Syrah Resources Limited

Thank you for standing by and welcome to the Sura Resources Q2 quarterly conference 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, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Sean Verner, Managing Director and CEO. Please go ahead.

Thank you. Good morning and thanks to everyone for dialling in today. With me on the call is Stephen Wells, our Chief Financial Officer, and Viren Heera, General Manager of Business Development and Investor Relations. Today, CSIRO released its June 2022 quarterly results covering operations, market conditions, the Vidalia initial expansion projects, and the outlook for natural graphite active anode material and their induced markets. We'll use the slide deck we released today for this discussion. SARA is advancing towards its objective of becoming a large-scale vertically integrated natural graphite anode material supplier. A favourable upstream market setting for natural graphite is translating to high demand for BALAMA products. Market conditions in the upstream natural graphite market have remained positive and are the strongest that they've been since Palama's commencement in 2017. This is underpinned by very good momentum in battery-driven demand growth and drawn inventory positions, strong import demand and high and stable prices for natural graphite. And this is despite Chinese natural graphite returning to almost full production in June. High growth rates in the electric vehicle market continue to be reported with EV sales at over 2.2 million units in Q2, up almost 51% on the high base in Q2 last year. Record Chinese EV sales of about half a million units in June and strong demand growth across other major regions. Momentum in EV sales continues globally despite recessionary fears and inflation. total Chinese active anode material production increased to over 100,000 tonnes per month and achieved new monthly sales records in the quarter. The global and regional battery manufacturing capacity pipeline and resulting active anode material growth requirements are significant and announcements for additional battery manufacturing facilities by incumbents and new entrants in all regions provide a great setting of Ardalia's initial and subsequent planned expansions, as well as BALAMA and strategic position in the battery supply chain. Governments, industry, participants and markets recognise the key role of critical minerals such as graphite in facilitating transport, electrification and energy storage development, toward the objective of reducing global carbon emissions. The importance of graphite and benefits of securing resilience and localised supply chains for active anode material more aligned with battery production capacity are now broadly recognised. Positive ESG differentiation also continues to increase in importance as greater understanding and visibility by EV manufacturers and battery materials consumers highlight challenges in parts of the existing supply chain. We have high conviction in the importance of the Bulama asset and our vertically integrated active anode material facility at Bedalia to the future of this transition. Bulama is the only natural graphite operation outside China with a sunk capital base capable of supplying significant volumes of natural graphite into the battery anode supply chain. The actions being taken by customers, investors and governments and commercial arrangements being entered into with Syrah validate this view. We are finally observing some initial improvements in global shipping market conditions, which will ultimately flow through to Syrah's East African export market. In executing significant breakbox shipping volumes from Pemba, we've mitigated the near-term constraints and increased our sales. We're very optimistic about the LLAMA's future volumes. Slide 4 reiterates our fundamental ESG commitments and performance focus and every quarter that passes highlights the criticality of this effort. Since the company's ESG commencement, ESG excellence has been a key focus and we are beginning to see the very real impact of downstream customer requirements and supply chain auditing bring differentiation between incumbent production projects and ourselves into sharp relief. In early Q2 2022, CSIRO announced a final investment decision to construct a solar and battery system at Gullarmine. This system is expected to yield a material reduction in carbon emissions and cost benefits by replacing around one third of diesel power generation used for Gullarmine's production. As we'll discuss in later slides, the cost advantages of this decision and higher fuel prices will be even more important if they're sustained. A critical panel review of the MnDIRO independent lifecycle assessment of CSIRO's integrated operations will be completed in Q3 2022. Upon completion of the critical panel review, CSIRO will comment further on comparative benchmarking of global warming potential for representative natural graphite and artificial graphite active anode material supply routes in China, which currently account for most of global production and will be able to demonstrate the differentiated sustainability credentials of SARA's natural graphite and anode material products. I will take this opportunity to emphasise that care should be taken in comparing LCAs between companies and to ensure that such comparisons are made on a like-for-like basis, including operating entities versus aspirational projects, and from a products and boundary perspective. We follow this area very closely, and it's clear that there is still not a universally accepted approach to inclusion of various elements in a particular supply chain, which can provide a distorted view of emissions results. Enviro's independent lifecycle analysis of SIRA and the critical panel review provide a best practice measure of the environmental impacts of the full value chain, which is based on a complete and well-defined inventory of our vertically integrated position. In operating ESG outcomes for the quarter, our health, safety, and environment performance at BALAMA remains outstanding. TRIFA at BALAMA was 0.8 at quarter end, and the BALAMA TRIFA has remained below one since late 2018. Our trooper at Bardalia was 17.1 at quarter end due to a lost time injury sustained to a contractor on our expansion project, the first injury at Bardalia since June 2020. We're very committed to absolute focus on hazard management and visible leadership to ensure the health and safety of the employee and contractor workforce at Bardalia. We'll now move to the highlights for the quarter, and I'll hand over to Steve here to make some comments on the corporate position at the bottom of the slide bar. Torrey also provides some market context.

Thank you, Sean, and good morning, everyone. On the corporate front, SARA finished the quarter with a cash balance of $168 million compared to $205 million at the end of Q1 2022. Our cash position fully funds remaining capital costs for the value initial expansion the start of production with significant capital invested during the project through the quarter. We also have sufficient liquidity to fund working capital and capital costs across our group. Total cash outflows for SARA were $37 million during the quarter, compared to $24 million last quarter, with the value cash outflows across operations, expansion and technology development of approximately $15 million. The remainder relates to VALAMA, which includes an $8 million one-off outflow to provide cash collateral for our standard environmental bond requirements, $2.5 million in capital costs, including the TSF, working capital movements related to shipping arrangements, as well as $2 million in corporate costs. In terms of VALAMA, we were able to produce close to our minimum production target of 15,000 tonnes per month, or 44,000 tonnes for the quarter. With the two additional break bolt vessels during the quarter, the llama sales match production of 44,000 tonnes and are materially higher than the first quarter. However, we do want to continue to grow sales volumes and production, which are only constrained by container shipping at this point in time. And we will be executing further break bolt shipments to continue to expand sales volumes, including one shipment that has already sailed from Pemba this quarter. Cash generation for the quarter was mostly impacted by shipping costs. While C1 costs were higher, pricing was also materially higher and our C1 margin improved on the first quarter. However, shipping costs were three to four times the normal levels, resulting in an operating loss after C1 and C2. Over the short to medium term, we expect shipping costs to moderate with a normalisation in the shipping market, while current price support for natural graphite based on market factors is strong. We do note, however, there is material uncertainty in the duration and extent of the impact of current China lockdowns and the impact on market conditions. SARA is progressing debt funding processes with the US Department of Energy and VFC on funding requirements for both the VALIA and the LAMA respectively. We've seen significant benefits to the company from these funding processes and in April SARA finalised a non-binding term sheet and was offered a conditional commitment for a loan from the DOE to support financing of Vivalia's initial expansion project. SARA and DOE are making very good progress on completing negotiations for the loan and are targeting signing of binding loan agreements in the third quarter. First advance from the DOE loan is targeted in the December 2022 quarter to align with the capital spending program for the Vivalia initial expansion project. If finalized, SARA's loan would be the first from the ACVM loan program since 2011 and the first ever from this program to a materials processing facility, highlighting once again the value of strategic position in the USA and providing strong validation of the project. Moving to slide six and current marketing conditions, as Sean noted, the end market setting in 2022 year to date has been outstanding with strong momentum in EV production and sales globally. And with broad-based electrification of model ranges planned by major automakers this decade, the trend is likely to continue. To underpin this substantial mobility transition, further large commitments are being made to develop EV and battery manufacturing capacity across the globe, including in North America. Positive momentum continued in our key leading indicator, EV sales, in the second quarter, despite the global economic and COVID headwinds. Global EV sales grew 51% in the quarter compared to the second quarter of 2021 for approximately 2.2 million units with record sales in China in June and sustained growth in key European and US markets. Year-to-date EV sales growth has been from a high rate set in 2021 and many expect further significant increases in EV sales across all major geographies through the remainder of this year and beyond. Supported by shifting consumer attitudes and more EV models driving adoption, the build-out of charging infrastructure networks, and supportive government policy. EV sales and battery demand growth are driving demand for anode material, as shown by total Chinese AAM production increasing to above 100,000 tonnes per month and achieving another monthly production record during the quarter. The trend in this area has been very strong over the past 18 months, and our broad interactions with spherical graphite processes in China and increasing flake imports demonstrates robust forward demand. The strong market setting for natural graphite has been evident even with natural graphite production in China returning to normalised output levels and there remains risks around Chinese production maintaining current output levels due to environmental issues, remedial actions, recertification efforts and COVID-19 related interruptions. Syrah's forward sales orders continues to be substantial at 90,000 tonnes of natural graphite around the same levels at the end of the first quarter. This level was maintained despite higher sales of 44,000 tonnes during the quarter and the passing on of freight costs on container shipments, which again highlights consumers' strong demand requirements and concern about future Chinese natural graphite production availability. Turning to slide seven and eight, these provide our customer an updated picture of the global and regional battery manufacturing capacity pipeline, forecasts and announcements. as well as the resultant graphite battery anode material forecast requirements. The growth ahead for the industry continues to strengthen, allowing a strong backdrop for the company to increase production capacity utilisation of the llama and a great setting for the value of various stages of expansion and a strong foundation for a European AAM production base. I'll now hand you back to Sean.

Thanks Steve. Slide 9 outlines our long-term vision and pathway to growing Syrah's downstream business to become a leading supplier of anode products globally, capitalising on the benefits of vertical integration with our world-class Balama graphite resource and operation. To succeed in this strategy, provision of production capacity in key markets is needed to underpin resilient and localised supply chains and customers. As part of the company's vision, SARA is considering a potential expansion of its downstream business into Europe. By 2026, European based lithium ion battery manufacturing capacity is forecast to approach 500 gigawatt hours per annum, which is estimated to require more than 375,000 tonnes per annum of anode material. Whilst it's evident that substantial investment is underway and planned in expanding the lithium ion battery manufacturing capacity across Europe, there's clearly not been commensurate planning, investment or progress in developing a proportionately scaled and localised natural graphite anode material capacity for that market. SARA's broad engagement with the customer base has also highlighted concerns with its input material production capacity deficit and the dependency on imported anode material from Asia. Given these market fundamentals, SARA is exploring the option to develop a large-scale anode material production facility in Europe and has commenced a process to assess the merits of developing a strategic partnership to complement SARA's capabilities and accelerate entry into the European supply chain. It's envisaged that a SARA production facility in Europe would replicate the technology, process and equipment used for the Vardalia Anode Material Facility and of course be supplied with natural graphite from BALAMA. During the quarter, SARA also entered into a non-binding memorandum of understanding with Mitsubishi Chemical Company, an established and high quality producer of anode materials. The MOU is to collaborate on the development of high performance, low cost and environmentally beneficial anode material products using BALAMA's natural graphite and MCC's processing technology. SARA and MCC will also evaluate the potential for joint development of localised production facilities for these active anode material products in both the US and Europe, forming a part of SARA's assessment of potential partnership options for European expansion. Moving now to slides 10 through to 14 and an update on the LLAMA's production, sales and logistics performance in the second quarter. The key takeaways from BALAMA's operational performance during the quarter are that production was sustained around our minimum target rate of 15,000 tonnes per month over the quarter. Operational performance was excellent with consistent product quality, stable grade and higher recoveries. C1 costs, FOB and CARLA were $543 a tonne at an approximately 15,000 tonnes per month production rate impacted by one-off maintenance input price inflation including diesel and higher logistics costs. While there are clearly higher input costs including diesel prices which may remain elevated for a period, there are also a number of one-off items in the quarter and we note an average C1 cost across the first half of $503 per tonne. The execution of Pemba brake bulk shipments to supplement NACALA container exports enabled the 15,000 tonnes per month production at the Llama this quarter. However, quarterly production remained constrained by maximum inventory positions at the Llama, Makala and Pemba and ongoing disruption in the global container shipping market. In short, we could have produced and sold significantly more products without the container shipping constraints. 44,000 tonnes of sales were shipped during the quarter and all 30,000 tonnes of finished product inventory at the end of the quarter was contracted to customers And the Ford sales book remains very strong. Product quality was consistent with previous quarters with stable grade above 95% carbon. Plant recovery of 79% with an improvement on Q1 and a continuation of a steady improvement towards our 90% medium term target. With the commissioning and optimisation of the cyclone system in the secondary milling circuit, the company is confident that recovery can be sustained above 80% as volumes increase in conjunction with ongoing recovery improvement plans. As I mentioned, there have been cost and logistics pressures across the sector given the strong inflationary environment, including shipping costs for inputs from outside Nosenberg. While increases in the prices of bags and pallets, grinding media and state-priced diesel may potentially be sustained, depending on global economic conditions, the one-off maintenance costs will not be. We're currently evaluating possible operational cost savings to offset these inflationary pressures. Note that C1 costs should trend lower with recovery uplifts and other improvement initiatives, including the solar project, but most importantly with increased production levels as shipping constraints reduce and we benefit from our fixed cost base. We're concurrently reviewing the BALAMA C1 cash cost guidance at a 15,000 tonne per month production rate and we'll provide further information on that in due course. SARA's final investment decision on the hybrid solar and battery system of BALAMA which will be delivered under a build, own, operate and transfer arrangement is expected to reduce BALAMA carbon emissions and operating costs and generate attractive returns for the company. We've also renewed our BALAMA mining services contract following a competitive tender process with improvements in mining productivity and costs. As we communicated in June, logistics and personnel movements to and from BALAMA were suspended for around seven days as a precautionary measure due to insurgent activity in the Cabo Delgado province. SARA's operations, employees and contractors were not impacted with the issues occurring approximately 200 kilometres from the Lama mine site off the main N1 road. Logistics and personnel movements recommenced after a brief assessment period and have continued without interruption since then, with access to both Pemba and Makala maintained. The company's present security procedures at the Lama are deemed appropriate. Moving on to slide 13, which contains some further detail on the graphite sales and marketing side. Significant improvement in sales volumes in Q2 over Q1 incorporated two-spot break-bulk shipments from Pemba. Again, sales would have been higher if not for the container shipping market disruption, given very strong underlying demand. Break-bulk shipments from Pemba will continue to supplement container shipments and enable higher volumes. have already dispatched our first break log shipment from the end of this quarter. We've seen very strong demand and stable forward contracting with customers. Our forward sales book remained at nearly 90,000 tonnes even with increased sales in Q2 and with higher Chinese natural graphite domestic production, demonstrating the clear market growth. Weighted average sales price increased to $662 a tonne CIF during the quarter, reflecting these strong market conditions, with Fines graphite accounting for about 86% of product sales. Fines prices increased through the quarter with record downstream anode demand and have remained strong despite the higher Chinese domestic production and higher net graphite imports into China. Horse plate prices ex-China remain strong due to industrial demand and ongoing supply disruptions, including from the Ukraine and China. The fines market is consistently exhibiting relatively stronger price growth momentum than the forced market, reflecting the different underlying market drivers for each segment and the importance of battery demand to natural graphite market growth. Major natural graphite miners in China continue to be hampered by environmental issues, remedial actions, recertification requirements, and a number of COVID-19-related logistics interruptions with inventory positions in China remaining low. Our Ford sales orders highlight customer concern regarding Chinese natural graphite production constraints and the perceived impacts of demand growth on the Ford market balance. Significant seed freight rate volatility and surcharges remain evident, caused by international logistics disruptions, fuel costs, COVID-19 restrictions and congestion, and global trade imbalance. Our Q2 average shipping unit cost was almost four times the long-term average, and whilst graphite pricing has improved materially, it is not offsetting the pace of increases in sea freight rates for the company. We're strongly of the view, however, that while sea freight rates will normalise, the structural demand increase for natural graphite will see pricing generate strong margins for our business, as the reductions in freight rates come through, which is already starting to happen. Moving on now to progress at Vidalia on slides 15 and 16. We're making very good progress with the Vidalia project in our strategy to become a vertically integrated natural graphite anode material supply alternative for the ex-Asia market. SIRA is a first mover in the integrated downstream nano market outside of China, and we have created a differentiated position at Vidalia that is not easily replicated. Following the announcement of a final investment decision on the initial expansion of Vidalia in February this year, detailed engineering has advanced towards completion and equipment fabrication and construction activities are well underway. The project is being overseen by a high-caliber team on the site of Baidu alongside the Wally Group. At the end of Q2, detailed engineering was around 76% complete with progress in sequencing, equipment manufacturing and construction activities allowing us to maintain schedule. Procurement has accelerated with contracts for a significant proportion of total capital costs and the critical path being awarded. And the final material contracts for mechanical and electrical and instrumentation work packages will be awarded in Q3. We're in the early stages of the onsite construction phase. The key activities undertaken during Q2 were piling, fencing and installation of infrastructure in readiness for the large influx of contractor workforce. And these activities are all proceeding on schedule. All overseas fabrication of major equipment is tracking well and delivery of this equipment is also on schedule. Construction activities in the September quarter will focus on completion of civil foundations, mechanical, structural steel and piping manufacturing and preparing for delivery and installation of major equipment. Construction of the 11.25 thousand tonne anode material facility is expected to be complete in the June 2023 quarter and following commissioning start of production is targeted in September 2023 quarter with an 18 month ramp up to the full anode material production rate. As far as offtake agreement to supply anode materials to Tesla from the Vardalia facility is core to this initial expansion. We're strongly advancing further commercial and technical engagement with target customers to supply anode material from Vidalia under additional long-term contracts. Qualification and iterative testing programs are progressing well. Our commercial interactions demonstrate strong interest for uncommitted volumes from the initial facility and for volumes from planned further expansion, and we expect to announce commercial developments with another Tier 1 customer in Q3. Our target customers are incumbent electric vehicle and battery cell manufacturers and new developments primarily in the US and in Europe. Market growth and segmentation along localisation and ESG lines in conjunction with our operational progress is materially benefiting SARA in commercial engagement. Our objective is to achieve further commercial agreements before the start of production in Q3 2023. SARA has significant future opportunity with its combined position at Bedalia and the globally significant graphite resource and operation at Balaama. The Tesla option for additional volume from further expansion, broader customer interest and market evolution continue to highlight the requirement for significant localised supply of anode material in the US and in other ex-Asian markets. SARA has completed trade-off studies and finalised the basis of design for the DFS and further expansion of the daily production capacity to at least 45,000 tonnes of NO material, inclusive of the initial 11.25,000 tonne facility. And the DFS is planned to be complete by the end of 2022, enabling SARA board assessment subject to customer and financing commitments. Scaling SARA's downstream business is underpinned by BALAMA and the resource. The opportunity to consume a significant amount of current design capacity internally over time and to expand BALAMA to supply third-party customers further are important factors in the overall upstream supply-demand balance. Even at an expanded 45,000 tonne facility at Bedalia, only approximately 25% of BALAMA's production capacity would be utilised internally. So to conclude on slide 2021, we remain very positive about the period ahead. EV sales growth, a constructive demand environment for anode material and Chinese supply disruption are driving strong demand and pricing for Belama products. Increased shipping optionality and freight cost reduction, release of inventory constraints and strong demand should facilitate increasing Belama production beyond 15,000 tonnes per month. and enable higher sales volumes. Construction of Vidalia's initial expansion is progressing within schedule and budget, with a pathway to 45,000 tonnes of Vidalia being assessed. And the DOE and DFC loan processes are advancing well, highlighting the strategic importance of SARE's integrated operations to EV and battery supply chains and governance. potentially freeing up liquidity to invest in further growth opportunities across CSIRO's business. The current market and CSIRO's progress demonstrate the unique position we occupy with the largest global integrated natural graphite operation of Balana and the most advanced option for a vertically integrated supply of natural graphite anode material outside Asian markets. We look forward to keeping everyone up to date with the company's progress and with that we'll move to Q&A.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Mark Fachera with Foster Stockbroking. Please go ahead.

Hi, guys. Good quarter. Just a couple of questions. Firstly, the MOU with Mitsubishi, you mentioned you're looking at examining facilities in Europe and the US. Just with regards to the US, is it possible that you're examining Mitsubishi coming into Vidalia either with the existing initial expansion of 11,000 or the proposed 45,000 tons, or is it for an additional facility beside Sedalia in the US?

Thanks Mark. We've been fairly clear that the 11.25 thousand tonne facility is fully funded and a construction process underway and contracting around it is obviously well progressed with the Tesla contract and further work that we're doing. We have said previously that as we look to an expansion to 45,000 tonnes and potentially beyond, that we would contemplate the potential for partnerships in that process. So this is the early stages of that cooperation and there's nothing at this stage that's concrete around potential structures, et cetera. It will depend on how the evolution of the product development continues and how commercial engagements with both customers and between Zara and especially chemical progresses over time.

Sure, okay. On the shipping side, you mentioned you're seeing some improvements, but it's obviously still a tight market in terms of getting containers Is it really, in terms of improving shipping for balama going forward, is it really a case of getting more break bulk shipments out through timber? And is that really sort of the immediate aim at this stage, where you can see improvements in shipping over the 45,000, 44,000 tonnes done in the June quarter?

Certainly break bulk shipping is critical to increasing volumes in the short term. We're starting to see some improvement in freight rates in the brake bulk market, which is very welcome, of course. It's also important, given that the brake bulk shipping is typically to single port, single customer, that we see improvement in the container side as well. I think where we are seeing improvement on that front at the moment is in the major trade So Asia Europe and Asia US seeing better schedule reliability and some decline in freight rates. That is yet to flow through significantly to the East African export markets, but it's a matter of time in our opinion. So in the very short term, we don't expect a significant improvement in container rates or availability, but we can supplement strongly with break off, but we expect through the remainder of the year we'll start to see some of the improvement come through in containers as well.

Okay. Thanks, John.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Glen Lawcock with Barangelli. Please go ahead.

Oh, Sean, good morning. I was wondering if you could just maybe talk a little bit more to the market. I mean, obviously, EV sales demand seems to be growing better than we expect. And then I think about synthetic cost pressure must be enormous for them, given what we're seeing with oil prices, et cetera, and all that. Why do you think the graphite price then hasn't responded like we've seen, say, for lithium, given it's going into the same end market? I mean, I'm trying to understand why the price hasn't really moved that much relative to what's happening. Is it just that much more capacity keeps coming on as prices move up? Just if you could elaborate a bit more, thanks.

Yeah, thanks, Ben. Well, I mean, the first comment I'd make is that the basket price has more than doubled from its lows. So that itself is welcome. As to why it hasn't gone 10x like lithium, I'll probably leave that to the lithium experts to comment on. I think what we are seeing is a very strong pull through from that anode material production going from a year and a half ago, two years ago being 20,000 tonnes a month to 30,000 tonnes a month and now being 100,000 tonnes a month. So I think what we see with the supply of both synthetic graphite and natural graphite into the final anode material market is that there is a longer inventory pipeline and I think that has taken some time to work through. There's no doubt within the last six to nine months, inventories have been very low in China and that started to see the significant rise in the fines prices and the concern around availability of material as we move ahead. So how high can those prices go? I mean, I think there's no doubt that a continuing set of constraints on Chinese domestic production, bearing in mind that there will be volatility because of seasonal factors, could see prices continue to increase because there is not a significant amount of additional production coming to market overall. There's no major near-term production projects that are going to deliver significant volume. It really leaves us in a position, of course, where OSIRA and its contribution to the market balance really is the incremental time in this market at the moment.

So do you have a sense, Sean, what you think it's costing now for synthetic? Can they make money at these prices still, at this basket price?

Well, the basket price for natural graphite doesn't have a direct relationship to synthetic. Obviously, the synthetic anode material price is driven by its input prices, power prices, et cetera. There's no doubt that both the natural graphite anode material price, which, if you go back 12 months or so, was in the mid $5,000 range spot. It's now probably $7,500 a tonne. synthetic graphite prices have had more than doubled during that period of time. So the cost pressure on synthetic and finished anode material has been higher because of power prices, because of input material prices. And that in part has driven the increasing preference for natural graphite anode material and the demand increase It's going through to the natural graphite market at the moment. So I think because of the overall demand for finished anode material, both synthetic and natural graphite anode material producers are making money. But end users are increasing their preference for natural graphite anode material to try and balance that cost input.

Okay, if I could slip in one quick one to finish on. When you talk about freight being three to four times normal levels, can you put some quantum around that, just what you're paying now and what you think the normal level would be? Thanks.

Yeah, I think we've said the long-term average for us has been around $50 a tonne. When we say three to four times, it's because on a shipment-by-shipment, destination-to-destination basis, we will see some variation. But in the quarter just passed, we were between $175 and $200 a tonne, with the mix of freight bulk and container destinations that we had. So it is heartening to see that more recent fix, vessels fixed have seen lower costs, lower freight costs. Hopefully that trend continues, but we certainly don't see that freight rates can stay at these levels forever. There is additional capacity coming on. Demand globally has been moderating and we've seen decreased pressure in some of the key trade lines.

Alright, thanks very much.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. We will now pause a short moment to allow questions to be registered. There are no further questions at this time and that does conclude our conference for today. Thank you for participating. You may now disconnect.