IGO Limited

Thanks, Darcy. Hi, everyone. Good morning. Thanks for joining the call. As usual, Kath Berzanich is with me, our CFO. But I'd also like to introduce, I know you can't see her, she's in the room though, Sian Beccarelli, Head of Corporate Affairs and IR. As you know, Richard Glass is taking... a really exciting trip around Australia with his family for the next 12 months or so. And so he's probably sitting in Coral Bay, hopefully not listening to this call. But anyway, we'll meet him. But Sian stepped in and come up to speak very quickly. So you'll get to meet her in due course. We'll cover a few highlights and then get into questions. I mean, look, overall, I think it was a solid quarter. Some big change with expiration, which I'll come to. But, you know, the foundations of the business and some rhythm, which is good. First on safety, the actual lagging results are still sort of flat and similar. There was a period of 60 days that we went without any recordable injury through February to early April, which we're really pleased about. And there's been a lot of focus on this, as you know, from the team over the last 12 months. And we're starting to see some strong progress there. to taking control of my safety. It's getting fantastic feedback and pull from the team at site. That'll be rolled out right across IGO. And that, amongst a number of other areas of focus in safety, I think we're having a real impact. We had a new head of health, safety, environment, heritage and land access join us in February. Strong, very strong pedigree in this space. And he's having a huge impact, which is great to see. I guess more broadly in terms of results, look, Greenbush has had a really solid quarter as well. Yes, production was lower than the prior quarter. That's just, you know, great and mind-playing effectively. There's nothing to see there in terms of actual underlying performance. In fact, and I'll talk more to it, the performance continues to improve. Rob's settled in and he's making tremendous progress there. As you see and you know already, this is a very, very strong... for the FY25 year to date. There's a range of operational improvements that are continuing, recoveries I'll mention, but that's all happening. And then I guess that broader strategic asset review and life and mine optimisation work that's underway. You know, everyone's asked about dividends and there was a dividend paid from Winfield into the joint venture partners, $110 million in the quarter. I was surprised. This business generates a lot of cash. It converts cash. And that's going to flow out, as we said. So even at the bottom of the cycle, even at the most difficult period for lithium businesses out there, this is a business that's still generating dividends. Kwinana, look, it was a tough quarter. The team was challenged with more equipment issues and a shutdown related to some of that work. The highlight, I guess, was the announcement of the train two decision. Of course, I think one of you on the call actually said, you know, when bad news is good news, and it was mixed. You know, of course, growth and, of course, development and more downstream processing of minerals and metals in Australia is attractive. Clearly, we have that view, but it's got to be economic at about at the half. Inova, look, as we know, had a very tough start to the financial year. They had a good quarter and the teams found their feet. We'll come back to more about forward-looking guidance on production, but overall, we're starting to get a better handle on the ore body and the way it behaves in its extremities, how we deal with the lower recoveries when we're in high areas of MGO. And generally speaking, more stable performance there, which is very good to see. And the team's working hard to continue to improve that. And on the financials, look, it's nice not having to share impairments and other challenges. So, you know, simple quarter generated some cash and getting back to basics. So overall, sound quarter and It's good to see some rhythm from the key operations in our portfolio. I'll just dive into Greenbushes in a bit more depth. I can't stress enough what an impressive mine this is. As an ore body, it's very privileged. We know that's world-class. The ability to generate margin in this commodity through the cycle and the cash conversion, I think, puts it in a very unique space. 68% margin through this period is extraordinary and shows you just how capable this asset is. And that's all knowing that there's still a lot of upside. And Rob is building out his team and building that momentum with the organisation. He's making change at a steady and very sensible and very thoughtful pace. There is a lot of challenges to manage as you make those changes. And some of you may have picked up the engagement with the local residents in the community around dust that was played out in some of the media in the last couple of months. That's the kind of thing that Rob's front facing. And we know that he's taking this very seriously. He's thinking about the non-technical risks. He's thinking about the impacts in a very practical way. He lives down in the region and with his team. that in a way that the impacts are managed very thoughtfully and the engagement with the communities and other stakeholders is done, leaving them feeling like this is a significant contributor, which I believe it is to the region and to the local communities, but that their voice is really heard and understood and the team's working through those challenges. So all credit to Rob and the Greenbush's or Taliesin team there and how they're doing that work. Mill recoveries, look, I think I've mentioned before that this obviously is a privileged ore body and that offers up opportunity, but equally the team's doing a great job at continuing to drive recoveries up and CGP1 is well above 80%. It's very impressive what the team's doing there and they're, of course, applying those learnings back into CGP2 and naturally they'll want to carry that into CGP3 when it comes online. But, I mean, this is the benchmark in the world for recoveries. some really strong focus on that, and that includes plant throughput and just asset stability as well, which we all know is a key driver of recoveries and ultimate performance. I mentioned the dividend, which I think is good to see, $110 million on a 100% basis. The broader optimisation work is underway, and I've got a bit more on that in a minute. And then capital expenditure, probably a key point to note is we've revised down our guidance For FY25, we previously said $850 to $950. We brought that back in at $700 to $800. And that's really a focus of, again, the work that Rob's done as he got in and worked through this with his team and the board's influence, of course. Strong focus on capital, being really careful to prioritise capital, spending money on the right things, making sure we get more value for every dollar that is spent. and being very frugal ultimately. We don't want to see the team hurt asset health or not invest in sustaining capital. Of course, that's critical and we want to continue to see this business perform at its very best. But equally, we need to be very thoughtful with how we commit more capital in that space. So great to see that progress. I'm very, very positive about that shift down and I think you'll see that continued pressure and focus maintained. Obviously, it's what you'd expect at the bottom of the cycle. What we need to do is carry it right through the cycle when the market turns and make sure that discipline stays in place. And CGB3, probably last key point on this slide, is it's tracking well on budget as we've signposted first production expected in the back end of this year. So moving on. Put in a quick slide. There's nothing new on this for anyone who's been through these kind of processes. It's not necessarily entirely unique, but it is significant for greenbushes. And Rob's progressing this. It'll take some time to work through all of the elements. But this slide, and I won't go through every dot point, but sets out the first part, which is looking largely top down at what the upside is. What is the full potential? What's the upside? What is it that we need to... prioritise that, and then breaking that down into the bottom up, which is when we say phase two, it's running in parallel. It's not to say that it's all staggered, but getting back into the block model and building up that picture of the mine from the ground up, understanding your characterisation, understanding the assets, understanding the product demand, and understanding how we get the very best value out of this business for the long term. And I think the last blue box is absolutely critical, and and the impacts, a lot of the non-process infrastructure and other non-technical aspects are fundamental. And how we think about growth and the requirements around that non-process infrastructure is absolutely fundamental to get right. So having that done strategically in the long term and being able to look out decades, not just a short period, is really important for us to get the best value from this asset. And so what does all that deliver? And look, This slide's nothing new either. I mean, you can all put this together from the information you've got. But it just visualizes the leverage on this asset. And so, yes, we're generating great amounts of cash at this point in the cycle. But as that lithium price, spodumene price moves, the leverage is extraordinary. And this is a picture of, as is, before CTP3 and before the improvements. And that's really the message I want to leave you with is, contemplate, we will do our best to unpack that as we go on. We work through that with the joint venture partners. You know, what is that potential and what is it that we're pursuing? How can the asset deliver more productivity, more throughput, lower cost? How can we optimise that amazing ore body? How can we grow the resource reserve in a way that drives material value for the business? And that work's underway and I guess the leverage loss curve is very significant. Kwinana, look, a couple of key points. I mean, covered LHB2 or Train 2. I won't go into that further at this point. There may be some questions. The quarter was challenged with some equipment failure and a shutdown. Also dealing with some of the residual work from the October shutdown. Conversion costs trended down and naturally are tied obviously to volumes as well, but there's still some work to do there. And then capital guidance is probably the major takeaway here. We've revised that down for FY25. I think that's important to note that we've got obviously a strong focus on CapEx here. It's not a case of just being an open book by any stretch. to be very, and are very thoughtful about where we allocate cash in this business. And both joint venture partners are equally attentive to this detail, making sure the team are very careful, very well planned, and execute each of their projects with a great degree of care to make sure we get the value for money that we expect. And, you know, you can obviously see in the guidance that that's a fairly material step down from what was anticipated. On to Nova, look, it's nice to see the team, you know, find their feet and have a good quarter. They had some good recoveries. They got some better grade. They got some good rhythm. The team were working really well with Barminco. And, you know, all of that with much better safety as well. It made me smile. I looked back on the quarter and it was just nice to see the team finding their rhythm and delivering. And that's continued into April, which is good. So, you know, I think... got a high ambition right through the organisation to do that, to show the quality of mining capability that IGO has. They did have a very tough first half. And so this was great to see, I think, or credit and give credit and recognition of the very hard work they've done through this financial year in a very difficult period with your body. It hasn't been kind to us. And so in a sense, it's good that we're getting our hands around it. The big takeaway I think on this page is we've put in there some guidance out to the end of life for the asset, for the mine, 15,000 to 18,000 nickel tons through to the end of life, which is pretty much the end of next year. So we've been through the long life of mine now many different ways. We've looked at it through different angles. There is still work going on in our budget cycle at the moment to fine-tune that, but we don't see any scenario where that changes. We think it's got good economics through the cycle, unless there's some major shock to the nickel market, which we can't see. So we've got some real clarity and certainty and confidence around how it can perform, and we just and manage that in that ramp down as we go. So overall, a nice quarter for Nova and well done to the team. On expiration, look, you know, it's been a tough year and IGO has got a long pedigree and a long history of expiration. That's where the company started. It has deep, deep capability in the team and some of the most capable individuals scientist geos that you could find. And we had a strategy which focused on these belt scale tenements, focused on very broad standing across Australia. And we've tested that, as you know, over the last 12 months. We've looked at where we stand, how we want to proceed, what we think will drive economic outcomes. And we've made a major change to the operating model, to the structure of the team, to the size of the team. And we've rationalised that portfolio of tenements heavily or in the process of doing that. That's been a very challenging process to go through. I mean, the team has done exactly what they're asked to do and done it extremely well. They were responding and delivering against the strategy of the business and we've changed that. And that's created impact for individuals, which is why I haven't wanted to talk about it in depth up until this point. I think it's It's just not ideal or respectful to do that until we've been through the work, but that's now complete. So March, well, this quarter was a tough period for the team. Very sad to see very long-term team members leave who've contributed a huge amount to the business, and I want to thank all of them who have been part of the team. Those that stay equally feel that challenge probably more than most, and it's still a difficult time as we get through that. into this personally. We've also had a change for the head of exploration. John Kilrow has been appointed. He's got a very long pedigree in this space and worked right across Australasia and beyond. a very, very capable individual to lead the team. Brett's been personally involved and I think, look, it'll take us a bit of time to find our rhythm again, but we've got conviction, we've got a focus, we've got a very good plan, we've looked at this really hard and we've also, as part of this, got some guidance for you going forward on what we think our expenditure will be in this space and we've indicated, you know, next financial year and onwards effectively is in that sort of you know, good guidance ranges of 30 to 40 million. We've put that out there to sort of say, look, this is where we think the right sort of investment fits based on our understanding of the tenements that we hold, where we think we can make a difference and what's appropriate for the scale of our business. So that's... We're now in a place to look forward with a lot of confidence for exploration. On the financial results, not a lot to cover there. I mean, obviously last quarter was heavily overweighted by the impairments on train two and train one. This is a cleaner quarter where you can kind of see the underlying numbers and cash starting to flow through. I note that some of that's tax return, which is, a function of cash timing from last year, but ultimately, you know, through the cycle, we are generating cash and covering our corporate expiration and other costs. You'll be aware, of course, that we're still carrying real cost for the care and maintenance activities at Forestania and Cosmos. So all of that taken in, we're still in a very strong position and our balance sheet continues to stand well behind us as we look forward and do a lot of really exciting opportunities with Greenbushes, Nova and beyond. So, look, just to wrap up, I mean, I think I was reflecting, you know, this is sort of effectively 12 months of full cycle since I did this, you know, April 2024. That's my first full quarterly and it's been a tough 12 months. There's been a lot of change. There's been a lot of hard decisions that we've had to take as and you work through so much so quickly. And that definitely leaves people feeling challenged and uncertain and anxious and knowing what's the future of the business. But I think what we're starting to see now is a much cleaner view of what is IGO and the capability of IGO and the potential with Greenbushes. We have a fantastic leadership team and fantastic bushes with huge upside and Nova in a stable place to deliver cash right through the end of next year and a reset exploration organisation to go and pursue and help us find some exciting growth. So I'll leave it there and open up for some Q&A.

Thank you. If you wish 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 wish to ask a question via the webcast, please type your question into the ask a question box. Your first question comes from Hugo Nicolacci from Goldman Sachs. Please go ahead.

Morning, Ivan and team. Thanks for the update this morning and the extra detail in the release and particularly just around that Winfield dividend to the partners. Great. First question just on the CapEx reductions at Greenbushes and Kwinana. Now that you've completed those initial spending reviews, can you just elaborate on where those CapEx reductions have come from? at Greenbushes and how we should think about that, whether that's more a deferral or reduced spend. And then at Kwinana as well, what you think the ongoing spend at Train 1 now looks like beyond FY25.