support helps me personally to push through. And I do -- I'm not big on quotes, but I do like this one, which I'll end the presentation before we show the video. And it came from Theodore Roosevelt, which I think captures the year perfectly and it goes like this, "it's not the critic who counts, not the person, who points out how the strong man stumbles or where the doer of deeds could have done them better the credit belongs to the people actually in the arena, whose face is marred by dust, sweat and blood." That's our team. That's Liontown. Thank you.

[Presentation]

Now, I will open it up for Q&A.

I have a question related to price. We don't have a lot of transparency. So where do you think as to what your strategy is?

That's a big question. So maybe I'll sort of hear it back down onto a couple of things. When I first joined Liontown, what was obvious to me was the market for the product was very much relationship-driven right?

There wasn't a sort of globally transparent trading platform so that we could get transparency around pricing. The second thing is the actual product we were producing didn't have a price reference. We had to rely on the chemical price of the product, right, chemicals and then back calculate what the product we were selling was worth. So we were tied to the price and the supply dynamics and demand dynamics of another product.

So right upfront, we said, well, let's -- when we sign our offtake agreements, let's leave a certain amount of product available for the spot market. And it's through the spot market and creating that platform to actually trade so that we could get the transparency, we hoped that we could get the proper pricing mechanism for the product we sell.

And therefore, margin, which is important when you look at the battery value chain, where does margin accrue, it should accrue at the point of first salable product, which is spodumene.

Now since then, we have seen a spodumene index develop sufficiently so that we've got confidence that we can now link our offtake agreements to that spodumene index.

Now we have contracts that we need to honor, which are still on the chemical price. But over time, we'll progress to a spodumene index. Grant, do you want to add anything? Grant is our commercial guy. So he's the one that's out there on the day-to-day.

I would just say that part of the auction process that we ran just before the AGM is around getting that transparency. So getting real data points, physical trades that can then inform that index to make sure we get paid a fair price for our product.

So as just Tony said, that's an important part of the journey that we're on, and you'll see us being much more active in 2026 on the...

All right. I just wanted [Technical Difficulty] talk about site every time now -- so I'm just wondering whether you're looking at [Technical Difficulty], are you looking at good last year, so that everyone is here in Australia and then [Technical Difficulty] our shareholders are, so we can actually [Technical Difficulty].

I can maybe I'll address the second part first. We are live streaming at the moment, okay? And so they have the opportunity to hear and ask questions, which are probably coming through as we speak.

In terms of the open pit and its closure plans, as part of our overall commitment to the Tjiwarl and to the government in terms of our permitting, we are looking at ways to minimize the footprint that we leave behind.

In fact, our tailings and our waste dumps basically nonexistent because we've reutilized a lot of the waste for the underground paste fill. And so the footprint is extremely small, but there's an understanding and our permitting is all based on the land form that is currently there now being left as it is.

Tony and the Board are -- congratulations [Technical Difficulty] you guys. [Technical Difficulty] you might comment that [Technical Difficulty] business. I was interested to give us [Technical Difficulty] I just want to ask the question, even in your [Technical Difficulty].

First and foremost, Eddy, thank you for assisting us in our capital raise in August. Secondly, in terms of our growth aspirations, our primary core competence is lithium, it's hard rock lithium.

But we're not going to be closed to just staying in hard rock because we need to understand where battery chemistry is going and there may be a hedge that we have to look at in terms of managing that battery chemistry evolution by possibly focusing on other forms of lithium like the brines.

Now adjacent minerals. The way I look at it is if there's an opportunity and it is value accretive and it is in strategy, then we'll look at it. As Tim would say, if it makes money, it's strategy.

First of all, congrats Tony and Chairman and everyone in [Technical Difficulty] question regarding the cost in the quarter [Technical Difficulty] all-in sustaining costs with the guidance that we gave earlier. It's only you can see how the cost is traded [Technical Difficulty] or relative to [Technical Difficulty].

Now we're holding to our guidance, 100%.

A couple of questions online. First question, I think some [Technical Difficulty]. How is [Technical Difficulty] improvement [Technical Difficulty] in the next 12 months?

We're very strong as a company. As I said, a number of us went to China 3 or 4 weeks ago. And there were 3 key messages that came out of that visit. Firstly, they wanted to buy more product.

So whatever we -- the Ford offtake, they wanted to buy the Ford offtake. They asked us about our expansion plans and when are we going to expand? But the third message was demand and demand is strong, especially in the stationary battery area. So therefore, we believe that this will be a market that will come out of oversupply driven by strong demand.

Another question from [Technical Difficulty] can you tell us what line [Technical Difficulty] more cost transit.

I think between myself and Grant, we've sort of answered that already. Clearly, the auction mechanism that we've adopted is one form, which we will continue to push and then we do sell production that is not on the index or not on that platform, which, again, we will report to the price referencing agencies.

And this one [Technical Difficulty] strategy question from [indiscernible]. Will Liontown be [indiscernible].

Well, we're public in our partnerships with both LG Energy Solutions and Sumitomo on our refining aspiration. We continue to work with these 2 very important customers and partners around the economics of refining.

We know that building something here in Australia has a cost premium, both capital and operating. So we're asking our partners and we're looking globally around where this opportunity can best generate the best shareholder value. So we're continuing to work that.

This is the last question from Shane, [Technical Difficulty] specific question. But has Liontown approached [indiscernible] providing on [Technical Difficulty] markets.

Not -- I wouldn't be that specific. We have had general discussions, and we will, as I alluded to in my speech, we will talk to customers of these data centers to understand their requirements and how we can best create an opportunity between us.

[indiscernible] auction, and you mentioned that there will be more risk, is there any idea at this stage, how [Technical Difficulty]?

We do have a plan for what we see in FY '26. I don't want to give too much away here, but we definitely have a strategy around this, very calculated.

If there's no further questions, once again, thank you for everyone for coming, and thank you, the Board.

Good morning, and thanks for joining us at Liontown September Quarter Results. My name is Tony Ottaviano. Joining me today is Ryan Hair, our Chief Operating Officer; Graeme Pettit, our Interim CFO; and Grant Donald, our Chief Commercial Officer.

So if we can move to Slide 1, please. It's the typical disclaimer and then we move to our highlights slide. I'd like to provide some context today. This quarter was one of execution and we delivered exactly what we said we would. We advanced the underground ramp-up on schedule, maintained a strong and consistent plant performance and strengthened our balance sheet more than $420 million of cash following the August capital raise and also the restructuring of our debt facility with Ford.

Importantly, this quarter represents the low point in our planned transition year, and it sets out the improvement story that unfolds from here. The plan is clear and unchanged. We continue to wrap up the underground production towards a 1.5 million tonnes per annum by March 2026, lift recoveries towards our target 70%, and once we process the cleaner underground ore becomes the dominant mill feed and drive costs down progressively each quarter as we fleet the open pit and move to full underground operations at the desired steady state run rate.

So the key messages for investors today are: first, execution and delivery. We achieved every operational milestone to plan. During the quarter, we executed the scheduled maintenance, as we highlighted in the previous results. We're executing our OSP strategy to manage our contact tools, achieved a 105% increase in underground production, reaching our 1 million tonne per annum rate by September. We also advanced the open pit towards completion, with the final clean ore bench reached in September and full completion planned for December quarter as stated. These outcomes demonstrate once again the strong delivery against plan and the continued validation of both the ore body and the process flow sheet.

Second, our financial strength. Our balance sheet is in excellent shape, providing full flexibility through our transition year. We closed the quarter with $420 million in cash, as I mentioned just earlier, supported by successful $316 million equity raise, and the Ford facility amendment to help us with the debt repayments in the course of the next 12 months.

Thirdly, our operational leverage ahead each quarter from here improves the benefit as we get scale and defray our operating costs, but also our all quality improves. With the underground volumes ramping up, open pit completion imminent and recovery uplift underway, production growth, recovery strengthens and cash generation accelerates. The operational leverage is built on visible -- it is visible in the trajectory ahead.

Finally, the long-term fundamentals. Lithium demand remains robust, underpinned by strong EV and the accelerating expansion of the battery -- sorry, the stationary batteries. Liontown's high-quality asset, Tier 1 partners and the fortified balance sheet helps us capture the full benefit as the market turns. So in summary, the context of today's results, disciplined execution through the trough, a clear path of improving margins and cash flow, and a business built on sustainable performance.

I'll now move to the next slide, please, which is our highlights. The production for the quarter was 87,000 tonnes at a weighted average grade of 5%, and this is in line with us processing the contaminated by the contract ore being the OSP. Contract sales were 77,000 tonnes. Concentrate on hand is 20,000 or nearly 21,000. Our recovery was the 59%, again, as planned, and this will improve as we get the better quality ore. And plant availability, notwithstanding the planned shutdown, of 92%.

On the financial side, I've already mentioned the cash imbalance. The revenue was $68 million, but it was impacted by the lower sales due to port congestion in September and the backward looking and we'll talk about this a little bit later in the presentation. Our realized price on a nausea basis plus our unit operating costs were exactly as planned, given that we had lower recoveries due to the OSP stockpiles.

If we move to the next slide. I'll now move on to -- and introduce Ryan here, who will go through the slide for us.

Yes. Thanks, Tony. So safety, our lost time into frequency rate, roughly in line with the previous quarter. The total recordable injury frequency rates up slightly on the last quarter. And as we've noted in the lead end of this slide, we are focused very heavily at the moment on a back to basic safety drive both on physical and mental well-being. Importantly, our leading indicator safety observations are still in line with our previous quarter, which is in line with our plans. And on ESG, renewable power average of 79% for the quarter. And notably, in September, peaked at 83%. And female workforce participation slightly at 23%.

If we can move to the next slide. So now talking to operational performance and starting with open pit. So performance remains strong in the open pit and continued to deliver to plan. We mined 292,000 tonnes of ore at 1.3% lithia, which is 77% up on last quarter. The final clean ore zone was reached in September, and completion remains on schedule for the end of the calendar year. Focus this quarter is on completion of the pit in preparation to contractor demobilization as we transition into full underground operation, which we'll now turn to the next slide on underground.

So the underground operation, we continue to perform exceptionally well here, and it does remain one of the most important indicators of our progress towards steady-state operation. During the quarter, all mined just over double to 225,000 tonnes, reaching a 1 million tonne per annum run rate in September, which is in line with plan. The pace fill and primary vent systems are now fully commissioned and performing to design, supporting delivery of the plan and improving operational efficiency.

The ordering, power reticulation of materials handling infrastructure are working well, providing strong operating reliability across all levels in the mine. We've mobilized a third jumbo and a fourth production drill, which increases development and production capacity and supports continued ramp-up towards 1.5 million tonnes per annum by Q3 FY '26.

The orebody continues to perform well against expectations. Volumes and grades are reconciled closely with the mine plan. fragmentation, overbreak and dilution remain well within design parameters. A total of just over 1,800 meters of development was completed for the quarter, up 8% on the prior period. To date, 18 stopes have been mined including 14 in the September quarter with an average stope size circa 15,000 tonnes.

Work fronts are expanding across multiple levels, providing flexibility as we scale up production. Our key priorities now are to optimize stope turnover, continuing to increase the rate of development and refine pace fill scheduling to sustain continuous production. In short, the underground is behaving exactly as designed. Infrastructures in place, performance is consistent and the pathway to 1.5 million tonne per hour and beyond is clear and achievable.

So now I'll move to the next slide on the process plant. So the plant continued to perform well and most importantly, exactly in line with the plan we outlined earlier this year with lower recoveries in production when seeding OSP material or our contact material during the early underground transition. We said we'd take this approach to manage all feed during the ramp-up phase, and it's exactly what we did.

Plant reliability remains strong with 580,000 tonnes processed at 92% availability. Recoveries behaved as expected with a range of 5% Lithia processed during the quarter, averaging 59% with the recovery, reducing a 5% lithium concentrate meeting all customer specifications. This confirms the plan is performing reliably and to expectations.

The current recovery is simply a reflection of the range of fleet types processed this quarter. The transition to cleaner underground ore is underway, and as that proportion increases through FY '26, recoveries were lift progressively. Our FY '26 recovery target remains unchanged with around 70% recovery expected by March 2026 as underground ore becomes the dominant feed.

At the same time, recovery improvement initiatives continue to advance. The tails regrind Vertimill has been commissioned and optimization work is ongoing across grind size, reagent dosing and water quality to support incremental recovery gains. In short, the plant is running to design recovery curve is following the planned trajectory and the improvement from here is baked into our guidance.

And with that, I'll hand over to Graeme.

Thank you, Ryan. Next slide, please. All right. Our results for the quarter were consistent with company expectations, reflecting the planned impacts of maintenance and OSP strategy foreshadowed in the previous quarter presentation. Revenue was $68 million, down 29% quarter-on-quarter as a result of lower shipping volumes over due to port congestion and backward-looking pricing mechanisms. Backward-looking pricing for shipments during this quarter resulted in pricing lowers of May and June impacting realized prices for the majority of the quarter. But a closing cash balance of $420 million, but we can look at in more detail on the following slide.

Unit operating costs increased 22% from the prior quarter to $1,093 per dry metric tonne sold due to the drawdown of OSP stockpiles. This increase in unit operating costs was anticipated in form part of our full year guidance. What you'll see going forward is that unit costs will trend lower as volumes ramp up and clean underground ore becomes the dominant part fee. All-in sustaining costs increased 10% from last quarter to $1,154 per tonne reflecting the higher unit operating costs. This was partly offset by lower sustaining capital spend. As with unit operating costs expect to see the trend lower through the year.

Next slide, please. Our tax position strengthened significantly, finished the quarter at $420 million with 21,000 tonnes of salable concentrate on hand. This excludes $20 million of the Zenith cashback guarantee, which we anticipate to receive in the coming quarters. Cash flow operating activities for the quarter was a negative $44 million and was mainly attributable to a $53 million reduction in cash receipts from customers compared to June's quarter. cash receipts were impacted by lower sales volumes and working capital movements, including an increase in the value of trade receivables and concentrates on hand.

Additionally, final pricing adjustments from the prior quarter sales of $8 million further reduced cash receipts. Capital expenditure of $44 million was primarily underground development and the completion of TSF construction. Given the completion of the TSF construction and the completion of open pit mining in the December quarter, you should expect to see capital expenditure reduce in the coming quarters.

Finally, on financing cash flows, inflows of $363 million represents the net proceeds of the August capital raise. The closing cash balance was also supported by the deferral of the commencement of principal and interest payments under the Ford facility, which has now been deferred for 12 months. Overall, we have a strong liquidity position and expect to see improved quarterly cash performance that will ramp up the underground and increased production volumes.

Next slide, please. right. So our debt profile remains low cost, long dated and highly flexible. This slide is an update of our debt position following the Ford amendment completed in August. The effect of the amendment has pushed the first repayment under this facility out to September 2026.

Looking at the maturity profile. Again, it's important to note that while the LG Energy Solution convertible notes are shown in the maturity schedule as a repayment of $414 million. cash repayment can only occur if the facility is not converted into equity before the maturity date of July 2029. Subsequent to the recent equity raise, the conversion price of the LG notes has been amended from $1.80 to $1.62 per share.

And in summary, our debt structure provides a very low cost of capital with no near-term maturities, and this allows us to continue to focus on delivering the ramp-up of the underground mine and deliver the full potential of Kathleen Valley. I'll now pass to Tony.

Thanks, Graeme. So if we move to the next slide, please. We've actually -- when we announced our forward debt restructuring and contract arrangements, we did make some mention around our volume profile going into the future. We've just simply graph this for the market now so that you can see it visually. So there's no new information here, but it just provides a little bit of extra clarity on the contract profile for tonnes. And we are delivering into some of these already. So that's really what this slide is designed to provide.

So if we move to the next one, please. Business optimization. Last year, we made $112 million worth of savings, either directly in recurring or some deferred capital. That pursuit becomes relentless. We need to continue with the business optimization because price is still where it is, and we can't lose sight of that fact. And this next exercise, this next phase is going to be a broad engagement and assessment of priorities across everything. So there will be team-led initiatives. There will be a challenge in everything we do, as I said in the slide, that we will challenge the status quo, and we will focus on our purchasing and contracts. So we will -- we've already said this, and we will continue to optimize our cost structure in the current environment.

So next one, please. So I'm now back on to Ryan for this last -- next slide.

Yes. Thanks, Tony. So this slide, which I think we've presented a couple of times now, recaps how FY '26 is unfolding quarter-by-quarter. In quarter 1, we deliberately executed planned maintenance activities and early technical improvements while implementing the OSP feed strategy to manage transitional ore during this ramp-up phase. That strategy delivered exactly as guided, lower production and recoveries were expected, and those outcomes were fully reflected in our prior guidance.

Moving into Q2 this quarter. The focus shifts to completing open bit mining and increasing the proportion of clean underground into the plant. Recoveries are already improving month-on-month and as underground volumes continue to ramp up, throughput and grade consistency will lift. We also expect operating costs to trend lower as we shut down the open pit operation and those costs fall away and we get productivities through increasing the scale of the underground operation.

By Q4, in the June quarter, we transitioned fully into steady-state operations. The process plant will be operated in design throughput. Recoveries will stabilize at or above 70% and costs were materially lower than in the first half. That's the point where the business begins to demonstrate sustained cash flow and margin that underpins our long-term investment case. So while Q1 represented the planned low point, every subsequent quarter and first year, higher underground production, stronger recoveries, lower costs and greater cash generation, all consistent with the plan we set out at the start of the year.

So next slide, please. So recap on our FY '26 guidance. FY '26 remains a transition with the open pit operations, as we've already mentioned, will conclude in December and the underground ramping up. In the first half, we continue to leverage the investment already made in the rod stockpiles processing the remaining OSP material, which we have always said would be temporarily impact recoveries and production and therefore, outline.

As we move into Q2, production and recovery performance are expected to improve as the proportion of clean ore in the mill feed increases and the influence of OSP material declines. This uplift will be driven by higher clean oil production from the open pit and the growing contribution from the underground. Sustaining capital remains on plan, focused on underground development, maintenance and equipment replacement to support the ramp-up. Importantly, there is no change to our recovery target of around 70% by Q3 FY '26, and we remain on track for 100% underground production by Q3 FY '26.

So in summary, the transition is unfolding exactly as we planned with Q2 marking the start of a steady state improvement across production and recoveries.

We now move to the next slide, please, and I'll ask Grant to lead us through that.

Thanks, Tony. I think it's important to highlight that there are 2 fundamental growth factors driving lithium demand. The first is EV sales and the second is factory energy stationary storage. I'll start with EV demand. As you can see here from the chart on the left, EV sales continue apace. Global sales grew 26% year-on-year from January September. Importantly, September results of the first month we've seen more than 2 million EV sales in a single month. This translated so far this year into over 3 million extra EVs sold versus 2024. And as you can see on the chart on the right-hand side, expectations are for that to continue with a very solid CAGR growth rate of 14% according to Bloomberg New Energy Finance.

I think importantly, it's also very interesting to see the growth of the rest of the world. that continues to grow at very, very aggressive rates off a small base. But we are probably about a quarter away from Rest of World sales equally in total North American sales. And one of the points highlighted to me by Homburg just yesterday was that EV sales in China now exceed total auto sales in North America.

If we go on to the next slide. battery energy storage systems have really come from nowhere and been a strong driver of demand in the last year plus. I think for the last 2 or 3 years, they have exceeded expectations from forecasters. What this slide is demonstrating is that not only is it accounting for 1 unit and every 4 units of growth over the next 5 years. There are also a wide range of views on how fast this market is going. You can see in the chart on the right there from SC Insights that there's a large spread between the investment bank on the left insights in the middle and CATL's prospectus on the right-hand side.

I think it's important to note the spread between the high and the low point is over 765 tonnes of lithium carbon equivalent, and that is around half of the total size of volatile market today. Large-scale grid investments are continuing to accelerate, and these are driven by the rise of data centers to support the shift towards as well as making sure that grids remain reliable with a larger share of renewable power penetration.

And with that, I'll hand back to Tony.

Thank you, Grant. So we don't go to our final slide, please. We end where we started. So we continue to deliver on our strategy. I won't repeat things but effectively, we're executing the plan. We're delivering on the underground ramp up. The compete well comfortable conclusion at the end of the year as we planned. And we've strengthened our balance sheet both with the equity raise in August, but also restructuring the Ford debt facility to give us that further strengthening of that balance sheet in the next 12 months as we see the market recovery.

So with that, I'll open it up for Q&A.

[Operator Instructions] Our first question comes from Hugo Nicolaci from Goldman Sachs.

First one for me just on realized pricing. You called out the impact of the pricing lag through the contract in the quarter impacting that realized price. Now that you've recut some of those offtake agreements after September 30, does that mean that we shouldn't expect to catch up on the pricing balance we saw through the September quarter now if you just realize closer to spot spodumene prices?

Go ahead, Grant.

Thanks, Hugo. I think anytime you've got a large delta from as we saw in May and June, which was the lowest of the year in the 600s versus where we're trading now in the 900s. You have this impact, and it's just a question of when that impact flows through your revenue line. With Q lagging, it just means it's a little bit delayed. So if you go back to last quarter, we actually had the benefit of that where we outperformed index. So we had a 105% realization compared to Fastmarkets spodumene index in the last quarter. Unfortunately, you have to pay the piper and that came through the sales this quarter.

So look, I don't think you're going to necessarily completely avoid any of those impacts because those kind of QP impacts are always there in your portfolio of contracts. And I don't think you should necessarily think that we did a onetime switch where we moved Q lag and we skip out the impact of that in the future. So that's not the case.

And then maybe just on the cost breakdown. Can you just give a bit more color in terms of maybe on a cash basis, the magnitude of spend, let's say, the open pit underground in the quarter?

Go ahead, Graeme.

So during the quarter, they were roughly even Hugo's, so between $10 million and $15 million per month.

Our next question is from Adam Baker from Macquarie.

Port congestion was called out as an issue, which contributed to the delayed shipment during the quarter. Is this something that you're still seeing? And could this resurface during the December quarter?

Adam, the Geraldton Port has an issue they call surge. And as a result, during the quarter, we had a number of surge events which then built up the number of ships on lean. So we have to weigh our turn in the queue for those ships to come in and be loaded. Now the government is putting money in to resolve this issue in the Jordan port. But I think we potentially will see the back of it in the next quarter, but it's really what nature puts in.

Yes. Adam, just for further context, it's Grant here. It's a bit seasonal. So that last quarter tends to be the seasonal high spot where you see more swell events in surge events in Geraldton. And it did perform quite a lot of queuing and we weren't the only ones impacted. In fact, everyone who ships out of the part that we ship all was impacted. And I'd say that going forward, we shouldn't expect that. But there's always quarter-end chase that's on where everyone is trying to get shipment away before the quarter end, and that would continue. So this one was particularly bad just because of those surge events.

Okay. And just secondly, spodumene concentrate grades 5% for the sales in the September quarter. Just wondering is this a proactive decision that was taken by the team? Or was this just a flow-through as a result of the higher propane Gabbro going through the mill? And I'm just wondering what the time line would be to get that concentrate back to 5.2%.

Yes. I think your summary is correct, Adam. It is the latter, which is it's a result of the high gabbro percentage, which we showed in the graph. So we expect that to unwind in the next 2, 3 quarters once we get into 100% underground mill feed -- underground ore for the mill.

The next question is from Levi Spry from UBS.

Yes. So maybe just following up on that. So I mean, this quarter, could it be a bit lower than 5%? And just confirming your guidance is at 5.2% in terms of lithium units?

Yes. So firstly, the latter, our guidance is confirmed at 5.2%. As I said, once we get into more the dominant seed being underground we will see that improve. And sorry, your first part of your question?

Could it go lower in the short term, I guess? What that offset the basis previously?

Yes. No, we don't anticipate it going lower in the foreseeable future. Our contracts specify a certain amount. So we're conforming to our contracts.

So just a little bit more color, sorry. The chart that we included on the process plant, we were endeavoring to then provide a little bit of color on gabbro. We will to try and maximize recovery and still keep within customer specs is great will naturally kind of trend a little bit lower. And what you'll also see on that chart is with the lower gabbro content, grade naturally drips up. So as we stated as the -- both the amount of OSP material, but also the amount of open pit starts to fall away and we get the clear higher-grade material out of the underground naturally gray order to, which is why we are maintaining guidance on both recovery and grade through the course of FY '26 and beyond.

Yes, and it's a blending exercise so there is an exclusion where it does drop. We will blend it with higher-grade material when we do have those better days. So that's -- it's all about managing it within the contractor specifications.

Yes. Okay. And just on the price piece, just as we're seeing spodumene prices improve here, can you just help us with how we're modeling that now? So I think you -- one of the previous questions was pointing to it. But just in terms of you repricing your resetting your contracts, how do we think about now the read-through on this grade concentrate to the spot price effectively?

Sure, it's Grant here. Look, the pricing reference is all disclosed, right? So now we've got 1 contract on Sports mean index. On contract continues to be on carbonate at least until the end of '26 when that deal expires. And then the other contract is on hydroxide.

The next question is from Glyn Lawcock from Barrenjoey.

Just a couple of quick ones. Firstly, you talked about the cost program under Phase II. Do you have any thoughts on the quantum that could yield or is it too early?

It is a bit too early. We're just -- we've kicked it off in the last quarter. We're still trying to assemble all the initiatives. So I can't give you a finger just now.

Okay. No worries. Any orders of magnitude you think similar like half of last year?

It's still too early, Glyn. It will come out.

Fair enough. Okay. And then maybe just -- I know it's very early days in the markets where it is, but it may be starting to show some signs of turn on the back of EFS, et cetera. But the 4 million tonne case, the expanded option, it says in the report you're still doing a little bit of studies towards it. Maybe just an update on where you are on that timing costs associated if you do -- if the market turns enough, you to exercise that option?

Well, the way it works and the way we're thinking about it is as we get more real-time operational understanding of our plant, we want to make sure that the expansion option is up to date with those learnings. So there's work that's always ongoing as to how do we -- how does that process flow sheet look like as we get more information from the existing operation. So that's one aspect of it. And the second one is, well, I think until we see a sustained improvement in the market, the Board will be live to this option, but it won't be a commitment yet.

We next have a text question from a private investor who asks, what do Canmax look to benefit from the recent capital raise investment?

I think we've already made some very good money given that everyone who supported us on the raise at $0.73 is now looking at a share price of over $1. So [ Mr. P ], he came to site and was impressed by the operations that we do, and he wanted to invest all of its financial investment.

Another text question from a private investor who asks, is there any clarity regarding the large tenants recently peaked near Sandstone?

It's an ongoing process. As we look at our long term, as part of that previous question around future expansion, we want to secure access to good water sources -- so we continually look more broadly as to where we can potentially look for the future long-term expansion requirements for water and other infrastructure. So that's part of that process.

Another text question. In your lithium demand forecast chart, which of the best BESS growth scenarios have you assumed?

Thanks for the question. Look, with any company, I'm always wary of single point expectations or forecasts we look at a range of scenarios. You can imagine that in our forward planning, we're thinking about what would the world look like at the low end and what would the world look like at the top end, and we try and make sure that the decisions we make are robust against either scenario.

Another question from a private investor. Did you have an update on downstream feasibility studies with LG Energy Solution and Sumitomo?

Yes. We continue to press work with both Sumitomo and LG Energy Solutions on the potential to pull downstream. I think it's no secret that some of our peers are having challenges in that space. The capital involved is significant. And in the current market environment, margins are squeezed. So for us, we continue to do the work to be option ready, but it's not something that we plan to make a decision on in the near term.

Thank you. That's all the questions we have today. Please reach out to the Liontown team if you have any follow-up questions. We thank you all for your time, and have a great day. You may now log out.

Welcome to the Liontown Resources FY '25 Results call. Following the formal presentation, there will be a Q&A session for investors, analysts and media. Participants can ask both text and live audio questions during today's call. [Operator Instructions] If you have any issues asking a question via the web, a backup phone line is available. Dial-in details can be found on the request to speak page or on the home screen under asking audio questions.

To view documents relevant to today's meeting, including more detailed instructions on how to use the platform, select the Documents icon. A list of all available documents will appear. When selected, the document will open within the Lumi platform. You will still be able to listen to the meeting while viewing the documents. Text questions can be submitted at any time, and the audio queue is now open.

I will now hand over to Mr. Tony Ottaviano, Managing Director and CEO of Liontown Resources.

Thank you, Michelle, and welcome, everybody, to our full year financial results for financial year '25. With me today is our Chief Operating Officer, Ryan Hair. Welcome, Ryan. This is his first results presentation for Liontown. Secondly, there's our Chief Commercial Officer, Grant Donald; and also our Interim CFO, Graeme Pettit. '25 has been a milestone year for Liontown. Our first year of production at Kathleen Valley. Today, I'll take you through the performance for the year, our financial results, our sustainability achievements and importantly, how we are positioned for FY '27 -- '26 and beyond.

So next slide, please, Michelle. It's the usual important information. Okay. So just a quick summary of where we stand at the moment. FY '25 has been a year of delivery. We've successfully constructed, commissioned and transitioned Kathleen Valley into production. We've generated nearly $300 million in revenue in our first year. Despite the tough market and therefore, the softer lithium prices, the impacts of a ramp-up, we still produced a positive underlying EBITDA of $55 million and held an operating cash flow at breakeven. This is a strong sign of the scale and quality of this asset. We've also strengthened the balance sheet with an equity raise completed after year-end, ensuring that we can see ourselves through this current price cycle and transition the underground in FY '26.

Our sustainability foundations remain a key differentiator, a strong safety performance, 81% renewable power penetration, deeper partnerships with our Traditional Owners in the Tjiwarl. So we see ourselves looking forward in FY '26 and then beyond with a lower cost base and a platform for growth.

Finally, with an asset such as Kathleen Valley, it presents a long-term value proposition with scale, quality and sustainability to endure the various price upticks as they go through the cycles. We continue to maintain our optionality should the cycles change to expand the asset.

We can go to the next slide, please, Michelle. So FY '25, it's been a milestone year for us with strong financial outcomes. Firstly, our concentrate production, nearly 300,000 tonnes there of concentrate sales of 283,000 (sic) [ 283,443 ] tonnes, strong plant availability in a ramp-up year of 89%. And again, lithium recovery of 58%. But if you look at it as a tale of two halves, the second half, we averaged 60%.

As I mentioned in my opening piece, our revenue nearly hit $300 million in this ramp-up year. And we finished the year with a strong cash balance of $156 million, which has been further strengthened by the capital raise and about 11,000 tonnes of salable concentrate on hand. Finally, our full -- second half unit operating cost of $800 (sic) [ $802 ] a tonne and our underlying EBITDA of $55 million.

So if we go to the next slide, please, Michelle. I'll now turn the discussion over to our Interim CFO, Graeme Pettit, to take you through the financials.

Thank you, Tony, and good morning to everybody on the call. Starting with revenue and despite a volatile price environment with spodumene prices down 24% in the June quarter, Liontown delivered the $298 million in revenue in our foundational year. The average realized price for the year was USD 673 per DMT, which translated to AUD 10.50 in dollar terms. As Tony mentioned, underlying EBITDA of $55 million demonstrates a positive operating leverage even in weak prices. Our statutory NLAT of $193 million was largely driven by noncash items, including the $81 million NRV write-down of OSP stockpiles and $159 million of depreciation, which includes open pit mine costs being depreciated over a short mine life.

Operating cash flow was breakeven in our first year, which was a great achievement in the context of ramp-up and lower prices. At year-end, we held $156 million in cash, which has since been strengthened post year-end following our $372 million equity placement in August.

Next slide, please. Turning now to the reconciliation of our earnings. We reported a statutory net loss of $193 million, as mentioned. As you can see on this bridge, the majority of that loss reflects noncash and ramp-up related items rather than the underlying operating performance of the business. Touching on some key items. Firstly, NRV. As flagged in the June quarter, where we provided a range of $75 million to $85 million, the write-down came in at $81 million. As a reminder, this is a noncash accounting adjustment and mainly related to OSP ore that is associated with the open pit mine, which is scheduled to end in December this year. Depreciation of $159 million, which was the depreciation of open pit mine assets over the short open pit life as well as half a year of depreciation of the processing plant and related assets. The depreciation of underground-related assets is expected to commence during the third quarter of this year. On that basis, for FY '26, we'd expect depreciation to remain at similar levels before moderating in FY '27 and beyond.

Just a quick point to note on income tax. We expect to commence the recognition of deferred taxes during FY '26 with the commencement likely linked to the declaration of commercial production at the underground mine. Underlying EBITDA of $55 million reconciles to $1 million positive cash flow from operating activities and the key adjustments are related to working capital movements.

Next slide, please. Turning now to cash flow. In our first year of operations, operating cash flow was breakeven, which is a solid result given the 2 headwinds we faced of lower lithium prices through the year and naturally higher costs associated with the ramp-up of an operation. On financing, we received strong support from our partners with $250 million convertible notes from LG Energy Solution and $15 million from the WA government for lithium industry support program. These inflows supported liquidity through our ramp-up.

On the investment side, we spent $331 million of CapEx, the majority of which related to growth and commissioning at Kathleen Valley, completing the processing plant and advancing underground mine development. All up, we closed the year with a cash balance of $156 million at 30 June. And importantly, post year-end, that position has been fortified with $372 million gross proceeds from the August capital raise, giving a pro forma cash balance of $528 million.

Next slide, please. The chart you see here demonstrates the changing composition and quantum of Liontown's CapEx spend. For FY '26, the CapEx spend reflects the continued investment in the underground mine, establishing life of mine infrastructure. We expect total CapEx to remain at similar levels for FY '27 before declining in future years.

Next slide, please for the project capital is now complete. It's now complete? Yes, it's complete. Finally, turning to the balance sheet. At 30 June, cash increased to $156 million, up from $123 million in the prior year. Since year-end, that position has been strengthened, as mentioned before. Property, plant and equipment rose by $142 million, reflecting the completion and commissioning of the Kathleen Valley processing plant and the continued investment in the underground mine. Payables decreased to $88 million, down $40 million year-on-year, consistent with the completion of project construction.

Borrowings increased to $831 million, which included the fully drawn forward facility and the USD 250 million LG convertible notes. The convertible notes are classified as a current liability because LG may elect to convert the debt into equity in the company at their option. The only time a cash payment can occur is at the maturity of the notes in July 2029.

Next slide, please. I'll quickly step through our debt position. So we've deliberately structured our funding to be low-cost, covenant-light and flexible with strong support from our offtake partners. On the left, you can see gross debt position over the past 3 years with the increase in FY '25 driven by the USD 250 LG convertible notes. On the right, the maturity profile shows these facilities are spread out. The chart highlights the maturity timing of the LG convertible notes. In the event that the notes are not converted into equity, Liontown would need to repay or refinance the notes in July 2029. The gearing ratio at 30 June being total debt over total debt plus equity was 59%. The gearing ratio reduces to 47% on a pro forma basis if we consider the impact of the August capital raising.

I'll now hand back over to Tony.

So if we go to the next slide, please, Michelle. I think this is a reinstatement of our prior release around our capital allocation. As a business, we're very early in our maturity, but we're very strong in ensuring that we set the right foundations for how we manage our capital. And clearly, our most recent capital raise will be something we consider in the context of our capital allocation framework. So we're very alive with the requirements and making sure that the capital that we obtain is spent wisely and to the best value for our shareholders.

So if we go to the next one, please. I'll now hand over to Ryan Hair.

So our updated resources and reserve statements show the strength of the Kathleen Valley ore body. Despite the depletion and use of more current assumptions, reserves have increased slightly while resources remain broadly stable. Notably, the first 5 years of the ore reserve align with the updated 5-year mine plan released in November 2024. Also worth noting is that the mining scheduled in FY '26 is predominantly in measured resource and proven ore reserve.

So if we go to the next slide, please, Michelle. So talking around sustainability. First and foremost, safety remains our top priority. We closed FY '25 with a TRIFR of 7.39, which is an improvement on last year, but still an area we know we need to do more work on. Our focus is on continuing to strengthen our safety systems and reinforcing our safety culture with the goal of driving this rate down further. On sustainability, we've embedded ESG into the heart of our operations.

During the year, we advanced our long-term water stewardship strategy, commenced electrification pilots across our fleet and maintained strict environmental compliance. Importantly, with 81% renewable energy penetration, we are setting a benchmark for decarbonized mining. This achievement was recognized externally with Liontown awarded Excellence in Renewable Energy and Mining at the 2025 Decarbonized Mine Awards.

So when we talk about highlights, it's not just about tonnes and dollars. It's also about delivering safe, sustainable operations that underpin long-term value for all stakeholders.

Thanks, Michelle. Next slide. So just to recap previous guidance, FY '26 is a transition year. The open pit finishes up in December, and we moved to 100% underground mining operation. The key thing I want to reiterate from the FY '26 guidance is our strategy in this current quarter. During the quarter, we have executed scheduled shutdowns at both the dry and wet plants, which facilitated several process improvement projects. At the same time, we continue to process directly from lower-grade OSP stockpiles in addition to the open pit and underground ore. That means the current September quarter is planned to have lower production, lower recoveries and higher cash outflow, all of which has been captured in our FY '26 guidance.

If we go to the next slide. This chart tells the same story visually. In the first half, the blend is predominantly lower-grade OSP and open pit ore. By the end of Q2, open pit mining is complete. From Q3 onwards, the feed mix shifts decisively. That's when our larger stopes start coming online with stope sizes increasing from roughly 10,000 to 15,000 tonnes today to over 40,000 tonnes in the second half. Ongoing mine development and access to the thicker ore zones underpins the run rate lift from 1 million tonnes per annum to 1.5 million by the June quarter.

Notably, as we transition to predominantly underground ore, we continue to target 70% lithia recovery in the plant. So half 1 is about managing through the stockpiles, scheduled shutdowns and completing the open pit. Half 2 is about scaling the underground and realizing the ongoing benefits of clean underground feed, higher grade, higher recovery and a clear runway to lower cost production. In FY '27, we expect to be running at 2.8 million tonnes per annum of underground ore, which shows the scale and productivity that's built into the design. So the message here is simple. FY '26 is a bridge year. We're absorbing the transition in the first half, delivering the step-up in the second half and setting the foundation for lower term -- so long-term lower cost production from FY'27.

Thank you, Ryan. We'll now move over to the market outlook and Grant Donald will run us through that.

Thanks, Tony. I think fundamentally, we come back to the demand of lithium being a very strong environment. We've seen continued growth on the EV side. You see -- compared to last year, we've seen an increase of about 2.7 million EVs sold. That strong growth is coming across not just China, but we're starting to see very good growth coming out of Europe and the rest of the world, which is growing at a rate which is catching North America in relevance. And look, I think this sets the scene for continued growth.

Importantly, the second factor that has been a very robust driver of growth outside of the EV space has been battery energy storage. As we see more grid scale systems coming in for renewables, such as Kathleen Valley's own renewable side, there is significant demand coming from batteries to effectively move some of that renewable electricity into periods that can be more fully utilized. That is going to be an increasingly significant driver of lithium demand growth. And what the chart in the middle shows here that out of every 4 units of growth from here, 1 in every 4 will be for stationary storage, which is material. The energy storage systems grew 54% so far year-on-year this year.

If we move to the next slide. Thanks. This is really trying to emphasize that it's been a bit of a roller coaster this year on pricing for lithium. And I would argue that this has been possible because the market is actually quite finely balanced. If you look at lithium inventories, particularly within carbonate, which is what people track in a number of days, we've really traded in a range-bound area for the entirety of this year between 40 and 45 days of inventories on hand.

As the market grows, clearly, those inventories on a number of days declines. And we've actually just started to see again, in line with past seasonal -- seasonality, we've seen those inventories drop below that range bound area and below 40 days. That demonstrates, I think, to me that lithium is quite finely balanced, and that means that it's very open to sentiment and speculative activity changing the pricing quite dramatically, and we've seen that in -- particularly in the last few months as various rumors and headlines have heavily influenced pricing.

So as we sit here today and look forward, I think we're relatively encouraged by the data that we see. We see strong demand both from EVs and from stationary storage. We see declining inventories in China that is clearly a good setup for stronger pricing as we look ahead. Tony?

Thank you, Grant. So if we go to our final slide, Michelle, just to wrap things up. Again, FY '25 to summarize, has been about delivering today, but unlocking the full potential of Kathleen Valley into the future. Again, '25 was about delivery, successfully constructing, commissioning and transitioning Kathleen Valley into production. We had strong underlying EBITDA of $55 million. We've had a balance sheet, which we've improved as a result of the capital raise that we got ourselves in a very strong position to see through this cycle and build on this platform.

And then finally, we're about long-term value. We've got an asset here that is scalable, it's high quality. We've built a foundation from which we can build. We've maintained optionality around our expansion options. So should the market change, we're in a position that we can capitalize on that improvement. And finally, we look as -- in accordance with our long-term strategy, we will look at opportunities to grow the business beyond just Kathleen Valley.

So that brings our presentation to an end. I thank you, everyone, for listening. And now I'll open up for questions.

Thank you, Tony.

And that's a great photo that shows one of our stopes. Thank you, Michelle.

[Operator Instructions] Our first question is a text question from James [ Ballantine ]. Could you please expand further on downstream plans and BHP rumors?

Okay. Let's deal with the downstream first. As the listeners may be aware, we have very -- 2 strong partnerships with both Sumitomo and LG Energy Solutions around looking at our downstream strategy. At the moment, we are progressing those partnerships by looking at various options around where we could potentially locate a refinery, but more importantly the economics of refining. And we're closely monitoring that given the current market. In terms of rumors, I'd rather not speculate on rumors. So I'll leave it at that.

Our next question is a text question from [ Conrad Porter ], who asks, how does LTR see sodium battery technology growth impacting on demand?

Thank you. Look, sodium ion batteries, we do not believe will be a significant player in the mobility thematic, primarily on 3 fronts. Firstly, the economics suggest that at the moment, you have lithium that is very, very competitive. Secondly, we do not believe they've got the performance that's required. They do have an advantage in colder climates. And they might have an advantage in smaller mobility, things like scooters and maybe motorcycles. But in the big end, I don't think they'll play a part.

And the final piece is, if you believe in the circular economy, they don't recycle well. So on that basis, it's only CATL that actually are pushing sodium ion batteries. And when I look at CATL's future forecast, around the battery mix that they are planning to make, they don't feature prominently in their mix. Next question, Michelle.

Our next question is from Glyn Lawcock from Barrenjoey.

We're here, Glyn. We're here. You're uncharacteristically sheepish. So...

Yes, no I'm here, Tony. Sorry, it's been -- I'm having technical issues on my end. So hopefully, you can hear me now?

Yes, loud and clear.

Yes. Sorry about that. I had to dial in, so apologies. So Tony, I had a couple of quick questions, if I could. Just a very quick one. D&A guide for FY '26 because there's a lot of moving parts. And as you say, underground will probably become commercial towards the end of the calendar year. Is there anything you can do to help us with D&A for '26.

Yes, I'll hand over to Graeme.

So Glyn, I think I did mention the expectation is that FY '26 should be broadly in line with FY '25 from a depreciation perspective with the underground and open pit basically exchanging places through the year from a depreciation perspective.

And does it step up then in '27? Or should that then be a reasonable guide for midterm?

We expect to moderate thereafter. So '25 and '26 will be higher than the long-term rate.

Which is driven principally -- sorry Graeme here Glyn. Principally by the fact that open pit has a short life and had to be depreciated quickly.

Yes. Okay. And then you've given guidance for '26 in terms of sustaining CapEx of, I think, it's 45% to 55%. When the underground is fully developed and running towards the end of this year, so what do we think underground mine development is going to run at to keep going? And I assume as you get deeper and the ore body gets wider, that might come down over time. But any sense of what underground mine development is going to run at Graeme.

So again, I think I mentioned that sort of '26 and '27 has the establishment of quite a bit of life of mine infrastructure for the underground mine. So we expect '26, '27 to be slightly higher and then a run rate from '28 onwards, somewhere in the order of $50 million to $70 million.

Thank you for no further questions.

Okay. Well, thank you, Michelle, for moderating, and thank you, listeners, and for the questions. Bye-bye.

Thank you all. That's all the questions we have time for today. Please reach out to the Liontown team if you have any follow-up questions. We thank you all for your time, and have a great day. You may now log out.

Welcome to Liontown Resources June quarter results call. Following the formal presentation, there will be a Q&A session for investors, analysts and media. Participants can ask both text and live audio questions during today's call. [Operator Instructions] If you have any issues asking a question via the web, a backup phone line is available. Dial-in details can be found on the request to speak page or on the homepage under asking audio questions.

To view documents relevant to today's meeting, including more detailed instructions on how to use the platform, select the document icon. A list of all available documents will appear. When selected, the document will open within the Lumi platform. You will still be able to listen to the meeting while viewing the documents. [Operator Instructions]

I will now hand over to Mr. Tony Ottaviano, Managing Director and CEO of Liontown Resources.

Good morning, everyone, and thank you for joining the Liontown quarterly and our full year results presentation. Joining me is Graeme Pettit, our interim CFO; Adam Smits, our Chief Operating Officer; and Grant Donald, our Chief Commercial Officer.

If you can move to the first slide, please. It's the usual disclaimer. And now I'd like to set the context for today's presentation. And before I do that, I think it's important that we sort of reflect on the year's just gone.

I mean we started production in July. But if we look at the macro environment, we've seen the price of spodumene for 36% and it's fallen even further in the last quarter. But notwithstanding, we've seen some green shoots in the last couple of weeks. It's a very volatile environment, and it's just best reflected by the fact that the spodumene price went up $60 a tonne on Friday, and it came down $50 a tonne last night. This is the macro environment we've had to ramp into. And what we can control is the way we perform and our business, and we've got to execute and execute well.

And we've seen that through 2 operational levers that we've had to pull. Firstly, our business optimization, and we've got a slide in that today; and secondly, the performance of the plant. We've effectively ramped up the plant in 6 months and then had 5 months to optimize the plant so that it can treat our strategic stockpile that we've spoken about. And we've valued that stockpile 6 months ago at $93 million, and that stockpile is a combination of our open pit, some underground ore and our OSP material, which is effectively our low-grade high gabbro material. So the plants had to -- we've had to tune the plant in order to understand the operating settings that will see us go into FY '26.

And notwithstanding that, if we look at our demonstrated capability, we've delivered 320,000 tonnes of concentrate in 11 months. which is an outstanding effort for our plant in ramp-up. And that's [ 294 ] on a dry basis because that's what we get paid on. But in terms of physical production, we produced over 320,000 tonnes.

The underground operation has commenced on schedule. We've delivered $125 million of cost savings in deferrals against a $100 million target and with a robust cash balance of $156 million, and we've delivered on our second half guidance for all-in sustaining costs. But even more pleasing in this last quarter, our net cash flow from operating activities was a record of $23 million.

We've also provided in this presentation our look ahead for FY '26, and we've said for some time that FY '26 is a transition year as we bring the open pit to closure and we wrap up the underground. We've also had to continue our business optimization because of the market and the way it is. And then finally, the last point, we must maintain a relentless focus on maximizing value, the focus on cash, and we'll continue to do that in FY '26. But we've also got one eye on the future. And all our expansion options are preserved in the event we see a market rebound.

Next slide, please. Next one, please. Okay. Here's a summary of FY '25. We've further strengthened our ESG credentials. And we've got a slide that shows that today. As I've mentioned, we've produced over 320,000 tonnes of concentrate, and we've done that in 11 months, and the plant has ramped up and performed reliably and has given us flexible options, which we'll talk about later in the presentation. We've commenced our underground operations, and there's no surprises there. Things are progressing well. And those of you that are on the site visit on Thursday, you will see that firsthand. And we're on track to conclude our underground operations in the end of this year, and we're responding very quickly to a volatile market, as demonstrated in our cost savings to date and the way with preserved cash.

Next slide, please. Okay, ESG. At a headline level, we've hurt less people this year than we did last year. In fact, we've hurt less people in the last quarter than we did last year. But the results are not where they need to be, and we will continue to focus on this. It's an ongoing focus, actually. But the pleasant thing is not only are we focused on lag indicators like TRIFR and lost time injury frequency rate, we're also getting our leadership focusing on the lead behaviors, the observations that we need to do, the field leadership we need to do.

On the ESG front, Consistently, we are delivering between 79% and 82% renewable power into our operations. There are times where we run solely on renewable power for a day or so. And our diversity, we continue to maintain the focus on getting in equality of gender in our workplace. But more importantly, diversity of thinking.

Next slide, please. So I will now turn to Adam Smits, who will talk through the physicals that we delivered not only for the quarter but also for the year.

Thanks, Tony. Good morning, everyone. I think the #1 point I'd like to make, really in this slide, is that, as Tony has already alluded to, we've only been in operation 11 months. That's not a defensive comment, that is just a statement of fact. And these figures very much reflect, certainly, the annualized figures, reflect the annualized, and how we've done over the last 11 months from start-up of a brand-new operation with a brand-new team, with a brand-new plant, and ramping it up at that time.

In terms of the quarter that's just gone, just over 85,000 tonnes of concentrate, produced sales of just under 100,000. Lithium recovery this quarter was a little bit down versus Q3. And we flagged that in Q3, where we said we were going to deliberately reprocessing our OSP, and I've heard a little bit about that later in the slide deck, we processed just over 600,000 tonnes of ore through the processing plant. That's a run rate of about 2.5 million tonnes per annum on an annualized basis. And June alone represent an annualized run rate of about 2.7 million tonnes. So you see you've got this brand new plant that is already running at not far off nameplate.

In terms of the year, as Tony has alluded to or mentioned, 320,000 wet metric tonnes of concentrate produced in 11 months. Without being anecdotal, we don't know how many more start-ups to produce that in the first year of operation. Concentrate sales of just under [ $300,000 ] annual recovery, 58%. And that was a tale of 2 halves. So half 1 was 55%, half 2 was 60%. We processed just over 2 million tonnes, again, a tale of 2 halves. Half 1 was about 0.8 million, half 2 was 1.2 million. So you can see that the steady improvement and the continuous improvement in the plant through that period.

The other thing that isn't on this slide, but it's really critical to mention, and I think it really reinforces the money and the time and the effort we spent in the early phase of the project is our availability for the plant for the second half of '25 was 93%. So just think about that for a second, brand-new processing plant, 93% availability, and very much the newness is worn off in half 2. So not only was it built well, but it's being maintained and operated well. And I think that's a key point to make.

In terms of next slide, please. In terms of underground, this is very much a key focus of everyone, Tony down. And the key focus is getting that underground to ramp up because, as Tony said, the open pit finishes in December of this year. An underground is very much about being ready. You can't just turn an underground mine up and expect it to produce the tonnes. You have to plan, and we've been planning for years to be where we are today and the infrastructure that's going in. And the development that's going in is all planned well and truly in advance.

What we are seeing now that we're at underground, and we have done significant development is the ground conditions are excellent. We thought they were excellent from the geotech work. They're proving to be excellent. Our mission bolting and the ground support we're putting in is per the budget. We've had no surprises. The initial stopes that we've drilled and blasted and mine now are sort of running between 4.5 and 8.5 tonnes per meter of drilling, it's what we planned. We're getting great fragmentation. You can see that in the bottom left picture.

Our enabling infrastructure is on track. There's $100 million in that paste plant between the contract we led and the owner's costs. That's Australia's biggest paste plant, and it's been being built and commissioned in advance of requirements. Ventilation is now nearing completion. You can see that in the top left picture there. That's a $15 million investment just in ventilation and primary ventilation and probably 18 months to 2 years of planning to have that in place today when we need it.

Our productivity underground for the jumbos, we've been touting that for some time. That continues at a pace even though we are now stoping paste filling and doing a whole bunch of other activities underground. We continue to focus on the mine in terms of making it efficient. So we've stuck with our dual declines. We're looking forward to getting some bigger stopes coming through in the back half of '26, up to sort of 40,000 tonne stopes and 80,000 within the next 2 years. And we've already ramped that underground up to a run rate as of sort of today of about 0.6 million tonnes per annum in sort of 3.5 months. In the next 2 to 3 months, that will be closer to 1; and in 3, it will be about 1.5. So it shows there's a real progression of that underground mine and it has to be because the open pit is finishing, and that's where our focus is.

Next slide, please. This is something that Tony alluded to back in November last year, we really pivoted in the low-cost environment to focus on how do we pull spend out of what we're going to put out the door going forward. And one of the biggest levers we pulled was coming back on development and revising our mine plan so that we dove down to the high the higher-grade, thicker zones of the ore body faster. What that meant was we took a lot of development out. We slowed the overall development down and it put a little bit more pressure or it made us pivot to processing our ROM and our OSP stockpiles earlier. We reduced our target in terms of what the common rate that we were going to produce from sort of 6% to 5.2%, it makes more money and it certainly save more money in terms of development. And we commenced trial in how we would best treat this OSP material.

Now this OSP material is essentially clean ore mixed with the gabbro, which is the host rock, in anything between 5% and 30-plus percent. And for those that are not aware, that gabbro is very, very, I guess, negative in terms of processing recovery, it's hungry and power and it's hungry and reagents.

In terms of I guess, our peer companies that run DMS and DMS float circuits, they simply cannot process much over 5% because of the actual SG of the gabbro is very near the SG of the spodumene. So you literally -- you have no selectivity. What we've demonstrated over the last few months is our ability to not only sort which many others are doing, and there is some benefits of ore sorting. But we've also demonstrated the ability of the plant to take direct OSP feed in levels of north of 20%. And the graph to the right there shows that we're still making salable grade concentrate at levels 15% to 20% gabbro. This is truly, truly, truly impressive reflects the massive effort of the team on site, and it reflects the flexibility of the plan to handle this type of fee. And it gives us another lever to pull in terms of what we do with the OSP.

The OSP is a very much a finite issue. It's very much an open pit mining problem to have. And if you ask any of our peers that have open pit mines, they will tell you that. We're certainly not seeing that percentage of OSP coming from underground. In fact, quite the opposite. We continue to work with an OSP and we'll do for the first half of 2016. But I guess the messaging to all that are listening is that we have a plan, and we've got it under control and we're making it work. And not only are we making it work, we're making it work well.

I think I'll hand over to Graeme at that point. Next slide, please.

Thanks, Adam, and good morning to everybody on the call. This slide outlines some of the key financial highlights for both the current quarter and also the year-to-date.

Starting with cash, we generated positive cash flow from operating activities for the quarter of $23 million, which was particularly pleasing given the challenging pricing environment. This is the third consecutive positive cash flow from operating activities reported since the commencement of operations just under a year ago.

Our closing cash balance remained strong at $156 million and excludes the return of $25 million used to cash back the guarantee facility that was mentioned in last quarter's presentation. These funds are now expected to be received during the next quarter. Quarter-on-quarter, our closing cash balance declined by $17 million or approximately 10%. I'll discuss the movement in the cash balance in a bit more detail on the next slide.

Working through the quarterly financial stats. Revenue was $96 million, which represents an 8% (sic) [ 9% ] decrease quarter-on-quarter, and reflects a decrease in average realized price, offset by a small volume increase. The Q4 average realized price of USD 633 per dmt CIF, which was 75% lower than the previous quarter. In dollar terms, the average realized price was $984 per dmt, which represents an 11% decrease Q-on-Q. The average concentrate grade shipped remained in line with the previous 2 quarters at 5.2%.

Unit operating costs of $898 dmt sold FOB and all-in sustaining costs of $1,227 dmt sold FOB were mainly impacted by an inventory charge reflective of the drawdown in stockpiles. As we've outlined in the Q3 quarterly presentation, we had expected to see an increase in unit operating costs in Q4 as we reintroduce ore sorting and drew down on stockpiles.

I won't spend time on the year-to-date financial steps, but what I want to draw your attention to is the note in the quarterly report discussing ROM ore stockpile valuation. Through the preparation of our FY '25 full year fin stats, we identified the requirement to adjust the carrying value of our oil inventories down to their net realizable value. The adjustment of between $75 million and $85 million is in accordance with our accounting policies and mainly relates to our OP inventories.

I just want to make it clear that this is a noncash accounting adjustment and is driven by the current low lithium price environment. The write-down does not impact our reported unit operating costs or AISC and the production of OSP, as Adam mentioned, is mainly associated with the open pit mine, which is scheduled for completion in December 2025. Next slide, please.

Just before we go off the slide, if I can just reinforce a point that Graeme has made, that $23 million of net cash from operating activities, is the highest figure we've received -- we've done so far. But that is on the backdrop of a price that has dropped $75 a tonne our realized price. So to put that into context, it's a better outcome at a lower price, and that reflects the business optimization work and our focus on cash.

Thanks, Tony. Next slide, please. This slide has a cash flow waterfall that broadly shows in chart form the same information that is in the 5B cash flow statement that we released today. We provided an additional split on investing activities to clarify the working capital benefit of drawing down on stockpiles.

Starting at the left of the waterfall, we had a positive cash flow from operating activities of $23 million, as we've outlined. As Adam mentioned before, the underground mine commenced production stoping during April. So this is the first quarter where we have started to see some underground mining costs flow through the operating cash flows. Cash flows from investing activities was $49 million for the quarter, and we've provided an indicative split based on the cost weightings. Growth capital was estimated at $30 million and mainly covers the initial tailings storage facility construction costs and underground infrastructure and development costs.

As mentioned, underground operating costs are starting to flow through the operating activities. However, given where the underground is at in its development and ramp-up, it has not reached commercial production for accounting purposes and is not expected to do so until Q3 FY '26. Sustaining capital mainly related to open pit deferred waste and mining capital projects. The open pit is planned to continue to focus on waste stripping throughout the next quarter before reaching the final major ore zone in Q2 FY '26.

Cash flows from financing included the proceeds of a $15 million loan rightfully received from the WA state government under the Lithium Industry Support program. The loan is interest-free and repayable over 2 years following the end of the interest-free period. We have highlighted a cash AISC of $1,099 per dmt sold. This was done to highlight that our reported AISC of $1,227 per dmt sold for this quarter is being inflated by noncash inventory charges. And as a result, the actual cash unit cost that we realized for the quarter was lower. Finally, we ended the quarter with a strong $156 million closing cash balance and 11,000 tonnes of concentrate on hand.

Turning to the next slide, please. This slide outlines our actual performance for H2 FY '25 against the guided ranges. For context, we provided our H2 guidance 3 months after turning on the processing plants and very few producers provide guidance during ramp-up as we have.

Running through the cost metrics, concentrate sold in an SC6 basis was 165,000 dmt, which was 3% below the bottom end of guidance, partially impacted by the lower concentrate production. Concentrate produced on the SC6 basis was 155,000 dmt, which was 9% below the bottom end of guidance. This was a result of lower OSP recoveries that initially contemplated when guidance was given, and Adam has covered off how we've been dealing with that.

Unit operating costs on an SC6 basis were $931 dmt, which was 9% over the top end of guidance. This was mainly a result of the lower production and higher inventory charge resulting from a drawdown on inventories. Total capital expenditure was $94 million, which is 3% below the bottom of guidance, and partly reflects capital reductions and deferrals from the business optimization program. And finally, when taken together AISC on an SC6 basis was $1,256 dmt, which was within the guidance range.

Although there were a few messages to guidance, the outcome should be viewed in the context of a new facility being ramped up and a challenging pricing environment requiring operational adaptations. And to that end, we are pleased with what's been achieved.

I'll now hand back over to Tony.

Thanks, Graeme. Just to set the scene, we're now moving to FY '26 and what we're seeing with FY '26. As we've said for some time, it is a transition year, and we're ramping up the underground.

So I'll now hand over to Adam that will give you some color as to what we're seeing in FY '26.

Next slide, please. Thanks, Tony. So I think I alluded to it a little bit earlier, but I think that '26 is very much a transition year. The big focus is on enabling infrastructure. A learning for me as a non-mining engineer is how much infrastructure and how much preplanning needs to go into one of these underground mines. And our team certainly, many of whom have been onboard now nearly 3 years, have certainly done that work, and that's why the infrastructure is coming on as planned in this quarter. So that includes the ventilation, which should kick off in about a week's time. The first big vent fans will be brought online. Our bigger stopes will kick in, in the back half of 2026 where we're talking north of 40,000 tonnes per stope, and that will enable us to get that sort of ore delivery out of underground that we need to support the processing plant.

We're looking at completing the open pit on schedule in December this year. The better ore from that pit now comes out in October and November and December. That's a project -- or that's a contract that was let nearly 3 years ago that basically has finished almost within a month of the date that we ordered it. So it's a pretty stellar achievement by Pete and his team with the open pit. We're still targeting a recovery of over 70% in Q3. People may ask, given that we're 57% for the quarter, how we're going to do that. It is very much ore related, and I've got a slide that talks to that. Clean ore equals better recovery, and we've already demonstrated that in Q3 of '25. And all of our ore will be coming from underground as of Q3 and '26, and we're on track to achieve that.

In terms of the processing plant, look, we think our availability is best-in-class, 96% feed on, feed off availability is truly sensational. We're restructuring the ROM pad currently. The ROM pad initially was set up as an ore stockpile, given the way the ore came out of the open pit. It is now being very much set up around feeding the crusher and reducing tramming distances. The processing plant had a lot of tech built into it when we started up, including an onstream analyzer from Metso. That technology has taken us a while to get it to work, and it is now working. So we are now trending lithium online. But we haven't stopped there. We've continued to spend money and deploy capital on things that make sense.

So we're just through the final stages now of an advanced control system on the mill called [ Manta ]. That enables us to control grind significantly better than just the standard PLC. We've also just installed what we think is Australasia's first online particle analyzer using cameras in pipes that give a particle size distribution every 20 seconds. It's pretty revolutionary technology. But we continue to push these types of projects through. And you may have seen a recent video where we're talking about a regrind mill, that should be commissioned in August, where we're looking at regrinding a fraction of our tailings, again, focused on recovery. And we continue to refine how we process that OSP. OSP is a very finite issue, as I mentioned, but we continue to focus on what proportion we saw, what proportion we feed and whether we blend or direct feed to the mill.

Next slide, please. I mentioned earlier a tale of 2 halves; '26 is very much a tale of 2 halves. Half 1 is very much focused on processing those stockpiles, completing the open pit and bidding in the underground. That's half 1. Half 2 is very much focused on ramping that up at underground and really cashing in on the benefits of that clean underground ore. And that's why we're so confident that we're going to get that sort of 70% recovery based on the work we've already done, processing straight underground ore through the plant.

So first half of '26 is obviously ramping down that open pit production. So we finished in December. We still got about 400,000 tonnes of clean ore to come out of the pit. We're continuing to focus on maintenance. We just had a large maintenance shutdown in the plant. That was not maintenance per se, but a lot of it was actually improvements to the plant to make it even better, and we continue to optimize that OSP strategy over the next 2 quarters.

In terms of Q3 and Q4 of '26, it's all about scaling up that underground. The underground is very much about scalability. We've got -- we've built that scalability into it in terms of the dual deep declines, the level development, and even the equipment mobilization and the contract we put in place over 2 years ago with Byrnecut is very much around geared or structured around ramping up the underground. And we continue to focus on availability. To put that in perspective, the underground is sort of producing, say, 70,000 to 100,000 tonnes a month currently, and 36 stopes in the first half.

It will be ramping to 100,000 to 170,000 tonnes per month and about 48 stopes in the second half and then that ramps up to 230 tonnes a month in sort of 80 to 90 stopes annually in '27. So you can see there's a plan. It's the same plan that we've had in place for a while, and we continue to execute that plan. and we continue to be ahead of the plan. I think that's a key learning or a key driver of how we've always gone about business at Liontown is to be ahead of the curve and ahead of where we need to be. And that's where we are or we believe we are with the underground in terms of the infrastructure, the people, the systems and just the general ramp-up that we're pushing.

Thanks, Adam. If we turn to the next slide, Adam's got one more slide to do, but I do want to say I want to thank Adam. This will be his last quarterly with us. And I'm deeply indebted to Adam and his tireless commitment to the organization. And you can see he loves the technical stuff. He is the engineer's -- he is an engineer. And I can say that because I am one. So I want to thank you, Adam, for your work you've done and the way you've set us up.

Okay. So we move into FY '26. There's a lot of stuff that we've already discovered, but there are 2 points that I want to draw out here. Firstly, the first half and the continuous focus on the OSP and getting those stockpiles out of the way, so we can set ourselves up for the really prime and good quality underground materials so that we can maximize our recoveries. The second bit is the Q1 scheduled shutdowns for the mill and the dry plant, that's planned. We've been operating the mill for over a year now, and we needed to go in and do the scheduled maintenance.

But if you look at the actual parameters for FY '26 and the guidance, I mean, the production, if you take the midpoint, it's a 39% increase from this year. So it is a significant increase. And then a lot of that costs associated with drawing down stockpiles, but again, the focus on cash maximization Okay. And there's no change to our recovery target and our underground planned production.

So if we move to the next slide, please. And we'll ask Adam to finish off on this one.

Yes. So I guess one of the key mine takeaways for '26, it's really a transitionary year, and that's to be low cost and scalable by '27. So the plant or the underground is designed for scale. We've derisked or we are derisking progressively the underground, and we've been doing that since day 1. And the target of underground is always a lower cost per tonne. And what do I mean by design for scale? We put dual declines in from day 1. We know we've got big stopes, and they're coming. They're coming in half 2 '26, where we crack the 40,000 mark and up to 80,000 in the next 2 years. So that's 80,000 tonnes from a single stope versus the smaller stopes we're hitting now, which are around the 10,000 tonne mark.

We also hit the bulk levels where we've got over 125,000 kilotons of material per vertical meter. And you can see the annualized production run rate. So we're already at about 0.5 today, 0.6 actually, by the end of this month. We're going to crack 1 million tonnes in the next couple of months, and then at the end of March, about 1.5 million tonnes. And that comes with a combination of equipment mobilization, systems and actually a lot of prior planning and a lot of development that we've been doing over the last few years to drive that type of ramp. It doesn't come just because you throw a few more bits of equipment down underground. It becomes because you've actually got a plan for it.

You can't -- and you can see this in other companies' results over the last sort of 12 months. If you don't have the levels available, if you don't have this space available on the ground, you can't physically ramp that underground up. And we've planned for that from day 1.

In terms of the derisking, I think a lot of derisking has focused heavily on infrastructure. It's focused heavily on people. And where we've seen gaps, we've bolstered the team, and that's happened in the last quarter as well. So we're pushing very hard, not only on the physicals, but also but also the people and systems. And what does all that give us? It gives us that lower cost per tonne. So '26 is very much about development. There's a lot more development going in underground. There's about 12,000 meters going in -- [ 8.5 ], sorry, going in '26 versus sort of [ 7 ] in the last 12 months. And that's very much focused on staying ahead of curve.

And then we're obviously ready for that expansion, [ 2.8 to 4 ]. We haven't lost sight of that. It's very much price dependent. And look, where the price goes is where the price goes. But certainly, the mine has always been designed to expand, and we've just got the ability to turn that on and off. I don't think there's much more to say on that.

Thank you, Adam. So if we move to the next slide, please. And this is where we sort of wrap up, the continuing relentless focus on maximizing value. If we go to the next slide, please. So we promised the market that we would deliver on our cost-out targets, and we delivered $112 million compared to a target of $100 million. So the split is $71 million, which is recurring, and then $41 million as a result of deferring. And a lot of the deferral was due to the North-West Flats being pushed out and all the development costs associated with North-West Flats. But in '26 the focus continues. We've got our -- the market is what it is. And if we look at where we will tackle this next horizon of cost optimization and business optimization, it will be around better sourcing of our product and our consumables, buy better, improve the outcomes of our top 10 contracts, a lot of them done during the peak market and removing waste and duplication in our processes and activities, okay? So we've got our program underway at the moment, which will continue through '26 and deliver outcomes.

So if we go to the next one, please. Okay, now I'll turn over to Grant Donald, who will take us through the next 2 slides. Thank you, Grant.

Thanks, Tony. Look, we thought it was worth emphasizing the extremely attractive debt package that we secured from customers. This is covenant light, and it's a real differentiator for us versus bank debt or project finance debt.

If we can start with the forward facility, the AUD 300 million debt facility had no interest payments until the offtake to which means the accumulated unaudited balance is at AUD 336 million as at the end of June 2025. The term is 5 years from the start of the offtake, which was agreed at Ford's request, to be 1 July 2025, meaning the debt matures in June 2030. 60% of the principal is amortized over the 5-year term, with a 40% balloon repayment at maturity. The interest rate is 1.5% above BBSW, which is equivalent of over 5.6% today. And the first interest and principal repayment is due at the end of September 2025, now that the offtake has commenced.

Moving to the LG Energy Solution convertible note. This is denominated in U.S. dollars to match our revenue line. Again, a 5-year term, it's $250 million equivalent to around AUD 370 million at the time of conversion. The share price conversion is AUD 1.80 and interest rate on this is SOFR flat, which is currently around 4.3%. This also has biannual interest, which is capitalized for the first 2 years, after which Liontown can pay in cash or equity until maturity of the facility in July 2029.

Deciding to use customer-backed financing to build Kathleen Valley has given us really good alignment with customers who also want to secure the product for the long-term supply chains that they're building. We believe this is a competitive advantage versus where we would have been if we've taken a traditional debt finance from project financiers.

Next slide, please. We'll finish on the market. In the short term, we are beginning to see signs of a policy shift to halt the rational competition, or involution as it's termed. This shift was signaled by Premier League Chang at a state council meeting in mid-July. And this year, it's specifically referenced as it relates to the EV sector, emphasizing a shift towards quality and innovation as opposed to price cutting. Local authorities have also been directed to discourage overinvestment in redundant projects, and this is built through to a number of audits or restrictions placed on lithium producers in China, which is impacting the supply side. You can see the very tangible impact of these stories on futures exchange in China on the lifetime chart.

On the demand side, the company continues to see robust outlook for lithium underpinned by strong demand for high-quality spodumene concentrate. In the first 6 months of 2025, lithium demand has continued its double-digit growth rates, driven by strong electric vehicle sales and battery energy storage systems. Global EV sales increased by 28%. Now to put that in context, that's the equivalent of 2 million more EVs sold, taking the total to $9 million sales in the first half.

And the silent sleeper here is really the battery energy storage systems where installations have increased by 54% year-on-year. BESS is set to be a very material driver of demand on a go-forward basis. And we tried to show this in the chart on the right-hand side to show you that 1 out of every 4 incremental units of lithium demand over the next 5 years is going to battery energy storage.

So in summary, our view is that the current fuel price environment really reflects an evolving supply-demand dynamic. And as we anticipate a return to more normalized conditions as demand continues its robust long-term growth trajectory. Thanks, Tony.

Thanks, Grant. If I can go to the final slide before we open up to Q&A. Look, just to summarize our position, as the CEO, I'm very proud of what we've been able to achieve since we started production in July of last year. And we've had to battle that ramp-up against a very, very tough low price environment, and I think the team has done an outstanding job in getting us there.

The focus has been where the focus should be, and that is to perform well to -- and operate as best we can with preserving cash, and we've done that with a cash balance of $156 million at the end of June. We know what we got in front of us in FY '26. Adam has already articulated how we've planned and we're well positioned to deliver on those outcomes. And finally, the relentless focus on maximizing value should be a theme regardless of the market, but even more in sharp relief as we're entering this period of uncertainty.

So with that, I open the line for Q&A. Thank you.

[Operator Instructions] Our first question comes from Adam Baker from Macquarie.

Just very interested in the slide on Page 14 with the underground ramp-up. With your run rates getting to that 375 kt by the 3Q FY '26, and then you've got your progressive ramp-up to the 2.8 million tonnes by the 4Q FY '27, just wondering what sort of drop off we see in the milling rates in that first half of FY '27 as you kind of dovetailing that ramp-up in the underground and that's offset, obviously, by the reduction in stockpiles and the remaining open pit material, what kind of percentage of the reduction in throughput plant capacity that would be?

I think there is no drop-off, no ramp -- it's -- we're trying to keep it steady state is how we're managing the stockpiles and the transition.

So the mill rate will [ include the ] underground production.

Correct.

Okay. Just it appears just on the Y axis, it's dropping off a little bit, but maybe that's just my...

Yes, very much is yes.

The annualized rate is pretty stylized, but the annualized rate for '27 is 2.8.

Thank you. And then just secondly, on the offtake with Ford, I just saw that there was an agreement to resell 150 kt of spodumene. Do you think there will be any future agreement to resell more spodumene offtake? And secondly, if that occur, would there be a change in the timing of the P&L repayments?

Go ahead, Adam.

Yes, look thanks, Adam. I guess the reality is the EV landscape has changed materially over the last few years. And we saw an opportunity for us to place these tonnes on behalf of forward with another customer who wanted the product. Ultimately, that is ongoing business as usual as far as we are concerned. If we see an opportunity to place product with a different customer for more value, and it works for everyone, then those are opportunities we would pursue. I don't think that necessarily is any potent of the future. I think that's just what we've done in the short term given the current demand position that Ford has for its own internal consumption.

The next question is from Hugo Nicolaci from Goldman Sachs.

Congrats on your first year of production. First one for me, Tony, you've always focused on doing volume and cost on an SC6 basis, noting your FY '26 guidance today is on a 5.2% basis on production and costs. Why is the change?

Well, we've been consistent with the rest of our competitors. We found that it's been a challenge to continually revert to SC6. And really, frankly, if the product we're producing is 5.2%, that's the cost structure that it's based on. So it's basically falling into line with the rest of the market.

Yes. Got it. So we've kind of moved to the same as everyone else does. That makes sense. On the cost savings piece, you've touched on it a little bit already. Can you just confirm whether you've now changed rosters and reagents already and if that's in the $71 million of recurring savings. And then maybe just elaborate a bit more on what magnitude of cost savings you expect to get through FY '26 from buying and sourcing better and removing duplication.

Yes. So the rosters remain unchanged. So it's not included in that figure. The reagents, we still have the reagent that we've been using. We've been playing around with consumption rates. So there is still an opportunity to look at an alternative reagent, but we need to do a bit more test work and that's planned for FY '26.

In terms of a target for FY '26, we haven't put anything out there because we're still working it through to establish the size of the prize. So until that work is done, Hugo, I'm not prepared to put a target out.

The next question is from Lyndon Fagan from JPMorgan.

Just looking at your cost guidance, I guess, if I take the midpoint -- multiplied by the midpoint of production, we've got site costs just under $400 million. I'm wondering if that's kind of setting the benchmark going forward to operate the site. Obviously, underground ramps up, open pit ramps off. I mean, maybe you could give us a bit more of a sense of what the dollar million looks like as a pure underground. Just trying to get a handle on this number to try and forecast forward.

The $400 million is a fair representation of the gross costs going forward. Underground basically replaces that open pit for FY '26 and we're well around broadly within that $400 million range.

So Volume goes up?

Yes, volume goes up. So volume goes up a bit.

The next question is from Kate McCutcheon from Citi.

So the next 2 quarters, you've got the OSP material going through. In your all-in sustaining cost, what is that stockpile adjustment component, please?

So just so I'm clear, Kate, are we talking about the adjustment to the carrying value of the stockpile or we're talking about how much of the unit cost is the inventory piece?

The latter. So in that dollar per tonne AISC amount is the stockpile adjustment? Yes.

Got it. So Kate we estimated between $40 and $50 per tonne on an AISC basis.

And then in Slide 16, you've told us that you expect FOB costs to come down 20% to 25% in '27. So that implies a little over AUD 800 a tonne, which is kind of similar to Lyndon's question, is that level of cost out? Also, how we should think about all-in sustaining costs? And would it be unfair to assume that's a level going forward?

So a lot of the drop in FY '27 is because we start getting efficiencies. A lot of the mining costs underground are fixed. And as we ramp up volumes, we wash the fixed costs more cleanly over more tonnes. From a sort of go-forward perspective, I think, I mean, as you can see in the middle chart there, we do have higher capital development costs at the moment, and we expect those to moderate over time.

So as we've previously -- just to build on what Graeme said, Kate, as we move into the thicker bulk zones of the ore body, which we anticipate doing in the back end of FY '26 and into '27, we will definitely get economies of scale. We will be able to wash over the fixed cost of the contract mining over more tonnes as we get into those larger stopes.

Yes, sustaining on a gross basis will drop over time, yes.

The next question is from Glyn Lawcock from Barrenjoey.

[indiscernible] for you.

Sorry, I missed that Tony, you broke up.

I just said that you noticed we did that cash flow -- cash calculation for you in our cash flow guidance.

Very much appreciate it. Good to see you appreciate my skid math, Tony?

Yes, we did.

Which everyone is talking about now, just not calling it skid [ maths ] but if you go back to Lyndon and Kate's question, so it's $400 million spend. Your inventory movement actually sits in your cost of production as per your prior guidance, I assume. So the $400 million, given you've got -- or you had $100 million of inventory, your $40 to $50 a tonne inventory movement, to Kate's question, only suggests $20 million. Is that right? I would have thought the $400 million, you should be out of put quite a bit of inventory down, wouldn't you over [ $26 ]. So ] what is the dollar-million figure that you expect will be inventory movement?

I don't have that number with me, Glyn, but the estimate of $40 to $50 is over a higher sort of sales base. And it's -- we only been get -- we consume most of those inventory units in the first half, yes, apologies, I don't have the gross number.

The way to look at it, Glyn, is the inventory drawdown will be an exercise in 2 halves. We'll have a lot of it in this first half of FY '26. And as you can see from our results of FY '25, we did a drawdown in FY '25. So as we ramp up the underground, there will be much more pulling coming out of that inventory. But then in the back half of FY '26, it will be predominantly fed from the underground.

And the other thing to note is that we do build inventory over time. So that $40 million is a net inventory charge that rolls through. So you don't see the full WACC of the drawdown.

I guess I'm just trying to -- if I run a very simple model of the midpoints of all your guidance, including CapEx, et cetera, plus all the interest payments, principal payments, you're going to spend over AUD 660 million this year before inventory adjustment. That means your breakeven is about USD 1,050 a tonne on an SC6 equivalent basis, just based on your guidance, just running the skid math. So you haven't had chance to do that.

So I assume you're right, so -- what's the question?

So I guess that would -- at today's price of $800 a tonne cash burn of $100 million, got $156 million, so that's fine. I guess, just like what are you doing? You've got your extra $100 million of debt you can -- you're allowed to get, maybe you can get forward to defer. I'm just curious what are you doing to make sure your additional liquidity?

Okay. So that's the question. Okay. Well, look, there's a couple of things we're going to focus on. Well, clearly, we're going to focus more on cost optimization, and we're going to put it lever. The second thing is we've got a strong balance to start with, $156 million. Thirdly, we've got track record -- well, there's a bit of a price improvement, but we've also got a track record of finding funding solutions with our customers and other parties, right? So we will continue to look at those funding options as we progress forward as simple as that. But it depends really on where the market goes.

Yes. And Glyn, just to add to that, I mean we haven't pulled the lever on prepayments like a lot of our peers have done. We -- as we've just demonstrated in '27 and beyond, we have a significant amount of more volumes to place. That could be spot, could be long-term offtake. So we still have quite a lot of options ahead of us.

The next question is from Stuart Howe at Bell Potter Securities.

Just a question, and apologies if this has been asked, but the guidance balance for the first half versus second half, have you got a rough percentage split across those and obviously taking to account the shutdown in Q1. And I assume also costs will be corresponding we conversely balanced to that.

Sorry, Stuart, you're sort of a bit muffled, but can you tell us you want to know what the cost split is between the first and second half of FY '26?

Sorry, the production balance between first half and second half of '26.

Right. Well, it will be more back ended. So I don't have that figure off Nick.

We've got about 170,000 odd in the first half and then 250,000 odd in the back.

And then just on plant flexibility, you obviously pointed to the ability to sort -- use the ore sorting material and process that well. That's great for, obviously, this coming fiscal year. But once you're into underground ore only those flexibility benefits probably fall away? Or are there other ways we can think about how you might be to use that going forward from an underground only perspective?

Well, I think the point that we were trying to make there, Stu, is that the ore sorting product material is essentially an open pit phenomena, where in open pit, about 30% of what you mine will typically report to this OSP category. As we go underground, by definition, we'll be far more surgical in our product extraction, and we won't have anywhere near this amount of OSP to deal with. So we'll just blend whatever OSP material we'll get from the underground will just form part of the blend going forward.

The next question is from Reg Spencer from Canaccord.

Tony, Grant, forgive me if you've covered off on this, but I just wanted to dive into recoveries and the OSP between now and Q3 FY '26. When you expect recoveries to start to pick up. So what you delivered in the June Q should that be indicative of expectations on recoveries in terms of that blend of OSP?

Yes. Good question, Reg. I think we're targeting around 60% to 65% over the half 1 as we progressively put more clean ore in the back of the half. But certainly, Q1 will be sort of 55% to 60% is a real number to use. And then Q2 of '26 will be slightly better. And then likewise, Q3 and Q4. So it's about -- the focus is to get a lot of that OSP done dusted this calendar year. Yes. And that's [indiscernible] ore sorting. So not just straight feed that's why we're...

The next question comes from Andrew Harrington from Petra Capital.

Well done, Tony and team. My question is more about what's happening with logistics. And as you're ramping up, what are your challenges or how smoothly or otherwise are things going with ground transport, the port shipping, what's happening with those costs? If you can provide some color on that, that would be useful.

Yes, no problem. Look, logistics side, we made a very deliberate decision to use Qube. They're very established operators, they are very professional. We're using quad road trains. So 4 trailers has taken 146 tonnes per truck -- road truck. And we're cycling through those. They do a figure of 8 loop between Mount [ Magnet ] and [indiscernible] and then Mount Magnet and Geraldton. So everyone gets to sleep in their own bed. The logistics so far have been extremely smooth and efficient. Of course, Geraldton is known for having some swells and weather activity. But that's all just part going out of Geraldton.

So on occasion, there's a bit of a rush at the end of the year, but no problem so far.

And I think to add to that, a key part of that contract with Qube, which not only the logistics, I guess, strength, but also the contract included an established shared and facility at the port, which is fairly unique, a previous facility that was built by others. But massive difference to just rolling up as a new customer in the port. So you already had an established outload facility and 40,000 to 50,000 tonnes of storage capacity within the port itself.

Right. Very good. And if I may, a second question. Can you provide some color on movements in terms of sentiment in China and how you view the market? What's relatively small changes in policy seem to have outsized impacts on sentiment at the moment. If you can comment on that would be useful as well.

Yes. Look, I mean, to me, what that basically indicates is that the market is very positioned towards the short end of things. And so there is quite considerable short positions that have built up on a GFX. I think just some of those stories start to come through around supply curtailment that pushed some of those short positions to unwind. But that unwind has actually been taking place a little bit before some of these news flows came on the basis presumably that people felt the market was at the bottom. But look, I mean it's always difficult to tell fundamentally on supply demand.

We entered the year with growing 100,000 tonnes of oversupply we get the numbers. There's always different views on projects coming in, but the reality is with the 28% growth we just talked about the BESS growth, we've seen over 100,000 tonnes of new demand just in the 6 months on. So we're probably entering that point now where some of these challenges of getting new products ramped up, new products ramped up, is starting to translate into physical tightness. And certainly, what I see from customers in terms of inbound inquiries and a lot of people looking for a physical product because you can't paper and a battery.

That's all the questions we have time for today. Please reach out to the Liontown team if you have any follow-up questions. We thank you all for your time, and have a great day. You may now log out.

Thank you very much.