IGO Limited

Good morning, everyone, and thank you for joining the call this morning as we present our operating and financial results for the March quarter. Joining me on the call today is Kath Bosnich, our CFO. Slide two highlights our cautionary statements and disclaimer. Of note, all currency amounts are in Australian dollars unless otherwise noted. Turning to slide three. To commence this morning's presentation, I would like to draw attention to our ongoing efforts towards enhancing safety, wellbeing and the engagement of our people. Our people are our priority. As highlighted in previous quarters, our recent safety record has been disappointing. Over the last year, we have amplified our focus on critical risk identification and management. It's pleasing to see improved safety lag metric outcomes over the last few quarters, although we acknowledge there's still work to do as we improve our safety performance. We have a fantastic group of people and a unique culture. An important measure that we track at IGO is our employee engagement. It's an annual pulse of the organisation to understand the strengths and weaknesses of our culture, and most importantly, identify where we can improve. Our 2023 survey, the first survey conducted since we welcomed in the Western Areas team into the business, was completed in April. Initial results indicate a strong employee engagement across the business, underpinning the strength of the IGO culture. Turning to slide four, our key highlights of the quarter again demonstrate the strength of our business. These highlights include record quarterly earnings and net profit after tax and repayment of our revolving credit facility, leaving our balance sheet in an excellent position. Our lithium business had another great quarter, with Greenbush's delivering consistent production and cost performance, while higher lithium price helped drive strong margins of free cash flow to IGO by way of another strong quarterly dividend from TLEA. In our nickel business, we have seen the rapid recovery of the... from the power station fire at Nova last quarter. We also secured a strategic parcel of land at Kwinana for our proposed integrated battery material facility, a key part of our downstream strategy. And finally, we also plead that our commitment to sustainability continues to receive third-party endorsement with recognition from S&P and Sustainalynix that IGO is a sector leader in sustainability. I'd also note that we advise in the quarterly of an anticipated impairment on the nickel assets acquired through the Western Dan areas transaction. I'll provide some detail on this later in the presentation. Turning to slide five, we'll provide an overview of our March quarter financial results. Of note, group sales revenue of $236 million which excludes contributions from our lithium business, was marginally lower due to lower sales from Forestania. IGO's share of net profit of TLEA, our lithium joint venture, rose to 30% quarter on quarter to $450 million. Quarterly EBITDA of $533 million and net profit after tax of $412 million were both quarterly records. And strong underlying free cash flow of $284 million enabled the repayment of our $240 million revolving debt facility, and thereby reducing our net debt position to just $9 million. Turning to slide six, where we lay out the quarter-on-quarter movements in net profit after tax. The key contributor to the excellent result was a strong increase in our share of profit from TLEA, driven predominantly by higher revenues from green bushes. Other factors include lower tax and a lower contribution from forestania, offset by marginal movement in mark-to-mark value of our listed investments. Turning to slide seven, where we reconcile cash. As shown here, we had some large movements in cash over the quarter. including inflows of $321 million dividend received from TLEA and $92 million free cash flow from NOVA. Key outflows included $240 million in debt repayments, as mentioned earlier, a record interim dividend payment of $106 million to shareholders, and $93 million in development expenditure at Cosmos. As at the end of the quarter, IGO's cash at bank was $441 million, with a total debt of $450 million. Turning to slide 8, and on to a discussion of the lithium business, which is held by a joint venture interest in Chanche Lithium Energy Australia, referred to as TLEA. Turning to slide 9. TLEA recorded another outstanding quarter, driven primarily by 45% higher quarter-on-quarter lithium prices. This delivered a 30% increase in IGO's share of TLEA net profit to $450 million and a quarterly dividend to IGO of $321 million. This brings total annual dividends received from TLEA to $761 million. I'd also like to note TLEA's proposed scheme arrangement to acquire central metals, which was originally announced in early January. As has been reported, the proposed scheme did not receive sufficient shareholder vote to be passed at the scheme meeting held last week. As a result, TLEA has terminated the scheme implementation agreement with essential metals. TLEA will continue to assess opportunities to grow its lithium business through M&A, but will only execute transactions which can deliver value to its shareholders. Turning to slide 10, we will discuss performance at the Greenbushes lithium mine. Production was marginally lower quarter and quarter to 356,000 tonnes due to lower run times on CGP1 and CGP2, offset by higher feed grades. Despite spodumene sales being 13% lower quarter on quarter, the higher spodumene prices noted earlier drove sales revenue and EBITDA to $2.8 billion and $2.6 billion, respectively, on a 100% basis. This represents an EBITDA margin exceeding 90% for the quarter. Unit costs excluding royalties of $290 per tonne were also higher quarter and quarter as a result of cost escalation and inflationary pressures. The overall realised spodumene price was $5,783 per tonne for the quarter. Turning to slide 11. The graph to the left shows results from green bushes illustrating a strong production and cost profile over the last 18 months. Expanding production and processing capacity is a key part of the Greenbush's growth strategy, which involves the addition of two new concentrators, CGP3 and in the future CGP4. During the quarter, the team progressed several of these key projects and related infrastructure, including advancing construction on CGP3, with the first ore targeted for mid-calendar year 2025. progress on the mine services area, which is advancing well and remains on track to enable the commencement of the new contract of McMahons in the coming months. The new power supply from Bridgetown has been completed and is currently awaiting energisation and earthworks for accommodation village have commenced with formal construction to begin next quarter. Turning to slide 12. Looking ahead, We expect the strong performance at Greenbushes to continue. Of note, quarterly sales were lower June quarter due to storage capacity constraints at Bunbury Port. However, we've seen the issue resolved and expect sales to rebound in June quarter to help offset this. The chemical grade spot treatment price has reset to $5,444 US per tonne for the June quarter, which continues to underpin strong margins at Greenbushes. We expect full production and cost to be at marginally above guidance, reflecting a strong production expectation for the June quarter. From a capital perspective, third quarter 23 was $122 million, which is behind schedule with a slower rate of spend over a number of projects. CGP 3 CAPEX, previously guided at around $500 to $550 million, is under review following some challenges related to earthworks and geotechnical piling. While a review is underway, which is planned to be completed next quarter, IGA speaks costs could exceed the contingency provided in our guidance range. We'll be in a position to provide an update on the completion of this review at the end of the quarter. Turning to slide 13 and on to an update of the Kwinana Refinery. The Kwinana team has continued to progress rectification works on Train 1, as noted in the prior quarter. Production rates have progressed, progressively improved, with total production of 960 quarter. Sales have also continued for potential customers as part of the ongoing product qualification process during the quarter. The ramp-up team is preparing for a major shut commencing at the start of May. This will focus on the lithium hydroxide material handling circuit at the back end of the processing plant. At the completion of production as we work towards achieving 60% to 70% of nameplate production by the end of this calendar year. Turning to slide 14, where we'll move to the discussion of our nickel business. In slide 15, we'll start with Nova. It's pleasing to report solid recovery of our Nova operation following the production disruption caused by the fire in December last year. Water production of all metals improved approximately 30%, while cash costs reduced 28% to $3.79 per pound. While operations have recovered well, the quarterly result was impacted by intermittent power supply issues that have persisted, as well as the result of a temporary power station. This is coupled with some constraints to pace production during the quarter. Issues at the PACE plant have been resolved and the site power supply reliability is expected to improve from the commissioning of a new battery energy storage system in connection with Nova's solar farm during the June quarter. Sales revenue and EBITDA from Nova rose quarter on quarter due to higher sales offset by a 6% decrease in realised nickel price. Turning to slide 16. At Forestania, quarterly performance was challenged by lower ore availability from both Flying Fox and Spotted Quoll mines, resulting in 5% lower nickel production quarter on quarter. Ongoing size week issues at Spotted Quoll have necessitated greater rehabilitation work and long re-entry times after blasting, while poor ground conditions at Flying Fox deferred access to some high-grade stoves to later quarters. Nickel sales of $58 million for the quarter were 36% lower than the prior quarter, impacted by trucking availability and road closure due to poor weather. Trucking availability is expected to improve during the June quarter with additional haulage contracts deployed to help draw down on the large concentrate stockpiles that have materialised at Forestania. Cash costs of $10.27 per pound were lower quarter-on-quarter benefit from savings generated by the NOVA blending agreement, including unlocking payable COBOL credits that were otherwise not realised and saving on on-site cost with NOVA export sales under the new agreement. Underlying free cash flow remains strong at $32 million for the quarter. Turning to slide 17. Development of the COSMOS project is continuing at pace. During the quarter, shaft and head frame constructions proceeded to plan, including the first leg of the shaft and paste plant completed. In addition, construction was completed on the new aerodrome, with the first flight celebrated last weekend. Total capex for the quarter was $97 million, with FY23 year-to-date capex at $240 million. This is below forecast due to some work being completed later than planned. However, the project delivery time remains on schedule and on budget. Turning to slide 18, where I briefly discuss progress on our downstream nickel strategy. Earlier this month, IGO and our partner, Walu Metal, announced the allocation of a strategic piece of industrial land at Kwinana for a proposed integrated battery materials facility. This is an important milestone in our ability to produce battery-grade chemical cathode precursor in an integrated facility here in Western Australia. While any investment decision will be subject to securing a pre-chem partner and a positive outcome for the feasibility study, IGO and WALU share a vision to produce low-cost, low-carbon, responsible-produced battery chemistries from what would be the first integrated facility of its kind in Australia. We look forward to keeping the market updated as we progress discussions with respect to potential partners and as the feasibility study progresses. Turning to slide 19 and on a brief outlook of the nickel business. Production and cost guidance at Nova and Forest Avenue remain unchanged. We've made some minor changes to CAPEX outlooks, with some NOVA CAPEX being deferred into FY24, while a slower rate of spend at COSMOS to date means we expect full-year spend to be under where we had previously expected at between $330 and $360 million. We have also advised in today's result that we anticipate recording an impairment against the assets acquired from Western areas The impairment reflects several changes compared to our expectations when we acquired the Western Areas assets last year. These changes include cost escalation, which has been widely reported across the industry, higher capex cost at Cosmos, as referred to in our September 2022 quarterly report, mine scheduling changes and delays in the mining of AM5 and AM6, and the general underperformance of Forestania. As we're currently working on our first annual life of mine and budgeting process with the new sites and the fact that any impairment will be dependent on the processes together with macroeconomic inputs at the time of testing, we're presently not in position to provide the market with a probable impairment value nor a range of values with any sufficient detail of certainty. We're currently, however, confident that an impairment charge will need to be recognised in respect to the Western Area's assets acquired in our 30th June 2023 financial statements and, as such, have elected to advise the expectation in advance while we continue to work through the budget and impairment testing process. We're working to complete this process as soon as possible and expect to be in a position to update the market further during the June quarter. The impairment will be non-cache. It will not impact underlying full-year EBITDA. Turning to slide 20, where I'll provide just a few comments on our exploration activities for the quarter. Moving to slide 21. Exploration during the quarter focused on the southern parts of Australia, specifically the Fraser Range, Forestania, Western Koala, Copper, Coast, Broken Hill and Greenbush's Bridglands projects. One program I note is a detailed review and sampling of lithium-barium pegmatite intrusions encountered in previous drilling at the Forestania project. This work is offering some interesting results, and we expect to commence drilling this quarter. We also continue to test nickel sulphide targets around surrounding silver nitrospects, with further drilling expected in the current quarter. Turning to slide 22, Before wrapping up with summary, I'd also like to provide some commentary on behalf of the board on the CEO search process. Shortlisted candidates have been interviewed by the search committee. Final interviews before the whole board will take place in the coming weeks, with a decision expected to be announced in the coming quarter. As you may have noticed in the quarterly, I've made the personal decision not to participate in the process. I look forward to leading the company as acting CEO through this transition. To summarise for the quarter, our business has continued to deliver outstanding financial performance with another quarterly record EBITDA and impact result. Free cash we are generating has enabled the rapid down payment of our revolving debt facility, putting IGO in a strong balance sheet position with just $9 million net debt. This has largely been underpinned by greenbushes, which is generating strong margins and driving dividend flow through TLEA to IGO, while at the same time supporting the production ramp-up at Kwinana. In our nickel business, Nova has recovered incredibly well from the fire last year, and we continue to improve performance at Forestania. The COSMOS development project remains on track, and we have made the first steps towards our downstream nickel strategies with the recent announcement of securing strategic land at Kwinana. As noted, we have also advised of an expected impairment on the ex-Western Areas assets, as we'll update the market on this in the June quarter. Thank you for joining us on the call this morning, and I'll now hand back to the operator for questions.

Thank you. If you'd like to ask a question via the phones, you'll need to press the star key followed by the number one on your telephone keypad. If you'd like to ask a question via the webcast, please type your question into the Ask a Question box. We will be addressing questions by the teleconference first, and if time allows, we will address some of the questions followed up received on the webcast. For the sake of time, please limit your questions to one per person. If you'd like to ask more questions, feel free to join the queue again. Your first question comes from Rahul Anand from Morgan Stanley, Australia. Please go ahead.

Hi, team. Thanks for the call. Look, my question, and I know you're only allowing one, is around CGP3, just looking for a bit more visibility around, I guess, the challenge ahead of you, some timelines, how we should think about those cost estimates, perhaps a bit more colour would be much appreciated. Thanks.

Yeah, hi, Ray. Yeah, I can give a little bit of colour on that. With CGP3, what we're doing is building part of the wet plan on ex-tailings. So we've done all the design on the tailings down. As part of the detailed work, we're looking at the geotech and the earthworks and the piling. The team there is just looking through final design on those pilings and then refeeding that through to a capital cost estimate. At the moment, it's pretty preliminary. So it's actually, we don't have a good understanding of what that cost would be. So we're just flying into the market. There is a potential that we could actually exceed our contingency. When we provided a range on that contingency, we talked to $500 to $550 million. So we had around about $50 million of additional in that guidance. We're not sure whether that will exceed that at this point, but we'll have clarity during the quarter.

Okay, understood. Okay, and perhaps just one follow-up then in terms of projects still, you know, the downstream project ramping up year 60 to 70% throughput expectations by the end of the year. Has there been any update in terms of product quality, et cetera? You did achieve battery-grade production, but... I mean, I wanted to understand the product quality going forward after these changes that you're expecting and then also whether you still envision getting to 100% of capacity for the project there.

Yeah, OK. So in terms of product quality, so we did 963 tonnes of lithium hydroxide for the quarter. That conversion to battery grade was around about 81 and 80 to 85%. So we're getting good conversion to battery grade as part of that quality. We're in the process of doing qualification. So we know that we're producing battery grade. The qualification process is that testing required as you get integrated in the battery supply chain. Once we have that qualification period, or qualification three, then we'll be in a position to sell more product out of Kwinana. Today, we're not having any sort of challenges on quality. The key challenge on Kwinana is all about ramp-up and de-bottlenecking. We'll have a shut coming up, and we'll see an improvement on that production rate coming out of that shut in May, back into next quarter.

OK, that's all from me. Thank you.

Thank you. Your next question comes from Matt Green from Credit Suisse. Please go ahead.

Hey, good morning, Matt and Cass. I hope you're well. Look, I'll just follow on from the QAnon question, Matt. So, you know, with these modifications in May, how should we be thinking about, I guess, the profile of this ramp-up? Because, I mean, I recall part of this qualification process is TLEA getting comfortable that you can supply them not only the quality, but also the volume. So will these modifications allow for a bit of a step-up change, and could these changes in May push you up to that 60% level, or should we be thinking of perhaps 40% with another step change with the next shutdown later in the year? How should we just – I guess should we be thinking more linear ramp-up here or more of an incremental step-up?

Yeah, no problem with that. Yeah, and we are well. So, yeah, so just give you a bit of guidance on how that profile looks over the calendar year. So we remain confident that we'll achieve between 60% to 70% of nameplate capacity at the end of this calendar year. We have two major shuts planned during the calendar year. We're coming into the first shut in May. What that what that shot does is it really focuses on the on the lithium hydroxide handling system at the back end of the plant from the basically from the centrifuge of the drive through to the from the crystallizers into the dryer. What that has been a real constraint to to production. There's an expectation once we finish that shot, change out screw feeders, change out bins and liners and and. we'll see a step up. We will not get to the 60% to 70% from this May shut. We'll have to continue to drive improvements through the calendar year to get to that 60% to 70%. But it would be fair to say that at the back end of June, we would anticipate to see closer to the 40% range.

Okay, thank you.

Thank you. Your next question comes from Lyndon Fagan from JP Morgan. Please go ahead.

Thanks very much. I was hoping to talk a bit about the Greenbushes mine plan. We're still pulling out really elevated grades, around 2.6%, which is fantastic, but can you give a little bit of a sense as to how sustainable those high grades are and when we kind of see it get back down to the 2% level. And I guess related, when do we actually see the ore mine pick up, which is, I guess, in line with some of the Tianqi guidance that was originally out there? Thanks.

Hey, Brendan. Yeah, so at the moment, we are seeing higher grades, and we will continue to have that ability to feed higher grades through... through our green bushes. And when you'll start to see grades normalised to 2% out of the mine is once we start to do significant material movements with McMahon's contract coming in. We'll see a ramp up in material movements over the back end of this calendar year and then majorly into next calendar year. And that's timed with, I think, Mahon's change of mining contract, Mahon's coming into green bushes and ramp up of waste movement as well, which will open up more of your body as per the mining plan.

And so, just to clarify, once that material movement does ramp up, is it right to think that 2% is the sort of grade at that point?

Correct. So each of the processing plants have a different head grade that they're designed to treat. So when you look at each of the processing plants, they'll have a different feed grade, but the whole life or the reserve of green bushes is the two. So it will normalise around about the 2%, but it may vary different head grades in different plants.

Thanks, and just a quick clarification, if I may. Appendix 6, the capex for greenbushes, does that include everything? And I guess if it does, it looks like you're running behind guidance. That's sustaining an improvement and deferred waste. Is that the entire capex for the site?

Yeah, that is the entire capex for the site, and you are correct in terms of forecasting capital over quarters and for the periods. We are running a bit behind, and we saw that also with Cosmos and Nova. It's got to do with forecasting of capital spend.

Great. Thanks. I'll pass it on.

Thank you. Your next question comes from John Bishop from Jarden Group Australia. Please go ahead.

Hi, thanks for taking my question. You make a comment in the release. You talk about no change to guidance for the lithium business outlook in terms of production, and that relates to some price disparities for lithium product streams. Can you sort of bury down a little bit more detail there on what that actually means? Is that referencing the technical grade portion of your production?

Yeah, hey John, it's always a pleasure to take a question. We've got some commentary in there just talking a little bit about market. And as we've seen in the market, what we're seeing is a volatile market with lithium. And that volatility is largely driven by a disconnect between lithium hydroxide versus raw material inputs. There's always At the moment, there is that conversation. So we're just working through all that market that having an integrated business provides a little bit more certainty about that variability that we do see in the market. Some of that you'd expect to see some form of impact at some point, unless the market doesn't correct itself where carbonate prices and hydroxide prices rebound.

So can I just clarify, then, the... The comment there in that text that talks about changes to production guidance, is that a reflection of the joint venture considering whether it withholds some material for better pricing environment or is it a change in product mix? If you just sort of clarify that for me.

Yeah, there's always that sort of options that the joint venture can do depending on where the pricing goes. But having integrated businesses ensures some form of protection on that. And we just wanted to provide clarity as part of that uncertainty that we remain on track to deliver to FY23. OK, that's great.

Thank you. Thank you. Your next question comes from Levi Spry from UBS. Please go ahead.

Good day, Matt. Thanks for the call. Maybe, sorry, you can just explain to me what you're seeing in the market a little bit again. I missed some of that, but, you know, we've just got off the Pilbara call. They've got their views on the market, maybe better improvement in the second half. But what are you seeing post this quarter?

Yeah, look, I mean, what we see is volatility in the market, and we talk... And that volatility is largely driven by how the market isn't necessarily that efficient at the moment, how it's pricing all the lithium products across the market. And effectively, it shows the value of having an integrated business when you build out these complicated markets and integration, because you never get balance across all these markets. Carbonate pricing compared to raw material supply. If you're just a carbonate producer, you'll be challenged in this sort of market.

OK, thanks mate. Thank you.

Thank you. Your next question comes from Kate McCutcheon from City. Please go ahead.

OK. Hi, good morning Matt. A question on Greenbushes. From your realized pricing, it seems like the technical grade product sold at a discount. And if that's correct, is the JV considering at all if it's worthwhile continuing doing that product given the added complexity to the mining operations that it brings?

Yeah, okay. The technical grade pricing is largely driven by longer-term contracts. I can't really get into a lot of that detail of how that pricing mechanism works. Effectively, to the cost of green bushes, you'd expect to see technical grade pricing to increase and be aligned to chemical grade pricing once contract periods align. In terms of cost to green bushes, with the new mining fleets, with the ability to open up more areas, et cetera, Probably, originally we thought it might have been a bigger cost structure than it probably is. We still have the flexibility to mine some of those technical grade units without being an impost to the operation.

Okay, so your thinking's progressed a bit then since I think the last time.

Yeah, the thinking has progressed a little bit and that's largely because you're turning over so many benches and you're opening up so many new mining fronts that you'll actually be exposing the higher grade, technical grade part of the ore body quicker anyway. So you can, you might as well, if you've got the opportunity to, then you might as well take it and stockpile it separately.

Okay, thanks for that. And so then you expect that pricing to converge moving forward so it won't be as much of a headwind?

Thank you. Your next question comes from Hayden Barstow from Macquarie. Please go ahead.

Good morning, Matt. Just a quick one on the Western Areas assets. I presume most of the internal value would have been on COSMOS anyway, so is there something that's potentially shifting there in terms of the development timing or the ultimate production rates you're thinking about that's driven this, or is it more just a sort of auditing nickel price assumption and hence you have to bring the valuation back?

Yeah, I think it's a little bit more, it'll be a little bit more than just nickel price assumptions. So, you know, we've seen the capital costs, capital costs, you know, we're also seeing escalation in operating costs across the market. And then the other potential impact is when we can get AN5 and AN6 into the schedule. So we're really working through all of that at the moment to provide that clarity when we look at coupled with NACRO testing, et cetera.

Thank you. Your next question comes from Khan Pekar from RBC. Please go ahead.

Good morning, Matt and Hussam. Just a quick question on the nickel business. On the quarterly, you mentioned that payability for blending Nova and Forestania products. Both concentrates already get good payabilities. So has it made a minor impact on the penalties? And I think you mentioned cobalt credits there. Can you just explain that a bit?

OK, and I'll let Kath answer that one.

Yeah, so it is... You are correct. It is an impact on penalties and payability as well as the cobalt credit. So as we anticipated last quarter, the blending strategy does generate a reasonable amount of value for us. You know, we get lesser arsenic penalties through the paper blending, the benefit of having Nova in there against the Forestania product. and also achieving the cobalt credits out of Forestania in respect of the fact that we can blend it with Nova. The other benefit we've got is actually a reduction in costs and everything because of the fact that as you put it through the plant at Forestania, you need to clean it less in order to get rid of more of the arsenic. So there's multiple benefits of going into a blending strategy.

Sure, just maybe following on with that, I think when acquiring Western Area, that blending strategy was considered a key synergy. So how are those blending synergies tracking to what your expectations were? And if I remember correctly, that blending would allow you to possibly target deeper mining at Forestania. Is that still the case?

So at the point of bid, we knew it was a synergy and we quantified part of it, but it was pretty hard to quantify a hell of a lot into the bid model at that stage. We're tracking well. We're actually achieving a lot better outcomes from that than we would have ever anticipated at the time of the bid.

And the targeting of deeper mining at Forrest Daniels?

I actually can't hear you properly. Yeah, so will it make a big impact to additional material coming into the resource and reserves? Unlikely. It will drive an incremental improvement in cut-off grades, but it won't drive a fundamental shift. What we do have is the ability to have more flexibility of mining different areas, which won't constrain the mine plans versus bringing additional resources, significant additional resources to account.

Thank you. I'll pass it on.

Thank you. Your next question comes from Mitch Ryan from Jefferies. Please go ahead.

Thank you, Matt and Cass. There was a comment in the quarterly that sales at Greenbush has been from higher grade spot in the quarter. I just saw that all Greenbush sales were at an SC6 range. Can you sort of provide some more metrics of the grade over the last two quarters?

Yeah, it will be at SE6. It is at SE6 range for all chemical grade.

Okay, so then is it the technical grade spot grade that moved around in the quarter that drove that then?

Yeah, so technical grade there is. Okay. All chemical grade, that's at SE6 spec.

I think what you might be referring to is the mix between technical and chemical grade, and that shifts from a quarter-to-quarter perspective.

Okay. Thank you. The next question comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.

Hi, Matt and team. Thanks for the update. Just one around mining contractors for me. I think Greenbush has switched over to McMahon at the start of the year. You know, we're seeing issues on mining at, you know, Wagena and a couple of other assets. I just wanted to ask how that contractor transition at Greenbush is going, and if you can provide sort of any updates around that, that would be great. Thanks.

Yeah, perfect. That contractor transition has actually started now, so we're expecting to have that transition. That transition is mid-calendar year. So McMahons are on site. McMahons are preparing for the transition. The team, I've got a dedicated team looking at that transition, and they're working through all of that at the moment, ready for change as of the mid-calendar year, and then it will transition over a three-month period so that at the back end of the calendar year we'll start to see ramp-ups from McMahons production.

Brian, thanks. Still from me. Thank you. Your next question comes from Matthew Fryman from MST Financial. Please go ahead.

Sure. Thanks. Morning, Matt and team. I'm interested in your comments around the CapEx spend at Cosmos and some of the delays that you've incurred. I guess, firstly, thank you for providing the tracking on the incurred spending today. That's always very helpful. But, yeah, interested in the works packages that have been delayed and really looking why you're or how you're confident in the view that those packages haven't necessarily impacted your expected timing. Are they not critical path elements? And then also you're not expecting those delays to result in additional costs. So just wondering what gives you the confidence around that view.

Yeah, look, it's a good question. It's one of the challenges of actually estimating capital, and we're actually going to be in one of the steepest parts of our capital expenditure. So we're talking about capital expenditure over a couple of months as part of this forecast change. So in terms of critical paths, we remain on track with completion of processing plant by Gres in September with First All, and then the second part to that will be specialisation underground for December. All programs that work, although we're from a capital expenditure over the financial year, remain on track for that program. So we don't see any variances there.

Got it. Thanks, Matt. Maybe just a very quick one while we're talking about capital budgets. and CGP3 and the adjustments you're making there. Can you remind me of the location of CGP4? Is that expansion subject to similar potential ground issues in terms of old payments?

Yeah, good question. CGP4, I mean, we're looking at alternate sites, basically, for CGP4, so that we don't have the same sort of challenges with CGP3. So there's a couple of options. You'd actually have CGP4 next to CGP3 or essentially take it to a different site within the Greenbushes mining tournament to ensure that we don't have geotechnical constraints associated with building plants on tailing stems.

Got it. Thanks for the insights, Matt.

Thank you. Once again, if you'd like to ask a question via the phones, please press star 1 and wait for your name to be announced. Your next question comes from Daniel Morgan from Baron Joey. Please go ahead.

Hi, Matt. I just wanted to follow up on the spodumene price and potential volume risk this quarter. So the spodumene price is now fixed for the June 23 quarter, which reflected the market conditions in the March 23 quarter. but the hydroxide prices downstream have been in free fall, and this might mean that either your JV partners downstream or third parties that you might be selling to might make losses and therefore don't want the product. Is that a risk to your volume from Greenbush? Is that what you're potentially highlighting, or is this price mechanism still fit for purpose if a market is in somewhat of disarray between the two? Thank you.

Yeah, that's a good question too. Ultimately, if market... Ultimately, as a lithium producer and all lithium market, we'll be looking at effective pricing mechanisms between all products. And what we're seeing is an environment where we actually don't have an effective pricing mechanism across all of the products. Will that have an impact? Does that have an impact on green bushes? Look, having integrated businesses protects... protects you from some of that sort of variance. But ultimately, if a market is imbalanced and continues to remain imbalanced, then there's got to be pinch points along the way. We don't expect to see any challenges through this calendar year that you'd expect this financial year. But if you expect to see continuation of these sort of imbalances, then there could be changes.

So just on that, I mean, your JV partners have integrated businesses, but your net long spodum in, excuse me, because Quinana hasn't, you know, ramped up completely. So, you know, is that a problem for you? Is that JV pushback? Might they say, look, let's not have the volume or might they say, well, this is not fit for purpose. And mid quarter, we might have a change to the price mechanism.

Yeah, I wouldn't expect that. I would expect to have conversations with shareholders to understand where their pinch points are. But ultimately, we feel that being the lowest cost producer of green bushes, then it's likely that production profiles would always continue.

Thank you, Mark. Thank you. Your next question is a follow-up from Matt Green from Credit Suisse. Please go ahead.

Hi, thanks for the follow-up. Matt, I'll ask one on the battery materials facility. Congratulations on in the land of Krona. A couple of parts to the question. What scale operation do you think this site could support? We're still doing the studies, but, I mean, ultimately, in terms of nickel feed, What sort of scale could you see there? And I guess real estate to add an active cathode facility there in the future. And then just lastly, on the precursor partner, when do you think you'll be in a position to announce this to the market? And I guess what are the current – what are you working through with these partners? What do they need to see from IGO? Is this more a case of concerns around the technology or is it more supply security of upstream nickel units? How should we be thinking about that?

Yeah, OK. So we've always said there's three key catalysts associated with the project. First one being securing land, which we've done with support of the WA government. It was a very strategic piece of land. There's very little land available in Kwinana, so it was great to see that we had to secure that, and the WA government supporting us on this battery integrated facility. Second catalyst there is pre-camp partner. We've always very clearly said that we don't have the technology and we'll be looking at bringing a pre-camp partner in to help us realise this, and that would be an equity position in the project, bringing technology as well. And then the third is really about the feasibility and study and permitting, et cetera, to make sure that we have all the detail before we make any sort of capital decision. In terms of scale, The land is sufficient to meet most scales, so we're not constrained by the land. So we've got the exact scale that we're working towards as part of that feasibility study.

That's great. Thanks, Matt.

Thank you. As there are no further questions at this time, I'll now hand back to Mr Dushi for any closing remarks.

Thank you, operator, and thank you, everyone, for joining the call today.