Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Record revenue growth with a 30% increase in revenues from products and services, reaching $24.2 million.
- Significant progress in the carbon capture business, including a perpetual global license agreement with Heirloom and Heidelberg materials.
- Successful expansion of the magnesia business, with a 14% increase in revenue and improved gross margins.
- Strong financial position with $43 million in cash, enabling continued investment in commercialization opportunities.
- Diversified revenue streams across multiple lines of business, including carbon capture, sustainable processing, and magnesia.
Negative Points
- Delay in the Leilac-2 project due to the closure of the Hannover facility by Heidelberg materials, causing a six-month setback.
- High dependency on grant funding and government support for various projects, which may not be sustainable long-term.
- Significant non-cash items such as share-based payments and depreciation impacting the P&L.
- Challenges in securing offtake agreements for the lithium phosphate joint venture with Pilbara Minerals.
- Increased payables at the end of FY24, raising concerns about cash flow management.
Q & A Highlights
Q: Can you give us an update on how the lithium phosphate marketing is progressing?
A: The lithium phosphate salt, which will be produced from our facility once constructed and commissioned, is in the hands of Pilbara Minerals for marketing. They have numerous connections with battery and lithium companies. The material remains of interest to several parties, and we look forward to updating the market as and when any secure offtake contract is put in place.
Q: Is there a target for how many offtake agreements you want to secure for the lithium phosphate project?
A: There is no specific target for the number of offtake agreements. The goal is to have the entire production taken by one or more parties. The plant is designed to produce 3,000 tons per year, which is a commercial quantity, and it might fill one contract or multiple contracts.
Q: How much grant money should we expect to come through in FY25?
A: We expect to see material grant income in FY25, similar to FY24. Although we won't receive the R&D tax incentive due to exceeding the $20 million annual turnover cap, we have significant grants already secured across various projects, including the PLS project, Leilac, and the ZETA Project.
Q: What drove the margin improvement in the water business, and how do you plan to grow it in FY25?
A: The margin improvement was driven by enhanced technology, efficient manufacturing processes, and high product quality valued by customers. For FY25, growth will come from an expanded platform in the US, leveraging our technology, and maintaining high product quality and service.
Q: What is the outlook for CapEx in FY25, and what are the non-negotiable versus discretionary expenditures?
A: The key CapEx for FY25 is the completion of the PLS midstream demonstration facility. Other than this, we do not foresee material incremental PP&E. We have invested significantly in the past few years, and we do not need to repeat that level of investment.
Q: Why did you decide to go alone on the Zesty project rather than with partners?
A: We have not ruled out partnering for the Zesty project. We will not become an iron producer ourselves and are open to forming a consortium or equity structure with strategic players.
Q: Can you explain the uplift in payables exiting FY24?
A: The uplift in payables is related to the capital commitment to the Pilbara project, which will be paid by the Australian government, Pilbara Minerals, and partially by us. It consolidates some of the capital commitment to the project.
Q: What is the rationale behind the uplifted value of the unincorporated JV?
A: The uplifted value reflects the work in progress of the project versus our ownership percentage and the cash we have to contribute. It is a mechanical process rather than any other factor.
Q: How do you plan to achieve continued growth in the water business in FY25?
A: Growth will come from an expanded manufacturing platform in the US, leveraging our technology, and maintaining high product quality and service. We aim to continue growing top-line revenue and gross margins.
Q: What are the next steps for the Leilac-2 project after the site move to Ennigerloh?
A: We are completing the detailed design for the new site, moving through the permitting process, and aiming to commence construction in 2025. Operations and commissioning are targeted for about a year after site works commence.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
