Igo Ltd

Thank you, Operator. Good morning, everyone. Thank you for joining our September quarterly call. As an introduction, my name is Matt Doonesy, Acting CEO of IGO. Joining me on the call today is our Executive Leadership Team, including Kath Posnich, who has recently joined the team as our CFO. Also on the call this morning is our non-executive chair, Mike Nostle. Mike will make the introduction comments. Mike, I hand it across to you.

Thanks, Matt, and welcome, everybody. As you're no doubt aware, it was with great sadness that we announced the sudden passing of our Managing Director and CEO, Peter Bradford, two weeks ago. On behalf of the Board and the broader IGO family, I wanted to start this call by extending our deepest sympathy to Peter's family and friends at this very difficult time. Peter's innovative and strong leadership over many years has transformed IGO into the company it is today. His passion for the mining sector, generosity, warmth and humility was truly inspiring, as was his strong belief that our industry has a critical role to play in the global transition to a clean energy future. Importantly, Peter always brought people along with him and developed strong relationships at all levels of the company through genuine care for others. For those of us who are fortunate to know and work with Peter, the news of his passing was devastating. He is dearly missed. While our immediate priority has been to provide all the support and care we can for his family and everyone at IGO, we've also moved quickly to ensure business continuity. On that front, we benefited from Peter's ability to build a strong team around him. Matt Ducey, who most of you know already, was appointed as acting CEO while the board conducts a formal search process for a permanent CEO. Matt's been pivotal to IGO's recent transformation and is committed to delivering on our strategy and purpose. He's well supported by the executive leadership team as evidenced by our recently appointed CFO, Kath Bozenich, who joins us here today. As well as the broader IGO leadership group and the board has every confidence that the team will continue to deliver for all stakeholders. While the last two weeks have been difficult, all of us have been buoyed by the huge number of people across the industry who have reached out to offer their condolences and support. Not surprising, given the high regard in which Peter was held, but greatly appreciated, and I thank all of you on behalf of the IGO family. I'll now hand the call back to Matt and the team for the quarterly results presentation.

Thanks, Mike. I would also like to pass on my condolences to Peter's family and friends, and also thank everyone who has reached out to the IGO family over the past two weeks. The support we have received has had enormous impact that Peter has had across the entire industry, both locally and globally. The IGR families have lost a dear friend, leader and mentor, drank difficulty for us as Peter passed away. I'd like to acknowledge the collective strength and resilience of the IGR team that showed you this time. This is a testament to our culture and our support for each other. We all miss him. I know Peter would have been immensely proud and we have determined to deliver on Peter's vision to make a difference. Moving to slide three. I'll start by commenting on safety and our focus on improving safety outcomes for our people. Recent safety performance has been disappointing, with our tripper moving higher since the start of the year. While the severity of injuries we experience in the business are generally minor, we acknowledge that our performance is not good enough. We need to minimise harm and create a safer workplace for our people. We are in the process of harmonising our safety systems and processes across the Forestania and COSBOS sites. In addition to our current safety programs at work, we are looking at complementing this with additional resources, infield supervision and workplace-focused safety risk workshops to ensure our people have the support they require. Moving to slide four. We are again proud to have delivered another excellent set of operating and financial results for the September quarter. This has included record sales revenue and EBITDA for the group, record quarterly spodumene production at Greenbushes, coupled with strong realised lithium prices, consistent delivery from our nickel operations at Nova and Forestania, announcement of our project revised development plan at Cosmos, We also are proud to publish our 2022 sustainability report in August. This is our eighth consecutive report. On governance, we have continued to evolve and renew the board with the appointments of Trace the Lord and Justin Osborne and his non-executive directors. It's great to have them as part of the team. I would also like to acknowledge the contribution of Peter Buck, who will retire from IGO's board at the upcoming Annual General Meeting. Thank you, Peter, for your contributions over the past eight years. Moving to slide five, where we'll summarise our key financial results for the quarter. As mentioned, the key driver during the quarter was a significant increase in earnings from the lithium business. IDO's share of net profit from TLEA, which we report as the EBITDA line, almost tripled quarter-on-quarter to $286 million. This result, combined with earnings from our nickel business, generated a record quarterly growth underlying EBITDA result of $398 million. Net profit after tax rose to $253 million for the quarter, while underlying free cash flow of $194 million was lower quarter on quarter. This has contributed primarily to our $59 million investment in the development of the COSMOS project. Strong cash generation by the business over the quarter enabled IDEO to make a partial repayment of $220 million of the amortising debt facility, leading to a closing net debt position of $396 million. Moving to slide six. The graph shows the reconciliation of net profit after tax for the quarter. The key drivers to the significant increase in net pack quarter-on-quarter were the increase in lithium bid machines, the absence of acquisition costs recorded in June quarter related to the Western Aries transaction, and an increase in mark-to-mark valuation of our investments. This was offset by low earnings from NOVA and high DNA and tax charges. Moving to slide 7, which shows the reconciliation of cash flow. Cash generation within the nickel business was strong, with Nova and Forrestania contributing $227 million in aggregate, offset by $59 million spent on development at Cosmos. The second quarterly dividend from TLEA of $106 million was also received. Other outclosed notes include $38 million payment of the FY22 final fully franked dividend of 5 cents and the repayment of $220 million of our net debt facility. Closing tax balance at the 30th of September was $284 million. Turning to slide 8, I'll talk about our lithium business. IGO's lithium assets are held by our joint venture interests in Chianti Lithium Energy Australia, referred to as TLEA. Moving to slide nine. It's pleasing to report the strong financial performance of TLEAs per quarter. As noted earlier, IGO's share of TLEA's net profit rose nearly threefold in the September quarter to $286 billion, while the $106 million received by way of a quarter's dividend was also significantly higher than the prior quarter. This strong financial performance is probably driven by improving production and higher squadron lean prices, which reset on 1 July 2022. generating strong margins and dividend flows from greenbushes. With Peter Bradford's passing resulting in vacancy on the TLEA board, we have today announced that IGA's non-executive chair, Mike Nozzle, has joined the TLEA board on an interim basis. I have also joined the Board of Winthrop Holdings, the joint venture company which owns Greenbushes, and remain active in the operating subcommittees which provide oversight to the operation and the numerous growth projects being executed by the Taliesin team. I would also like to extend my thanks to our partners, Tianqi, Albemarle and Taliesin, for the support over the last recent weeks. It's greatly appreciated. Moving to slide 10 and to a discussion on the quarterly performance at Greenbushes. Spodumene production at Greenbushes quarter was 361,000 tonnes. This is 7% higher quarter on quarter with increased plant throughput and improved recovery performance. Given the increased operational performance, the team commenced lowering feed grade. The cost of goods sold excluding royalties was $253 per tonne within buyers and consistent with the previous quarter. The significantly step-up in revenue and EBITDA was predominantly price-related with chemical grade pricing reset on 1 July 2022 to US$4,187 per tonne. As first foreshadowed last quarter, a realised price of US$3,729 per quarter was impacted by a delayed June shipment that was realised in July at the previous price of US$1,770 per tonne. The average price also incorporates technical grade pricing, which continues to lag chemical grade prices. For reference, technical grade production remains at approximately 10% of the chemical grade production. As discussed during our full year results call, the spodumene transfer pricing mechanism, which determines the price at which spodumene concentrate from green bushes is transferred to its shareholders, is currently being reviewed by the Green Bushes Board. While discussions have well progressed, no decision has yet been ratified by the Board. We expect to update the market on this shortly. Moving to slide 11. At Greenbush, the team is continuing to study and execute programs of work to maximise and optimise this world-class asset. During the quarter, excellent progress was made on the expansion of mining and processing operations. Early works are advancing well on the construction of CGP3, which will add an additional 5,000 tonnes per annum of processing capacity at Greenbushes. Construction is expected to be complete in early 2025, with commissioning to commit thereafter. The tendering process for the new mining contract for the expanded alterations is ongoing. On the right-hand side of the graph, we've displayed the growth profile at Greenbushes over the coming few years. Over the next five years, Greenbushes will expand processing capacity by 1 million tonnes per annum with the addition of CGP3 and CGP4, while mining volumes will expand full average to an average of about 9.5 million tonnes per annum over the estimated 21 years' life of mine. Turn to slide 12. At Kwinana, the team has continued to progress with commissioning and rectification on Train 1 during the quarter. Key activities include badging of the acid roast kiln and calciner, continued debottle nursing of the flow sheet, improved reliability and run times and increased battery grade conversions. The team remains focused on continued commissioning and ramp-up. During the quarter, Tianqi China has embedded a large team of technical and operating personnel from their operations in China as part of the ramp-up process. Trial production increased quarter on quarter to 195 tonnes, while the product qualification process with off-take customers continues. EBITDA of $21.2 million for the quarter relates primarily to the sales of lithium hydroxide to SKI, delivered by tolling arrangement that's in place with TLC, whereby TLC's conversion facilities in China have delivered product on behalf of TLEA. In parallel, progress continues on Train 2 to enable the TLEA Board to make the final investment decision on Train 2 over the coming quarters. This has included continuing engineering, design, tendering, EPC, contract negotiation and resourcing the owner's team, as well as some early works on site. Turning now to slide 13 and a review of our nickel business. Moving to slide 14. The September quarter has been the first full quarter IDO has owned the Cosmos and Forestania assets, following the completion of the Western Areas acquisition in late June. Our expanded portfolio provides IDO with significant opportunities to grow our nickel business organically, with our current key strategic items listed on the slide. First and foremost, our focus is on completing the integration of the forestry and cosmos assets into the IGA business. This is progressing to plan and I'd like to thank everyone who has worked on making this process happen. We have multiple opportunities to increase value through optimising and synergies. At COSMOS, our focus is on delivering a safe and sustainable project which maximises value. We have now mapped out a clear plan to deliver this project over the next 12 months. We are currently negotiating new offtake arrangements for 50% of the NOVA nickel concentrate and 100% of the Forrestalian concentrate volumes, which will now become available in the March quarter. This is a unique opportunity for IGO which delivers value both at operational and commercial level. We expect to provide an update on this in the December quarterly results. Our nickel downstream study is progressing with Wiley Metals. The aim is to reach a financial investment decision on this in mid-2024. We have a strong interest in partnerships as we look at linking our technologies in the production of nickel sulphate with PRECAM. And finally, we're working on various studies with the objective of expanding our nickel resources and reserves base. Silver Knight is the most progressed of these studies, while New Morning and Mount Good have recently commenced. Moving to slide 15. The NOVA team has delivered another strong quarter of operating and financial performance. Production of all metals was generally in line quarter on quarter, while costs were higher at $3.14 per pound. The increase in cash costs relates primarily to lower copper by-product pricing over the quarter, which has driven lower by-product credits. The revaluing copper price of $5.12 per pound compares to our assumed price when setting guidance of $5.65 per pound and accounts for 52 cents of the total variance quarter on quarter. Sales revenue and underlying EBITDA were lowered by 27% and 37% respectively, driven by lower realised nickel prices, consistent with the lower spot prices and absence of hedging gains we enjoyed during quarter. EBITDA margins and NOVA remained strong at 65%. Moving to slide 16. At Forestania, production of 3,189 tonnes of nickel was 11% higher than the prior quarter, with higher mill grades, greater availability and success of the SCAPS magnetic sorting program. Higher production drove cost cuts lower, offset by increased cash production costs related to mining contractor rates. Cash cost of $8.70 per pound compared to favourable with the prior quarter result of $9.24 per pound. Moving to slide 17. Our project development team has been busy on the over-the-quarter at COSMOS. I don't intend to speak in any detail, however, broadly, development activity is progressing well, with high levels of activities on the process plant, PACE plant, shaft and supporting infrastructure. In addition, a total of 1,427 metres of underground development was completed. Total construction and mine development capex was 59 million for the quarter. Moving to slide 18. The other key work stream has been delivering a revised project development strategy for the COSMOS project. This has included expansion of the processing plant from 750,000 tonnes per annum to 1.1 million tonnes per annum, upgrading and improvement of the shaft and infrastructure, committing to advance AM6 and AM5 with additional development, which will open up multiple mine areas and oil sources, generally right-sizing and strengthening site infrastructure. With the decart work behind the plan now complete, IGA expects to progress plant and first concentrate to be completed during the first quarter of FY24. The shaft, headframe and underground material handling systems are expected to be completed around the end of CY23, with all hoisting from this point. Moving to slide 19. IGO has also updated the capital cost estimate to the revised project plan. Total project costs for 30th of June 2022 prior to IGO owner-ownerships were $302 million. The remaining cost to complete the project is estimated between $493 million and $523 million. This estimate includes all project development activities up until commercial production, plus the expected cost to complete the shaft and associated infrastructure after commercial declaration. Of this remaining cost to complete, IGO expects to spend between $400 million and $425 million during the current financial year. On the right-hand side of this slide, we've provided some context to the capital estimate, showing a bridge from the implied total project cost as detailed in the independent expert report published in April this year to the midpoint of the revised total estimate range of $810 million. The cost differential has been driven by three key drivers. 150 million relates to IGO's optimisation initiative, designed to deliver a more robust mining and processing operation. Items within this category include the cost to expand the processing plant, accelerated mining to bring forward development of AM5 and AM6 ore bodies. $140 million relates to timing. Effectively items previously classified as sustaining capital or operating expenditure which has now been brought forward into the project capital cost estimate. And $95 million related to rectification of emissions and escalation. These items are costs not included in the IER assessment of the project. These capture incomplete engineering, scope, work missions, along with capital escalation. On slide 20, we provide a more detailed project delivery schedule showing key deliveries over the coming quarters. As previously noted, process for plant and first concentrate production will be in first quarter FY24. First all hoist from the shaft in the following quarter, second quarter FY24. Moving to slide 21 and a high-level review of our exploration for the quarter. Moving to slide 22. In the near NOVA environment, the team has been very busy at Silverknight with drilling, identifying sulphide mineralisation at Silverknight sail outside the existing resource. More work is required here with further drilling underway in the current quarter, Silver Knight South, as well as Firehawk and Red Queen targets. The team has also been diamond drilling at the Premier and Orion targets during the quarter. The geology intersected at Premier was consistent with previous drilling and disseminated nickel, copper, sulphides observed. At Orion, drilling counted basic intrusions. However, they do not appear to be as prospective as previously intersected in the Orion intrusions. Moving to slide 23. At the Patterson project, the project team continues to work on generating quality datasets to help inform future work programs with several geochem and geophysical programs completed across various joint venture projects. The most interesting results in the quarter came from the account of Joint Venture, where diamond drilling intersected quartz carbonate veins with variable copper sulphide content at EB01 and ET01. Air core drilling was also completed across several targets on the Cyprian Joint Venture tenure. Moving to slide 24. Before I move to the summary of the call, I just wanted to highlight the recent release of our 2022 Sustainability Report, our eighth consecutive report detailing our performance in key areas of environment, people and culture, community, government and business integrity. We are proud of our achievements in these areas and the recognition we continue to receive for the quality and transparency of our reporting. At a project level, the second solar farm at Nova, which will expand our renewable generation of storage and further reduce our carbon emissions, is near completion. We're also actively seeking carbon reduction initiatives in several other areas in line with our convictions to deliver a clean energy future. Moving to slide 25. Before we move to Q&A, I'd just like to summarise the quarter in which we continue to deliver. Highlights of note include record quarterly sales and underlying EBITDA, record spodumene production at Greenbushes, our nickel business which is tracking within guidance, announcement of the COSMOS revised development plan, a stronger balance sheet with strong free cash flows enabling us to reduce debt and a continued focus on ensuring our people are safe and supported. Although it has been a difficult couple of weeks, IGA has a great culture, a great team and a great future. Collectively, we are committed to making a difference and continuing Peter's legacy. Thank you for joining us on the call and we'll hand it back to the operator now for questions.

Thank you. 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 would like to ask a question via the webcast, please type your question into the ask a question box. Your first question comes from Mitch Ryan from Jefferies. Please go ahead.

Good morning, guys. Good morning. Thank you very much for taking my call. My first question is with regards to quinana and the hydroxide sales there. Just wondering if you could provide any follow-up on either the volume or the grade that was of that product?

Yeah, so if we hear you right, you're taking the value and the grade of that product?

That's correct.

Yeah. So that value and the grade of that product is within battery specs?

Oh, sorry, it was battery specs. Okay, thank you. Staying on Kwinana, with regards to, you've called out the dryer issues continuing. Do you have a pathway or a time to rectification? And also as a second part of that, is there a cost or time to replace the piece of kit that seems to be not working at this point in time?

Yeah, okay. There's a couple of elements to that. So we talked about the dryer being one of the bottlenecks and that still remains one of the bottlenecks. So we're working through this quarter on continued rectification on areas throughout the plant. The team has a really good understanding of what they need to do. At the moment, we've got about 12 to 15 people from China headed up by the COO from TLC or China also on site, and they're developing that program at works. So we'll expect this quarter to see an increase in production. The key for the dryer will be, the next key step for the dryer will be a rectification of the material handling system around the dryer, and that's associated with feeder systems, etc. The idea is to plan for that rectification work at the next shut, and they're in the process of scheduling that next shut.

Okay, thank you. That's my two questions. I'll pass it on for now. Thank you. Thanks, Mitch.

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

Hi, Lyndon. Hi, thanks for the call. First question I had was just on the dividend received from the lithium joint venture. It looks quite low relative to your share of profit. Just wondering if you can talk through why there's that difference. Yeah, I will. So, you know, I'll hand it across to Kat in a sec, but largely Zivina was in line and it's largely due to driven by payment terms. I don't know if you have anything else, Kat?

Yes, it was in line with our expectations, as Matt's indicated, and you need to take consideration to the payment terms with our customers and also our investment in capital and including the timing of that investment. We expect that the highest budgeted prices will be reflected in our December quarter dividend. So you're just seeing a bit of a lag there in terms of where the cash is coming through to us.

So is it a timing issue or are you holding on to the cash to invest in, say, QAnon Phase 2?

Predominantly timing, Lyndon. It's predominantly timing. We've got slightly longer payment terms there and we've got a higher debtor's balance at the end of the quarter comparable to some of the other ways that things get paid.

Okay, thanks. And just to clarify, you called out the toll trading for Kwinana. Do you mind just talking through exactly what's going on there? So are you toll trading your share of spodumene that would otherwise be going through and that's what the EBIT does from as opposed to any hydroxide sales directly from Kwinana? Yeah, so that toll treatment was the production of lithium hydroxide out of TLC China facilities to ensure that we make contractual terms with SKI and KIC. And is there any opportunity to ramp up that toll treating to... I guess, opportunistically make some money? That's coal treatment out of China. That resides with TLC. Okay. And look, just one more from me. I'm wondering if you can talk through the grade profile a bit at Greenbushes. It just seems to be still coming through at an elevated level, which is great to see, but how much longer is that likely to be the case. Yeah, like this quarter you've seen grade C go down. That's ultimately from stockpiling. So they have a lot of flexibility at green bushes with mining sequences, et cetera, at the moment. Largely that was to do with ramp up and run times and recovery. So as we've got CGP Two, throughput of CGP2s improved, CGP recoveries improved, etc. will bring back grey to more in line with forecasting. Alright, thanks very much. I'll switch it over. Thanks Linda.

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

Hi Levi. Yeah, g'day Matt. Yeah, I hope everyone's going okay there. Lyndon asked most of our questions. I guess, can you just push a little bit on the Kwinana train too? What's delaying the FID or when can we just push you a little bit more on when we can expect the decision there?

Yeah, so we'll expect to see that over the next coming quarter or two. It's not actually delaying the project at all because we're committing to the engineering, we're committing to building owner's teams, we're committing to systems and processes in place. And so what we're actually doing is doing more early work versus making a final financial investment decision on train two. What we want to be sure about in that financial... When we do make all of that financial investment decision, that all the rectification engineering has been captured into the Train 2 design.

OK, thanks, mate. And just this arrangement with TLC, so if things do keep taking a bit longer with Train 1, like how much capacity is there to... Can you fulfil all of your contracts through China? How do we think about that?

Yeah, there's only a shortfall of contract associated with the SKI, and it's more a relationship thing. Ultimately, they're all commercially sensitive, but there is no other requirements.

Okay. Thanks, mate. Thank you.

Thank you. Your next question comes from Daniel Morgan from Baron Joey. Please go ahead.

Hi, Daniel. Hi, Matt and Tim. Sorry to keep following up on this toll treatment comment. It's just very interesting. So with SK Innovation, I guess I'm trying to understand, is there more obligations you have to deliver product, for instance, next quarter or until, I guess, Kwinana Train 1 ramps up? Is there more obligations you have and therefore more toll treating you might do and more earnings that might come through, like what we've just seen, from toll treating arrangements in the next quarter. Thank you.

No, I mean, I'll leave a small volume associated with what we're doing for this toll treatment through TLEA. That was ongoing last quarter as well, so it's not a new thing. And effectively, there's no more opportunity really to toll treat through China except for that requirement.

Okay, and when I look at this earnings, is that predominantly the toll treatment earnings? Like when typically if something's being built or ramped up and not commercial, which this is not yet, I imagine that the costs and the revenue associated with the costs from the small volumes at Dunnett Kwinana are capitalised.

Is that correct? The sales are sales of lithium hydroxide during the quarter. Is that actually a question? Maybe I've had an understood your question for like So we've made... Sorry?

Maybe I'll just clarify. I mean, typically, pre-commercial production, all revenue and costs get capitalised. That's true, is it not?

No, we're actually putting them through the P&L at this present moment, because you've got to remember they went into care and maintenance for a period there, which drove a slightly different accounting treatment. Sorry, I didn't understand the question initially.

OK, thank you. And... At Kwinana, you say you're going to make several rectifications at the next scheduled shut. Why not bring that forward to now, given you've got immaterial volumes? Is it because you're waiting for equipment to arrive? Thank you.

Yeah, it's largely driven by timing, equipment, engineering.

Okay. Thank you very much for your answers. See you, Shannon.

Thank you. Your next question comes from Khan Pekar from Royal Bank of Canada. Please go ahead.

Hi, Khan. Hi, Matt and the team. Thanks for taking my question. The first question is really around the offtake. Just wondering, I know you've talked about sort of aligning the offtakes for NOVA and Forrestania. They both get good pay abilities. The duration of that timing and the strategy around that, will that depend on the study around the downstream processing that's expected by end of CY22? Could we just get a bit more detail on that?

Yeah, correct. So what we make sure is any offtake arrangements is coupled with downstream. and also include any provision that should we make a financial investment on downstream then we would have the right to change those off-takes. The driver for the off-takes is really about how we optimise the forestania essentially and that has the ability to ensure that we're not processing arsenic or have additional operating costs associated with processing arsenic, how we get improved recoveries because we're not having to drive arsenic as a reduction through the processing plants, et cetera. So we think that the gleaming strategy will have a significant advantage, not just in pay abilities and providing significant nickel metal units, but also on an operational basis.

Sure. And with the offtake, it's sort of the same table I suppose it's rolling off Gintron and Truffy.

There's a huge amount of interest from both traditional op-takers but the broader market. So we'll cast that net very far and wide.

Sure, thank you. And the second question was around Nova. Just if you could talk through the quarter-on-quarter cost changes, particularly around processing. Sure.

I mean, on a C1 basis, that large variance is largely driven by that copper bypass of the product, and you'll see that come through. In terms of operating, we had a shut in the quarter, and typically you'll see some variance in operating costs in a processing plant associated with where shuts occur and bin reliners, et cetera.

Sure, thank you. And just to speed the last one in, with Forestania, the inventory adjustments, can you just talk through what's impacted those? Thanks.

Yeah, I can cover that. Because we're in business combinations or we've done an acquisition, we have to fair value our inventory and all our balance sheets at the date of acquisition. So you'll see this one-off large increase in inventory, which has flowed through to our cash costs because our inventory has been valued at net realisable value on the 20th of June, which means that it's had a negative impact on our EBITDA. We'll see the normal ups and downs that you see going forward. This is just a first quarter thing.

Thank you. I'll pass it on. I appreciate it. Thanks.

Thank you. Your next question comes from Matthew Friedman from MSD Financial. Please go ahead.

Hey, Matt. Thanks. Morning. Yeah. Hi, Matt. Thanks very much for taking some questions. Firstly, just after a bit of an update on some of the discussions that have been previously flagged that you're having with the JV partners, firstly, the TLE a quarterly dividend versus the monthly dividend that's coming out of green bushes. I think we saw evidence of that during the quarter, and you guys were discussing earlier the quantum of the dividend. So any movement there in terms of moving towards the more regular sweep out of CLEA, perhaps a monthly sweep as per green bushes. And then secondly, the six-monthly backward-looking pricing mechanism from green bushes. Any update to those discussions at the Taliesin level? Thanks.

Yep, sure. So I'll capture the dividend one first. So as you're aware, we're doing monthly dividends weeks at Greenbushes coming up to TLEA. And then at TLEA level, it's quarterly. There's no... They'll remain consistent for the time being. In terms of pricing, how spodumene and pricing mechanisms at the Greenbush level, that's still in discussion. As you're aware, that was set in 2020, which is set by annual at the start of mid-year and also mid-year and start of the year, so Jan and July. And it's based on the proceedings quarters. And it consists of the three PRAs, which are fast metals, benchmark and Asian metals. That discussion is still ongoing. We expect to provide updates to the market next quarter on what that new pricing mechanism would be.

Sure. Thanks, Matt. Any comments around the fact that one of Albemarle's other JV partners, obviously Mineral Resources, is now adopting that same pricing mechanism for their water main transfers? Does that affect the discussions at all, or how do you take that?

I would describe discussions as positive.

Okay, that's really helpful, thanks. And then just finally, the COSMOS update, obviously quite a bit to unpack there. I'm just looking at the component of operating costs and sustaining costs that you've now capitalised, you know, versus what was in the independent export report. I don't have the exact numbers in front of me in terms of the mining costs and the sustaining capital that were described in that report. But should we be revising down our life of mine mining costs and our mine development costs by an equivalent amount of about $140 million that is now capitalised? I think the IER had $80 to $90 a tonne mining costs and It's not somewhere in the order of $150 million of sustaining capital over the life of the asset. Is it fair to take out that amount that you've now capitalized up front?

Yeah, the majority of it. So in terms of that, how we tried to bridge the gap so everyone could understand we used that IER, and then we talked about $140 million, which is related to timing. There's two main drivers within that timing, the 140, which is both shaft and underground mining.

Okay, thanks, Matt. That's helpful.

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

Hi, Matt. Hey, Matt. Thanks for taking the questions. Hope you're well. Just my first comment, I'm sorry, I know your comments on Mount Good being a feedstock for your downstream. How are you conceptually thinking about this project now? Is the PFS following the scoping study that Western Areas was undertaking?

Yeah, so they were doing scoping. We'll advance, we've started the PSS, and that PSS will be designed to complete at the mid of 2024. And again, it would be ideal to couple that with our thinking on downstream. We've started doing metallurgical test work now on Mount Good. So we will start this quarter on metallurgical test work. The idea of doing that metallurgical test work is to see properties and understand those properties related to downstream nickel as well.

Okay, thanks. So you're still thinking open-tet 4 million tonnes per atom at some levels?

That will be part of the PFS when we work through all of the options as part of the Mount Good test.

Okay, that's great. And then just on the nickel downstream, did I hear you correctly earlier that FID is now mid-calendar year 24?

Yeah, that's always been the case, mid-calendar 24 financial investment decision on nickel sulfate downstream.

Okay, and are you still thinking modular approach, single train, or does this study on Mount Good and potentially other upstream partners change the initial scope?

Yeah, so we're doing... The current study is all the optionalities we're doing at the moment, so we're in the process of doing all the trade-offs as we speak, and all of those sort of trade-offs are locked down, should be done early next calendar year. That will enable us to get into detailed engineering.

OK, that's great. And just one last one, Matt. The recent budget... There was, I think, about a billion dollars earmarked for value-added downstream and critical metals. Are you engaging with the state and federal governments? Are you sort of confident that you could see some financing?

Yeah, look, we are confident that we would get significant support from government, and we're already seeing that support come through. It's just the timing. So what we wanted to do is get a better understanding of our business case before we... present to government to look at funding?

The dental's in the detail on that, and they haven't come out with a lot of detail on how it all fits in, so we're going to be working closely on that when the detail comes out in order to align it with our business imperatives and the like. I hope that helps.

Yeah, thanks, Kat. That's all from me. Thanks, Matt. Cheers, mate.

Thank you. Your next question comes from Tim Hoff from Canaccord. Please go ahead.

Hey, Tim. Hey, guys. Thanks very much for taking the question. I was just looking for the timing of the wrap-up to 1.1 million tonnes. Has the capital change led to a pull forward in when you expect to hit 1.1?

The philosophy of advancing both AM5 and AM6 is to bring on additional oil sources. and that we're not able to faster wrap up to the 1.1.

Okay, excellent. The next question I have is just around the realised price. I realised there was a carryover shipment. I think the last quarter we had 34,000 tonnes. Just finding out what you should be getting this quarter and what you were getting on the previous one, it points to a realised price of about 3,900 tonnes. I was just wondering if you could explain the difference between what you've actually delivered and the $3,900.

So it was 34,000 tonnes and my understanding is that the difference relates to the timing, forex changes at various points as to when those ships have been delivered. So we're confident with our pricing there. It's timing effectively on the forex.

Timing on forex and then the other one is your technical grade? Yes. And you'll see that price come into this quarter coming?

Okay. And that technical grade product, is that going to be wrapped into the number that you report?

I didn't catch it. Can you say that one again?

Sorry, Tim. For the technical grade product, will that be wrapped into the next quarterly recorded price?

Yeah, it does get wrapped up into the quarterly price, so you'll see a little bit of a discount. And we've tried to guide the volumes in the quarterly, you can see, as well, so you'll have to take that into consideration.

Okay, excellent. Thanks very much.

Thank you.

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

Hi, Kate. Hi, Matt. I hope you guys are doing okay. At our green bushes, you gave us milled tons of 1473 kilotons for the quarter. If I do tons times mine grade and a recovery and some tons for TRP, it implies one of those numbers is kind of average. Can I get some colour on those variables? Maybe TRP times milled grade or overall recovery?

We can take that one offline if you like and we can give you a bit of a snapshot if you want.

Okay, sure, sure, if you don't want to share them with Nicole. And then at Cosmos, I might ask the prior questions another way. We've got an update on CapEx with some of that OPEX moving into CapEx. What are the expectations for OPEX now? So I think under Western areas, they are expecting 360 a pound kind of OPEX, any color there. And then secondly, when can we expect to hit that 1.1 million tons with AM6?

Yeah, okay, so I'll answer first with the OPEX one. So, you know, OPEX will provide guidance on OPEX mid-calendar year, as we do with normal OPEX. In terms of production profiles, ramp-ups, you mean it will be, it's a relatively quick ramp-up profile?

Okay, so you mean AM6 will come online quite quickly?

AM6 will, AM5 will potentially come on earlier.

Okay, okay. And so mid-calendar year we'll also get an update on those kind of life and mine OPEX numbers as well?

Correct. So mid-calendar year we'll provide OPEX and some ramp-up protocols.

Okay. Thanks, Matt.

No problems, Kate.

Thank you. Your next question comes from Khan Pekar from Royal Bank of Canada. Please go ahead.

Thanks. Just a quick follow-up question on Flying Fox. I'm just wondering what that current mine life is there. Are we still expected to produce into the second half of this year? And please remind us what's banked into Forestania cost guidance in terms of Flying Fox?

Flying Fox is to continue into next year. It's largely Flying Fox and the amount of tonnes we get from Flying Fox will largely be driven by our octane negotiations. At the moment Flying Fox are high cost tonnage and it's largely being mined. Some of those stoats at high cost have largely been mined because they are having to manage arsenic on site. So if you have the off-take strategy comes in place then we can make a decision on like box mining schedules etc. So it's a little bit early to give true guidance because it's really largely driven by that off-take negotiations.

And your unit costs are based on Flying Fox continuing into the second half this year? The ones that were published a couple of months ago?

Yeah, the unit costs do, but we'll have to have an assessment once we make another strategic decision on what we do and how we optimise the forest area access and drive more margins.

Thank you very much.

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

Hey, John. Hi, guys. Condolences clearly to Peter's family and to the team. I've just got a couple of questions just in relation to Kwinana. You were talking about obviously early works and long leads ongoing at train two, so it The read-through clearly is that it's a fait accompli. Can I ask, though, what sort of changes, if any, the joint venture's been looking at in terms of the flow sheet in relation to what you've experienced at Train 1?

In terms of Train 2, the flow sheet was rough. It will be the same. Major capital pieces are in place. Most of the challenges associated with Train 1 are dealing with interconnectivity. So that materials handling piece is obviously being integrated into the layout plan, is that right? Correct.

Okay, and then just very quickly around the Odysseus development, can I just ask, just around inventories for AM5 and AM6, Do we just take the existing resource inventories as last decked by Western areas in terms of integrating those into the life of mine plan for now?

Yes.

Okay, great. Thanks very much. See you, mate.

Thank you. There are no further questions at this time. I'll now hand the conference back to Mr Ducey for closing remarks.

Thank you everyone for joining the call today. Also I'd like to thank you for your support and stay safe and