IGO Limited

Thank you for standing by and welcome to the IGO Limited December quarter results call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the ask a question box and click submit. I would now like to hand the conference over to Mr. Ivan Vela, Managing Director and CEO. Please go ahead.

Thank you, and good morning, good afternoon, everyone. Thanks for joining us again to run through our December quarterly results we've just released. Kath Bozanich, our CFO, is with me again, as per usual. I'd also love to wish you a happy new year and definitely a happy Chinese New Year as well in the year of the wood snake. We recognised the start of that yesterday. Let me start with safety and look at persistence starting to pay off for focus there. While the headline lagging numbers are flatline, they aren't changing. Under the covers, the team's doing some fantastic work to improve our safety maturity and steadily, step by step, those leading indicators are starting to turn. So it's an area of focus and something that I'm confident through this calendar year we'll be able to show some steady improvements. If we start with the lithium business and looking to green bushes, it was good to see another strong quarter of production. The teams finished the calendar year well, beat their own plans and after a very slow start in the calendar year, I think shows the capability of that operation. It's been really good to see Rob Telford settling in as the new CEO there. He's been getting a lot of time in the field with his team, deeply understanding the business, connecting with the team and I think setting a really good foundation and set of priorities for him to focus on through this calendar year as he starts to make his influence felt. I'll come back to more details on Greenbush's performance in a minute, but look, overall their progress is fantastic and that includes CGP3 that's tracking well now to the revised date that we shared late last year and there's a variety of other optimization improvement work underway there quinnana we've obviously made several announcements in the last month and most importantly the announcement around train 2 which i think everyone's absorbed and understood i'll come back to that in a little while it was for us a you know fairly important decision to clarify we know that we were getting a lot of questions around it and to be able to provide that guidance after extensive conversations with our joint venture partner, some deep reflection and a really clear decision. I think that's been helpful. The production out of Kwinana has improved and that was signposted following the shutdown in October, November. The results of that aren't fully realised yet. I'll come back and talk more about that as we go. But I think the important thing I guess residual work that we've signposted is the impairment testing that's ongoing. We've recognised obviously train two is part of that, but there is an assessment on train one as well, which is ongoing. And we'll share more on that in the half results coming up in a few weeks' time. NOVA, look, it was a tough quarter. A number of factors driving that, largely mine grade related and our understanding of the ore body at its extremities. That's impacted recoveries. We did have some plant availability issues through part of the quarter as well. Ultimately, that led to a lower nickel output and obviously a flow through to our costs or unit costs. And at a time when the nickel price was also subdued, it certainly impacted our financials. That's, I guess, the quick headlines. Let me spend a bit more time on green bushes and just dig into that. As I said, look, production was pretty consistent and I'm sure I'll get questions again around guidance. At this stage, look, remember Greenbush's plans on a calendar year, we provide guidance across a financial year and so I wasn't in a position to update that. We're working through the budget and plan finalising that with the joint venture participants and with that we'll be able to provide some update but there's really nothing more to see other than a an operation that is running well. It's continuing to improve. Recoveries were continuing to be sustained at good levels. The team's driving and focusing on productivity and obviously with two strong quarters under the belt in this financial year, it bodes well for the next half. Sales were down. That's really just shipment timing and nothing too much to see there. That'll wash out through this quarter. Again, it's not a signal of anything more than just the timing and the management of the business. And cash costs were a difference to Q1 and we've explained in our notes that was really about, I guess, a one-off differential against the prior quarter given some deferred stripping adjustments that we'd noted in the prior quarter and some high maintenance costs that that should level out to our guidance as well. Overall, a good quarter from Greenbushes. I'm still focused very heavily on that forward runway for improvement. There's still a lot of productivity opportunity in front of the team. There's also work going on as we understand that ore body better and better and how we think about the growth, particularly as we bring CGP3 online and make sure we get the very best out of that ramp up later this year. Lots of positive work going on, still generating extremely good margins at this sort of lower point in the cycle. And with a lot of upside, we're very encouraged by the performance there and all credit to Rob and the team for their continued diligent performance. Kunana looked to dig in a little more depth there. The uplift in production performance was good to see and definitely was obviously a flow-on from that shutdown that we had. We still haven't hit the expectations or the targets that the team had set for themselves based on those projects and improvements that they made in the plant that we expect to flow through in the next couple of months. And there's obviously an ongoing focus on the performance and the ramp-up. We're in that same budget cycle at the moment for Kwinana and looking at what the plan ahead looks like what changes still need to be made to that plant to bring it up to operational nameplate capacity, what the kind of costs are and so on. There's a lot of work going on. The Train 2 decision, I guess to spend a few more minutes on that, we have looked at obviously Train 1 ramp up, we've looked at the broader market, we've looked at the CAPEX and OPEX and that sort of investment decision what that would take, and it just didn't make sense. And so TNC and IGO were very aligned on that decision to cease all of the activities around train two. And I guess we've announced that last week. The impairment will include that, of course, but also test for the forward performance on train one as well. The other, I guess, Key takeaway from Kornana is the flow through to our financials, EBITDA loss there resulting from NRV adjustments on our spodumene and lithium hydroxide inventories. As we've noticed, inventories have built, sales have been slower than expectation due to weaker market conditions and a number of other factors. Ultimately, that's leaving us in a difficult position in terms of that flow through to our financials. On to Nova, the production performance there was certainly lower than our expectation. As I said, as we mine and get further into the extremities of the ore body, we're certainly finding that more challenging. I think we'd signpost that in the last couple of quarters and we're really feeling that. Equally, if I talk to just the last couple of weeks, for example, in January, we're seeing some layering in parts of the ore body here that then has resulted in a real uptick in grade as well. And so the team's doing quite a lot of work to try and get a better understanding of the ore body in these areas, more drilling, looking at our mining technique, managing for overbreak, underbreak, and ultimately trying to deliver a much more reliable or predictable production performance that we can depend on. Again, as I've signposted in a couple of quarterlies now, we work through this we wanted to get to a place we have a confident view to the end of mine life that we can provide that production guidance all the way through so for the rest of this financial year and all of next financial year we'd be able to give you that view i don't think that's too far off now and that for me is important to just give the market clarity on what to expect from nova as it as it moves towards end of life the um uh i think the rest of the the focus at nova is just just continue to um to deliver safe and stable production so um we'll leave it leave it there on um on the financials look the results don't obviously tell a wonderful story and as you can imagine with the impairment signposted for the half that's going to have a heavy impact as well as flow through the the factors driving the majority of this of course are coming out of TLEA and the um impact from the NRV adjustments, also some FX losses on US denominated debt at green bushes are all factors flowing into that. That's not necessarily a cash impact, but does flow into our accounts and is reflected in the EBITDA that you see there. The performance in NOVA, of course, is lower than expected, and that's also had an impact I think the other key takeaway in our financials is that we've also indicated we don't expect to be paid any dividend from TLEA in the second half of this financial year. And so, you know, in terms of our cash position, that's also going to be taken into account. We finished the quarter with $247 million cash. So broadly in line, we're managing our corporate costs. closely exploration is trending down as we indicated and all of those factors are being managed proactively through this period just to wrap up then in summary green bushes i think some some real highlights there steady improvement two strong quarters and good control of the costs continuing to deliver fantastic margins and lots of optimization work going on productivity and i guess getting a deeper understanding of how we can really bring the best out of that mine cgp3 is progressing well and we expect that on later this year um quinana spent a bit of time on i'm sure there'll be lots of questions and um you know there's a lot of work ongoing there and then back to um to our core of a nickel business nova um the team are working hard to get the best out of the residual body there i didn't talk about Cosmos and Forrestania in depth. I think it's important to note that Forrestania's obviously finished mining and is closing out sales of their product and just wrap up in the last quarter. They're well and truly into care and maintenance now and we're working through what the next steps are for that site. Our exploration team has still been active there and pursuing a number of targets in that area as they are at Cosmos as well. We've also been working through our drilling and testing around the Cosmos project so that we can make some final decisions there. I won't go into too much depth there. It's still too early to say, but I guess the piece I can share at this point is we're not at a point of flooding that mine or moving on from it. So we've still got some question marks there that we need to work through and we'll provide an update on that, I'd expect, in the next quarter. So that's, I guess, covered the headlines, key messages, and leaves us with some good time for Q&A.

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