Deep ongoing connection to the land and we pay our respects to elders and leaders past, present and emerging, and extend that respect to all First Nations people. We also want to talk about social inclusion.

It is very important and a core part of our values with respect to inclusivity. No one should feel unsafe at work.

Lastly, sustainability. It's central to who we are as Calix, solving global challenges in industrial decarbonisation, because as we say, Mars is for quitters.

Just emphasising who we are. Just moving on then to the next slide, which is all about who we are as a business, because this is all about making great businesses as well.

If we have a look at the different lines of business that we've been developing over the years, magnesia is one of those that we'll talk a bit about in this half-year results session. The magnesia business is really starting to perform very well for us.

We think it's a reasonably large addressable market, and that market is expanding as we replace caustic in wastewater treatment with our unique magnesium hydroxide product derived from our core platform technology. Looking forward to updating on how magnesia business is growing.

Also, of course, lots of happening in commercial milestones in our what we call sustainable processing lines of business, where the core technology being used is a new type of kiln or furnace in iron and steel, alumina, and lithium. You can see some pretty big addressable markets there, certainly iron and steel, one of the largest decarbonisation opportunities on the planet alongside cement and lime.

Alumina, very significant opportunity there. Lithium, a little bit smaller, niche opportunity, but still, nonetheless, a good upside value opportunity for the business.

Then lastly, but not least, the parts of the business that have been focused around cement and lime and carbon dioxide removal, that's what we call our Leilac part of the business, low emissions intensity lime and cement. Some interesting applications emerging there just over the course of the half year that we're going to be talking about as well.

Lots of shots on goal here, some pretty big upmarket opportunities, and we look forward to updating you on the progress with our commercialisation over the course of the first half year. Before I do that, let's just jump to the numbers.

I might hand across to Darren to take us through the half year's numbers. Over to you, Darren.

Hey,

thanks very much, Phil, and good morning, everyone. It really is a great pleasure for me to be able to talk about our first-half results for FY26.

There's two or three kind of really key messages that I want to get across today. Firstly, obviously, strong revenue growth.

That's the first message from the first half. The second message is focused business delivery.

The third message is significant commercial milestones. I'll talk a little bit about the cash position at the back end as well.

Really strong set of financial results in the first half of FY26. Just dialling in a little bit on those points, significant revenue growth in our magnesia business.

We achieved $15.8 million of revenue, which is up 48% on the same period last year. We've seen significant contribution from sustainable processing for the first time.

We've also earned grants and other income, all together that has delivered a record revenue result. At the same time, we've done a lot of work over the last 12 to 18 months to kind of focus the organization on the key kind of business delivery objectives that we're targeting.

That's translated into significant improvement in our operating performance. Net cash used in operating activities was down 65% on the same period last year, close to $18 million of net cash used in operating activities last year, that's down to $6.2 million this year.

Significantly lower operating expenditure in the first half of '26 when compared to the first half of '25, down 30% to $15.6 million. The business is essentially a capital-light business with very minimal capex requirements.

Aside from a consolidation of our share of the Mid-Stream project, we spent just $600,000 on capex in the first half. Very, very strong financial performance in first half FY26.

I might just go to the next slide if I can, Christineh. Just drilling a little bit into this snapshot from the statement of profit and loss, as you can see, strong growth in revenue, strong growth in gross profit, and strong growth in margins as well, and I'll talk a little bit about that.

That top section is essentially growth across the board, except that other income was a little bit lower, but we're really focused on driving revenue from paying customers, products and services. We've also seen significant savings right across the kind of core cost elements of the business.

Sales and marketing expenses have come down, research and development expenses have come down, and admin and other expenses are down as well. Significantly lower operating costs and focused on delivery and execution against our kind of key operating objectives.

The last point that I'll touch on is just the one-off non-cash impairment charge that related to the announcement that we made last week regarding our decision to sell our share of the Mid-Stream UJV to PLS. Phil will talk more in detail to that throughout the course of the session today.

I just wanted to kind of clarify, over the course of the last two and a half years, in the profit and loss, we've recognised a non-cash gain of just under about $30 million associated with that transaction. What we did last week, when we announced that we've sold our share in that business in return for $11.4 million of cash, is that we've essentially written back that gain that we made over the last two years.

Again, it's a non-cash charge. It's a non-recurring charge.

It basically, as I said, writes back the gains, the non-cash gains that we've recorded over the course of the last two and a half years. A very strong performance across the statement of profit and loss in the first half of FY26.

I'll just kind of dig into some of the highlights if I can. Thanks, Christineh, for moving to the next slide.

Continued revenue growth. You can see there year on year, Calix is executing strong revenue growth year after year, both in terms of first-half and second-half performance.

Let's just touch on the first-half revenue anyway. So, $16.3 million in total products and services revenue, that's up 21% on the same time last year.

That's the light blue bars at the bottom of the stacked bar chart on the right-hand side. Our gross margin was 40% in the first half of FY26.

It was 37% in the first half of FY25. We earned $6.7 million of gross profit in the first half.

That's up 37%. It's important to note that the magnesia business, our gross profit was up 52% on the same time last year.

The magnesia business is a very strong growth and margin business that is only kicking more and more goals every year. I'll talk a little bit about that maybe on the next slide, if you can move to that, Christineh.

The magnesia business, incredibly strong performance in the first half. As I said previously, 48% revenue growth over first half FY25.

At the same time, we secured a major commercial milestone that it's important to note had zero impact in the first half FY26 financial performance. We announced in December, I think it was, certainly late in the first half, that we've secured a new contract that's worth up to $10 million of additional revenue for us each year with a major US customer.

Unfortunately, we're not allowed to mention the name, but it's one of the largest agriculture businesses in the world. Again, in the first half, they contributed zero to the revenue or gross profit of the magnesia business in the first half.

We've just started delivering products and services to that customer over the course of the last few weeks. Really it's been a tremendous job by Greg, Doug, and the team in the US to get up to speed and begin to ramp sales to that major customer.

We're incredibly excited about the way the magnesia business is performing. We're doing well not only in the US, but also in ANZ as well, and we've had renewed and expanded contracts with the City of Gold Coast and Unitywater that's contributed to strong first-half growth in FY26 as well.

What are we looking forward to the second half and moving forward? Obviously, want to continue to ramp sales.

We're in the process of completing a new manufacturing facility on the Sunshine Coast to service Unitywater. Again, it's relatively minimal capex, though.

We're keen to kind of continue to demonstrate and deliver continued revenue and gross profit growth in that magnesia business. I might just move to the next slide.

This one's really all about kind of trying to highlight the focus, cash discipline that we've been able to deliver over the course of the first six months. The bar chart on the right-hand side essentially tracks the dark blue lines are our operating expenditures every six months going back to the first half of FY23, and the light blue bars are our capex spend every six months going back to the first half of 2023.

You can see there if you look at the bars on the far right-hand side of this chart, significantly lowering our operating costs every six months and also lowering our capex spend as well. In first half FY26, our operating costs is down to $15.6 million, and that's down 30% on $22.3 million that we spent in the first half of FY25.

We're really focusing our business efforts and our business performance on a few key large addressable markets that represent best value for shareholders, and Phil will talk more about that as we move forward. I'll touch a little bit about the capex spend as well, and whilst the line there says the capital expenditure reduced to $7.1 million, the actual amount of capex that went out of Calix's accounts was $600,000 in the first half.

$6.5 million of the capex spend that's been recognised in the account is our share of the spend of the Mid-Stream UJV and its spend on completing construction of the Mid-Stream project. We did not actually tip any additional capital into the Mid-Stream project in the first half of FY26.

What we're saying there is, our operating expenditure is tracking down and lower, and we're really now sort of a minimal capex spend business and are resorting to this kind of capital-light business structure. Just the final slide for me, I think it's the final slide for me.

It is the final slide for me. Before we made a rather large announcement last Thursday that Phil will talk to, one of the key takeaways from my presentation today was the first statement on that second line there.

We expect to be cash flow neutral in calendar year 2026. That's driven off a number of things.

Firstly, we expect to see continued strong revenue and gross profit growth. Secondly, we've clearly done a lot of work around focusing and streamlining our business, our teams, and our operations.

That's paying through into reduced net operating cash flow. We've also expect to see significantly reduced capex requirements moving forward as well.

In addition to that, in calendar year 2026, there'll be several one-off payments, including government grants, ARENA, which we previously announced last year. We expect to receive a second cash payment from Rio Tinto.

Both of those are obviously subject to project milestones being achieved that we believe we are in hand and we're on track to deliver. We're also due to receive some significant R&D tax incentives from the UK government.

That was my key takeaway, strong revenue growth, focused business delivery, and a cash flow neutral FY26. That was before we announced last week that as a result of our plan to sell down our share in the Mid-Stream project, and it's still subject to final documentation that we're working with our partners PLS on, in addition, we'll now receive a further $11.4 million of cash in the calendar year 2026.

In terms of our cash position and our liquidity position, calendar year 2026 will be a very strong result for the company. Strong revenue growth, strong gross margin growth, operating cost base and focused delivery, and minimal capex, cash flow neutral before incorporating the $11.4 million.

It's a very strong financial position that the business is in after a great set of results for the first half of FY26. I'll now pass back to Phil to talk a little about some of the commercial milestones of the business.

Excellent. Thanks very much, Darren.

Apart from all the work that's gone into the financial part of the business, there's been some significant commercial milestones we achieved in the first half of the year as well. Certainly, magnesia, firing on all cylinders, as Darren mentioned, a new contract worth up to $10 million per annum over three years with a two-year extension option hasn't even hit those numbers yet.

That we started delivering in January to that particular customer, and so we're looking forward to seeing the flow-through of those additional revenues on our magnesia numbers. In the iron and steel business, it sort of seems a long time ago, but it was only the last half year that we announced ARENA support of $44.9 million into the ZESTY opportunity, obviously subject to matched funding, which I'll talk about, as well as achieving project milestones.

A significant milestone and leg up was achieved when we were able to announce in November that Rio Tinto were joining us in the project as a strategic partner committing over $35 million in cash and in-kind to the project. That project is really starting to hit its straps.

We do need to go and find additional funding. That will be at the subsidiary level, we are looking at bringing project financing or capital into a subsidiary.

A lot of key planks falling into place for the iron and steel opportunity, which is enormous and very relevant for Australia, obviously, as well, but certainly applicable around the world in terms of the decarbonisation of that industry responsible for 8% of global CO2. Also, again, just in the last six months, the first half year of this financial year, we're able to talk about and announce the partnership with Norsk Hydro, who run the largest alumina refinery outside of China.

That work is underway. We're expecting over $1 million in materials testing and development work that we're doing right now with Norsk Hydro.

That work has commenced, and look forward to updating everyone as we progress through all of that testing work. Ultimately, yeah, what we're really trying to do is start to develop the technology into the alumina industry.

A very important partnership, and some nice early revenues coming in from there as well. On the lithium side, obviously, as Darren mentioned, last week, we're able to announce a bit of a deal restructure with Pilbara Minerals.

We acknowledge it wasn't received that well by the market, but let me explain why we think it's a great deal. Certainly, we see value.

The value that we see in the cash up front that repays us our capital, if we net that off against the potential licence fees and you risk those licence fees from PLS, and there is, of course, it's subjective when will a plant at full scale be erected, and when, and how big, all of those things are part of the risking process. We saw good value in upfronting those licence fees and giving PLS a royalty-free licence moving forward to develop.

We still have access to upside there as well with 20% of any royalties applied to a third party. There's zero risk.

This is important to emphasise. The commissioning process, the process of running the facility, with the current volatility in lithium markets, you need a pretty big balance sheet to take that on, and PLS is the right partner to do that.

Restructuring the deal is a sensible thing to do, and it strengthens our balance sheet. That's important for everything else we do, not only just in terms of continuing to develop these other opportunities, but also the strength of the balance sheet in things like raising capital if we're looking at raising capital into a subsidiary for the iron and steel business, for example.

Certainly, a strong balance sheet helps as you contemplate those types of efforts and negotiations. The other thing that's really important about the deal is speed, moving into commissioning and demonstrating our first electric calciner at scale as soon as possible.

Again, with PLS and the balance sheet that PLS have able to move that forward, then that was certainly another key factor as well as to get this technology demonstrated at scale. There's lots of good reasons why we did that deal, and so hopefully that over time, people will come to realise it was a pretty smart strategic move.

It was a good deal for us, as well as a good deal for PLS. It was a win-win.

The lithium, we're proud of that deal, and it will bear itself out in terms of value for our shareholders. Leilac, lots of progress on Leilac as well.

We've completed the pre-FEED study for the Zeta project. That's a lime calciner project in South Australia supported by some grant money from the Australian government.

That project continues to progress nicely. Then, of course, recently, just a month ago, we were able to announce a study with a group called Frontier.

Frontier is a collective, if you like, of some of the largest American corporations such as Google, Stripe, Shopify, who've committed to forward purchase over a billion tonnes of CO2 to offset their emissions. This particular contract worth over half a million US is about testing of our technology to decarbonise lime and other carbonates, and it's for the use of those in what we call ocean alkalinity.

In terms of offsetting shipping emissions or offsetting CO2 emissions, if you can add carbonates into the ocean, which of course is also a natural process been going on for billions of years, then that actually helps the ocean absorb some of the CO2 and create seashells or create carbonate rocks like limestone in the ocean. It's like an ocean form of direct air capture, potentially much cheaper than on land direct air capture.

Exciting potential new market for us in Leilac. Lots of commercial milestones were achieved in just the last six months, which on top of the significant advances we've made on the financial side of the business, puts us in very good shape.

If we just move on to talk about our individual projects, thanks, Christineh. Just in terms of ZESTY and the project with ARENA and Rio Tinto, obviously securing that strategic partner in Rio Tinto is a very important part of continuing to progress that project.

We continue to target equity raise or project financing into a subsidiary, similar to the way we did the Leilac business back in 2021 when we got investment directly into that subsidiary. Certainly, having a strategic on board like Rio is a great catalyst to enable that process to continue.

We're continuing to target that sub-level funding and to move into an FID decision point this year. Good progress there.

On the ZEAL, we've talked about, which is the Zero Emissions Alumina, we've talked about Hydro and the work we're doing there, Norsk Hydro. We've secured that paid test work, and that's underway now.

Right now, we're getting paid. We're doing lots of work from the materials sent across from their Alunorte refinery in Brazil.

On the lithium, I've talked about the Mid-Stream project. Construction was complete, on budget.

The commissioning process is in PLS's hands. As part of the deal we did with PLS, we're going to be paid at market rates for our engineering and testing work as we would with third parties as well.

The commissioning decision is with PLS there, and we await that with interest. On the Zeta project, we've got the grant funding, as I mentioned, we've moved through pre-FEED, and we really like to progress that project again through some equity or financing at the project level or into Leilac Group to enable that project to proceed.

That's a nice little project for us online with South Australia. Lime is no small part of the market, either.

It's about a tenth the size of the cement industry, but it's still bigger than, say, the alumina piece. Lime is a very important industry for us.

It's important for making aluminium. It's important for making iron and steel, and it's obviously a very important industrial chemical.

Good to see that project progressing. On Leilac-2, we continue to have issues around permitting and financing that project.

There is no clear line of sight to resolving that timing, we've talked before about potentially delaying or a potential delay of that project. It is now delayed, having moved into this calendar year with no clear line of sight to resolving the permitting around there.

We are continuing to progress that, and over the course of the first six months, we were progressing that, and we'll continue to do so. As soon as we can get some line of sight to that timing, we'll update the market.

With respect to Leilac full scale, the work with Titan, the work with MLC, unfortunately, we still haven't heard back from the US DOE. They'd promised to get back after the summer of last year, the US summer of last year, and I guess with everything else that's happening in the US, they sort of haven't looked at this yet.

We obviously continue discussions with Titan, with MLC, with numerous other players. The pipeline still remains nice and full, over 85 projects.

We're not trying to seek more projects, but some of those projects obviously we're looking to see if we can convert elsewhere as well given the US is stalled a bit at the moment. Similarly with Heirloom.

Heirloom again is one of those projects that was under review from the Department of Energy. The new work that we're doing on the Frontier piece, which is also about CO2 mitigation, in this case in the ocean via ocean alkalinity, that particular piece of work is a carbon dioxide removal piece of work, which is moving forward nicely for us.

Some projects moving forward really well, others a bit delayed, a bit of a mixed bag, but that's why we've got so many shots on goal. It's because some move, some don't, and then move.

Rest assured, there's a lot happening, and for some of these really big opportunities like iron and steel and alumina, things are going really well. If we move forward just to a summary.

Thanks, Christineh. Just in summary, obviously the financials we're very pleased with, the magnesia particularly hitting the ball out of the park, nice gross profit, getting a really nice focused business now with the opex and minimal capex, and so the strength in our financial numbers is really starting to help us and will continue to improve and help us down the track.

The commercialisation, which has been achieved on top of all the changes we've made in the business, has been outstanding. Obviously, we'd like to really emphasise the move ahead with ARENA and Rio Tinto on the ZESTY part of the project, which is ZESTY part of the business, which is a really interesting project into a huge potential market space.

Also, of course, Norsk Hydro with alumina, a great partnership that's working really well, and a good deal for us with the Mid-Stream project. As Darren was mentioning around our cash position, we expected neutral cash flow this year as a result of all of those activities that we've outlined, and an additional 11.4 back onto the books puts us in a really strong position from a balance sheet perspective, which helps across all of our projects and all of our activities.

Just in terms of outlook around commercial milestones, obviously we want to continue with the magnesia revenue and gross profit growth. That big contract we won aren't in our numbers in the first half year.

It's going to be really great to see those starting to flow through into the numbers for the second half of the year. Obviously, we want to progress ZESTY towards a final investment decision, which includes the financing, the remainder of the financing part of the business, possibly through an equity raise into a subsidiary company there.

With ZEAL, complete the test program with Hydro and hopefully move into a pre-FEED piece for a demonstration in alumina. Complete the Leilac Frontier paid studies and get their material testing complete, and there's second and third phases that may flow from that should we be successful.

Lastly, we obviously want to continue to progress the Leilac Zeta project for lime in South Australia towards FID as well. Hopefully that gives people a good idea of where we're at in the first half year in terms of financials, in terms of commercial milestones, and also what we're looking at for the remainder of the financial year.

On that note, I'm happy to open up to questions.

Can you hear me?

Yeah.

Okay. Thank you.

Just a reminder that to ask questions, you can use the Q&A box at the bottom of the screen, or you can email them through to investor relations at calix.global, although you can use an anonymous function here, it's easier to keep it all in one spot. There's been quite a few questions come through, and we've got 30 minutes left on the clock.

We'll get through them as quickly as possible and as many as possible. I'll start with the first one.

How much revenue do you expect the new magnesia customer contract to deliver in second half '26?

It's going to be run-rating at about 10 per annum. There's always a bit of ramp-up.

We're expecting that ramp-up as we start supplying to be a couple of months, few months. Once we start to hit our straps, we should be run-rating at that full contract value in the second quarter of this calendar year.

It's not going to be the full 10 in the last half of this year, certainly not that, but, yeah, we're looking forward to seeing how quickly we can ramp that up and get those revenues flowing through. We won't give a number, but the commencement of that contract will certainly hit our numbers for the second half of this financial year.

Okay. Are you continuing to pursue new water contracts in the US?

If so, can you comment on what the pipeline might look like?

Absolutely. This particular contract that we just secured, there's multiple opportunities of this scale in the US.

One thing to keep in mind is these contracts often take some time because if the volume is contracted, typically they're contracted for several years, and so that takes a while to convert. We've got a very good record in terms of retention, once we've won a customer, we tend to keep them, the customer churn is very low.

It takes a few years, but the customer churn is low. Once we've won a customer, we tend to be able to keep them.

There are several customers been working on for quite some time as well, we are obviously targeting some of these big accounts, similar scale, of which there are quite a few, but there's also lots and lots of smaller accounts as well, and some of those typically shorter cycle times between when you approach a customer and when you convert. We're really concentrating around the geographic areas that we've now got all of our plants, if you recall, we had four plants originally, we built two more, one down in Texas, and one as we move across in the Midwest into Wisconsin, and so we're continuing to expand our geographically.

As and when potentially we start to get anchor customers in new regions, we will look at additional plants to help support that region and take out cost. It's absolutely a strategy that we've formed some time ago.

It's bearing fruit now because the cycle times have taken a reasonable amount of time, but it's bearing fruit now. Look, I wouldn't discount Australia, either.

We were at a certain level in Australia, only about $4 million a year in Australia for quite a while, and that business in Australia starting to grow quite significantly as well. Same phenomenon, takes a while to get into some of these larger accounts because of the time period under which they're contracted, but having been successful with Unitywater, having been successful on a retender with Gold Coast, two of the largest accounts in Australia, and there's multiple other opportunities in Australia that we're looking at as well, it's not just the US, we still see upside in Australia.

Hopefully that answers the question, Christineh, yeah.

Yes, it does. I'll pivot to ZESTY.

Are you confident that you will have project investment and have moved into FID for ZESTY by the end of this financial year?

Certainly, it'd be great if we did. What adds to a level of confidence is if you see where capital raises have been successful in the private space, in the venture capital space, it's because there's been a strategic.

It's been tough in the markets in the impact fund land for sustainable technologies. Everyone acknowledges that the last two or three years has been tough, but we have seen that deals done successfully, and they're done successfully when there's a strategic involved.

Getting Rio and doing the strategic partnership, the joint development arrangement with Rio is a really good indicator to me that we can capitalise on that momentum to execute that strategy. I can't give you a definitive time, two reasons, one, I shouldn't, and the second is it just gives commercial advantage to counterparties who might be dealing with.

We want to get this done as quickly as we can, we're working hard at it.

Okay. You're emphasising how capital-light we are going to be.

Does this include the ZESTY project, too?

Absolutely. Certainly, we're going to be building a demonstration facility, some might argue that's not capital-light, but it certainly is compared to a full-scale facility.

We're going to own and control this. Sure, there'll be investment coming in the project level or even into as equity into a subsidiary, but they'll be minority stakes.

We'll own this facility, and so, yeah, with respect to capital-light, we'll still need to invest a little bit of capital to get the technology demonstrated in a few of these different industries. Iron and steel is one, and cement is potentially another one.

Capital-light remains the business model. We do see that licensing and royalties is the best way forward for the technology to scale and be deployed quickly.

Phil, I might just add a couple of comments there if I can. I think maybe one way to look at this is capital-light at head company level.

Phil talks about raising capital at the subsidiary level. The ZESTY commercial demonstrator will be financed through a combination of direct investment from impact funds, significant grant, $44.5 million from the Australian Renewable Energy Agency, which we're very thankful of, they've been great supporters, and obviously a significant contribution both in cash and in-kind from Rio Tinto.

At the ZESTY project level or at the ZESTY subsidiary level, it will require capital, but we will target raising that money at that level and not at Calix headstock level. Calix headstock will be a capital-light business model.

The money for those commercial demonstrators will and needs to come into the subsidiary at subsidiary level and be supported thankfully by grants, strategic partners, and industry participants.

Okay. Next question is, will demo plants in partnerships or JVs be required in each product type prior to commercial licensing arrangements?

If so, is Australia the preferred location for demo plants?

As Darren mentioned, where we need to put demo plants in, and typically for the larger industries where they want to see at least single tubes in operation or bigger, for those very large opportunities in iron and steel, cement, and lime, then yes, we're going to need to demonstrate. Iron and steel is going to be using hydrogen, and so the ability to handle hydrogen at scale and prove that at scale is important for us, a demo plant's important for that particular application.

Then in cement, the ability for a multi-tube unit to be integrated into a cement facility is important as well to demonstrate. For a few of the others, where there's less integration, where there's a stand-alone opportunity, lime, for example, we don't believe we need to build a demonstration facility.

The Zeta project is, in fact, a small commercial facility straight off the bat. It's a little bit horses for courses, but as a rule of thumb, let's just imagine the very largest industries are going to require a demonstration.

Just in terms of preferred location, Australia with the opportunity in green iron is sort of a bit of a no-brainer for ZESTY to move ahead. Iron ore is something like a third of our export income in this country.

96% of that ore is unsuitable for electric arc, and so as the industry decarbonises, that creates a bit of an existential threat for this country, and so the ability to look at a green iron industry here and the opportunity, if you like, is where we see ZESTY sort of naturally developed. You can see some pretty significant government support.

Obviously, Darren is Darren as Darren mentioned has been very supportive, but there are opportunities moving forward to help operators of these types of facilities, various government-funded-type arrangements and subsidiaries to help get this industry up and running in Australia. Cement and lime, we're a minnow in cement and lime, and it's not a huge part of our economy.

There's a lot of cement production capability in China, obviously, a lot of cement production capability in Europe, and Southeast Asia and the Asia-Pac region. Even the US is quite a small cement play, it's only 5% of global production.

Cement and lime, certainly cement is more likely to be offshore in terms of where we continue to develop that. Obviously, the Leilac-2 project in Europe is important for us, but there are numerous other opportunities that we're developing in the pipeline across Asia-Pac and additionally in Europe.

Cement is more likely to be offshore. Alumina, as we mentioned, is with Norsk Hydro, the Alunorte refinery in South America in Brazil, is a good spot to develop that particular application of technology, apart from the fact that there's biomass-type options to look at energising our calcination process, there's also abundant and cheap renewable power.

Brazil could be a good spot to progress the alumina opportunity. Hopefully, yeah, it gives a bit of an idea of the fact that there's no cookie-cutter approach necessarily to each of these, but generally a demo for large, complex industries will need to be built, but we have the plans to do that via these subsidiary capital raisings, as Darren mentioned before.

Okay. We've got about 15 minutes left and quite a few questions to get through, I'll keep the next one's quite punchy.

Will a cut in capex spend inhibit your ability to grow?

Sorry, will a what?

A cut in capex spend.

Oh, yeah,

I'll answer that, Phil. I think what we're forecasting is lower capex spend moving forward, and essentially at this point, we've got the platform to continue to grow, particularly in the magnesia business.

If we got a kind of massive surge in demand for our magnesia products, we'd need to have a look at it, but I think the business is generating sufficient gross margin and cash for it to be able to finance any capital requirements it might have to add plants to grow revenue even further. At this point in time, essentially we've added a customer that's going to deliver an additional 30 30-plus percent in revenue on an annual basis, and we haven't seen the need to invest material amounts of capital to deliver that.

Look, I think we're just saying, relative to the spend over the last three or four and a half years where it's been $7, $8 million in a six-month period, we're certainly on a much lower view forward in terms of capex spend to kind of continue to drive the growth that we see in front of us.

The next question is, with the Rio Tinto JDA agreement providing $35 million in value and an FID for the demo plant due in 2026, how will you prevent a repeat of the PLS situation? If the demo plant is successful, does Rio Tinto have a pre-negotiated right to buy out Calix's interest, and have you already locked in the royalty rates for a global rollout?

It's a very different structure to the PLS structure. Rio have an option for equity for the cash part of their investment via what's called a SAFE, a Simple Agreement for Future Equity, and they haven't priced that.

What that means is that as and when we raise capital into the equity to go and build the plant, Rio could convert some of that money into equity in the subsidiary on metrics such as, well, Calix is investing the 44.9 coming from ARENA through into that subsidiary, on the metrics of adding matched funding to there, which outside of Rio's 8 million, will be of the order of 30, 35 or more million, and on a metrics of benchmarked technology valuations for green iron and steel technologies, that percentage likely will be a very small, minor percentage of equity in that facility. In the Pilbara case, we were minority equity participants, as was appropriate given the ratio, if you like, of capital for our technology versus capital for the balance of plant, but here we're going to be the majority, similar to Leilac where we're 93% of Leilac, we're going to be a majority owner in ZESTY, and so it's a very different deal structure to the Pilbara deal structure.

I think the other question was around the royalty rates, Phil, in terms of the relationship with Rio Tinto. Have we already, yeah, agreed the royalty rates?

The answer is in principle. In the JDA, the royalty rates were outlined, but the full licence agreement is being worked on now, which will incorporate those royalty rates.

As and when, in the interest of preserving commercial, I guess, umbrage in deploying the technology to other parties, we won't be disclosing those rates publicly, but those rates are appropriate royalty rates, similar to what you might determine as appropriate royalty rates for a technology. We've sort of indicated before that anywhere between sort of a half or 1% of the ultimate size of the market in terms of revenue or value, up to 10% in some cases might be considered a high royalty rate.

There's a range for you. The total market's $640 billion for iron, and royalty rates of half to one at the low end and 10 at the high end would be typical royalty rates for technologies.

It's a very significant opportunity, and, yeah, our royalty rates that we're working through are within that range.

Okay. There's a couple of questions with Leilac, which I'll combine.

Can you talk to the financing issues you are having at Leilac? Are they related to permitting?

A second part of that is, please explain what the permit issues relating to and who has the power to unblock the situation?

I'll talk to financing first. We're going through the same thing in the Leilac group as we're going through with ZESTY, which is about finding and working with impact funds and strategics to invest in the Leilac in a round two.

Leilac, if you recall, had investment come in in round one from Carbon Direct, who bought 7% of Leilac for €15 million at the time, and so we're looking at a round two to help raise the capital we need to build the plant to match the funding that we're getting from the EU to enable that project to proceed. That financing, as I've mentioned before, it's been a difficult financing environment.

On the ZESTY side of things, we feel that with Rio as a strategic partner, that's going to be well thought through and well thought of. On the Leilac side of things, we're hitting the same issues.

We want to move ahead with raising around there. We've got some reasonable support from the consortium that we have there, who've already committed some funds into the project.

It's a matter of closing out those sorts of rounds, and, yeah, that's taking longer than we expected. On the permitting side of things, we are dealing with three different levels of authorities in Germany, and so the permitting process is complex and long.

The submission of fully designed down to last bolt designs then get followed with inquiries or changes being suggested by different levels of authorities. Some of those changes then change the structure of the tower or the wind loading, and so you've got to go through and turn the handle again.

Then, you resubmit, and you start a process again, and then a European summer happens, and no one's around in July, August. These are the things that are frustrating and slow, and so we just have to work through it, unfortunately.

Without a line of sight or an end date, which we don't have from the permitting authorities yet, we feel we can't talk about that project in terms of a timeline just at this point. Hopefully that covers the permitting and the financing side of things on Leilac, on the L2 project.

Just to follow up on L2, is there an option to move L2 to another site with fewer permitting challenges? How much work has been done in site preparation?

Short answer, absolutely, and absolutely, we're working on it.

Okay. Just on PLS, the announcement of the PLS deal made it sound as though Calix has given the IP away to PLS for use in any lithium project they proceed with.

Can you comment on that?

When we say given away, certainly we've sold, forward sold if you like, PLS's right to use that IP and for the price of recycling the capital we put in. When we look at the value equation, it's whether PLS will go ahead and build a full-scale facility and when will they build that full-scale facility, and what licence fee would we have got from PLS.

We've done all of those maths, and we've weighed it up and risk assessed that, we still think this is a good deal for us. PLS, if they go ahead and build a dozen full-scale facilities, they'll probably come out ahead on this deal, okay, good on them.

If they go ahead and build a dozen facilities, then that means it's a great technology, and that means third parties are going to have to follow suit if they want to take advantage of the logistics advantages, the carbon advantages, and the energy advantages that technology brings. Of course, for those third-party licences, we get upside, we're exposed to 20% of any royalties from those third parties.

As I say, we think it's a fair deal. PLS done the heavy lifting on the capital here, in fact, in the end, they've paid for the full facility.

We've got no process guarantees. We've got no downside liabilities on commissioning or running the facility, and all we have is upside, both in terms of engineering fees, technology and testing fees, and any third-party licences.

It's a balanced deal. I can see how people could see that PLS got some good value out of it.

They did. We got some good value out of it, too, it's a win-win.

That's the way we see it.

Okay. There's still a bunch of questions, and I just want to warn everybody that we may run out of time, if we don't get to your question on the webinar, we will ensure that we come back to you directly.

The next question will be a quick one. What is the projected full cost for ZESTY above the ARENA and Rio Tinto JDA contributions?

I think the greenfield's cost of putting the plant on the ground, Rio sorry, ARENA is covering $44.9 million at a 50/50 rate, and that includes commissioning, and that includes two years support for two years of test work. The project all the way through, including commissioning, helping support those first two years of test work, we're saying is a $90 million Australian project roughly.

Great. Related to that, with Hazer able to produce low-carbon hydrogen for $1 a kilo, as compared to $4 to $5 kilos in the techno-feasibility study, are you considering teaming up with them to provide hydrogen plant for ZESTY?

Look, I think Hazer's a really interesting technology. We're obviously speaking to numerous potential hydrogen sources, including Hazer, and so we'd love to see Hazer progress technically, and ultimately, if they can produce at $1 a kilo, that'd be a fantastic solution for the industry as a whole.

Another question on hydrogen for you. Considering the current delays in hydrogen supply, could you outline how natural gas may serve as an interim reductant for ZESTY,

and whether

this offers advantages over other transitional sponge iron technologies?

Look, short answer is yes, absolutely, natural gas. You could reform it, in other words, you could turn the natural gas into hydrogen with some CO2 that's produced as a result of that.

Although it's not a zero emissions or very low emissions iron, it's certainly lower emissions than a blast furnace. If you can, it's less than a third of the emissions of a blast furnace route to produce iron and steel.

As a transition to be pragmatic, absolutely, we'd be considering natural gas or reformed natural gas. We're lucky with ZESTY, it's very flexible in terms of the way it can be adapted to some of those alternate reductant routes.

We obviously would love to start the plant up on green hydrogen, but if we can't for whatever reason, then we are looking at these alternatives as well.

Okay. Then I've got two questions for you, Darren.

I'll combine them. Do you envisage having sufficient capital to meet your needs for the remainder of calendar year '26?

Beyond full year '26, do you expect Calix to become cash flow positive?

In answer to the first question, yeah, putting aside the $11.4 million that we'll receive once we've completed the transaction with Pilbara Minerals, we said we'd be cash flow neutral in calendar year 2026. Hopefully that answers that question.

In terms of the second point of the question, or the second question, I think the way that I'd answer that is that we have been cash flow positive from operations going back a few years now. We know how to run the business to generate cash and profits immediately.

Right now, we think it makes all the sense in the world to continue to invest in developing the technology for large addressable markets such as iron and steel, and alumina, and lime and cement. That's going to take a little bit of upfront investment in research and development.

We think that makes all the sense in the world for us to continue to do that because applying the technology in those large addressable markets will create significant value for shareholders and for the planet. From a shareholder and value perspective for the company, we think absolutely it makes sense for us to continue to focus in these large addressable markets, which, like I said, which we think will generate great value.

Now, like I said, we could stop all of that R&D, we'd have a very profitable, nice revenue-growing business, but we don't think that's the right thing to do right now. We're certainly, as I said, going to be cash flow neutral for FY20- for calendar year '26, sorry, if I said FY, I apologize, calendar year '26 before we factor in this $11.4 million.

Suffice to say, we're in a very strong financial position to continue to grow the business in the areas that we want to, have focused delivery and execution, and pursue these large addressable markets in a capital-light way.

Okay. We'll try and get through the last two questions submitted during the webinar.

Do you expect that external investors in ZESTY will require Calix to contribute capital to the demo plant in addition to the anticipated free equity carry?

We'll contribute $44.5 million from ARENA to the project. That's the extent to which we're contributing to the project.

That's the case. Obviously, the IP is 100% our IP.

Again, as opposed to where we're at with the lithium joint venture where there was a lot of IP associated with developing a new product in a new process for lithium phosphate salt, it's 100% our IP in ZESTY, and that's going to be valued, absolutely.

Okay. When capital is raised at subsidiary level, does that mean Calix itself won't be required to provide funding?

Yes.

Correct.

All right, perfect. I'm conscious that we've had a lot more questions come through separately to the webinar, and I'm sorry that we haven't got time to address them, but I will certainly get back to you each individually.

I think we've run out of time, I might hand over to you, Phil and Darren, for any closing remarks.

Thanks, Christineh. Look, just to really sum up the key messages from the first half year, growth in revenue and gross profit, a focused, streamlined business is now delivering on and continues to deliver on some significant commercial milestones that were achieved in the first half of the year.

We look to the second half of the year to continue to progress delivery on those commercial milestones while maintaining focus in the business and discipline. We're very pleased with our first-half performance, and we look forward to the second half continuing that performance.

Thank you very much, everyone.

Thanks, all.