Igo Ltd

Thank you for standing by and welcome to the IGO Limited 2023 December quarter webcast. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the ask a question box. I would now like to hand the conference over to Mr Ivan Vela, Managing Director and Chief Executive Officer. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to our December quarterly Operating and Financial Results call. Joining me today on the call is Matt Dusky, our Acting Chief Development Officer, and Kath Bozonich, our Chief Financial Officer. I'm delighted to have joined IGO and want to thank everyone who has made me feel so welcome since I joined in mid-December. I'm just into my sixth working week in the business and just starting to get to know this business and the team more deeply. And I have been incredibly impressed in the way our people are working together to deliver the strategy and purpose that they and everyone before them at IGO has worked so hard to build. This is my first results call with IGO and a very difficult day with the announcement on Cosmos. I'll come back to this in a moment. First, I wanted to share some broader reflections on the business. I want to start with my first impressions and why I'm so excited about what we can achieve together at IGO. For me, I can summarise this in three points. First is our purpose and strategy. It's very well thought through and it's underpinned by the global energy transition, which is absolutely critical to our future. And as I settle into this business, we will complete a complete refresh of the strategy, but we have a really solid core to build on. The second point is the fantastic ambition and culture underpinned by the IGO values. These not only attracted me to IGO in the first place, but were reinforced as soon as I started. IGO has been bold, it has been fearless and it has been innovative. All of the core values shine through when you engage with our people and the culture which helps people bring their best to work each day through having fun, enjoying each other's company and being part of something that really is making a difference. I've heard endless times over the last six weeks how much people say they love working at IGO and they love their jobs. It's an absolute testament to the investment in this business, which has made developing a unique and special culture and something that people really want to be part of. The third point, of course, is the outstanding asset base, the partners and the optionality as we look to take full advantage of the clean energy transition. Firstly, and most importantly, that world-class resource at Greenbushes. It's an absolute standout, and I'll talk more to that soon. Our partnership with Tianqi Lithium is another huge advantage. We have an excellent nickel business at Nova, an incredibly strong balance sheet, which provides us with immense optionality and power to move forward. But let's be clear, I've also observed there are some growing pains, brought about through a series of transactions and some very tough lessons that we're learning through Cosmos. In all of this, though, there's nothing we can't address and learn from as we develop the next chapters of this business. I still have much to learn about this business, but I'm pleased I've managed to visit all of the operations, including our JV operations before Christmas. And last week I was in China meeting with the Tianqi Lithium executive leadership. I got a chance to visit one of their new lithium carbonate processing operations, And what I've seen so far across this range really excites me. I have absolute conviction that IGO has an exceptional platform to work from and deliver the products critical to the clean energy transition. There are, of course, market headwinds at the moment and this is compounded by the nature of the lithium market. Recent volatility in commodities has been incredibly challenging for our sector and there's a lot of uncertainty and there's a lot of opinions. But having worked in the mining industry for many years, I know that this is the time when we'll see the true quality of our assets. For me, IGO is positioned so well with the lowest cost, long life, world class Greenbushes lithium asset. This cornerstone gives us the strength and resilience to look forward and realise the full potential of our presence in this dynamic industry sector. Shortly, Matt will take you through some of the specific operational results. But first, I wanted to talk about a few important items that we've released today and earlier this week. Of course, first, we've just announced a very, very difficult decision to transition Cosmos into care and maintenance. While the review of the operation identified a number of opportunities and potential for optimisation, the rapid deterioration of the nickel price over the last six months has meant it would not be prudent for us to continue with the project at this time. I really want to acknowledge the team on site. To their full credit, they have given this project everything they had and delivered some fantastic outcomes. There's a huge list of achievements and most notably for me, improving their safety performance through this period and the mill ramp up was absolutely outstanding. But on reflection, this project was not set up for success and it's being developed through a very difficult time in the market. Notably, the movement in the nickel price has been rapid. The rapidly increasing support from Indonesia at least catching the market by surprise, both in their ability to deploy their capital efficiently and the speed in which they've ramped up their mining and processing activity. Our priorities at COSMOS are firstly to provide all the assistance we can to those of our team who will be impacted by this decision. Times like this are very tough for our people and we're working hard to redeploy as many of our people as possible. We believe there is value in COSMOS and therefore we're laser focused on preserving this opportunity through a safe and robust care and maintenance program. so that we can bring it back online should the market conditions justify it. We'll share more details of the care and maintenance plan in future releases. Importantly though, our remaining nickel businesses, Nova and Forrestania, continue to generate positive cash flows. Within our lithium business, I want to start by commenting on Greenbushes, which as I've said is an outstanding asset and one which will deliver strong margins throughout the cycle. The scale of the operation, the cost profile and the untapped upside through resource expansion are second to none. And we are privileged to have exposure to an asset of this quality. We're also in a unique and enviable position of having partners who are among the leading lithium industry players in the world. We're delighted to work with both of them and continue to learn from their unique insights in the market. As announced on Monday, we've agreed several changes at Greenbushes. These changes, including a shift in the pricing mechanism, provide greater certainty on spodumene concentrate sales and our production volumes over the short term. As our partners work to manage their inventories and working capital through this volatile period, Taliesin is managing production of green bushes over the second half of FY24, and we've just adjusted our guidance to reflect that. While the partners have taken a conservative view on the market over the short term, Our collective commitment to growing this asset, in particular CGP3, remains unchanged. We'll continue to work with them to ensure that we deliver the best outcome for IGO's shareholders. At Kwinana, the ramp-up has continued to be challenging. What's clear to me, having been on site before Christmas, is that the team have done an outstanding job wrestling through a long list of design and engineering challenges that they were faced with. Looking ahead, my focus is on working with the Kwinana team to continue progressing a bottom-up plan to get a handle on the remaining issues impacting the steady operation of the refinery. To date, we have not had the ability to forecast with any certainty. There are still a number of changes that we need to make in the refinery, and these are being allowed for in their capital programs. We remain committed to ramping up this asset, and I have seen some green shoots in recent weeks. We believe in the integrated value chain tied with green bushes, and we do not underestimate the relevance of the outstanding quality of the SC6 concentrate from Greenbushes. As I said before, I was recently in China working with our partner Tianqi, and I was deeply impressed by their understanding of the market, their technical expertise in downstream refining, and the constructive dialogue that we had about how we can work together in the future to build our success at TLEA. We visited one of their lithium carbonate refineries, just been constructed and I was incredibly impressed with their technical skills and their project execution capability. In summary, I'm incredibly excited about the opportunity to lead IGO into this next phase. Our purpose and strategy is exceptionally well thought through and tied to the global energy transition. Our lithium business has green bushes as its cornerstone, a world-class asset with huge potential. and we are partnered with two of the biggest lithium players globally. We have multiple options for organic growth, including through exploration. We have a strong balance sheet, which we will be disciplined and measured with, which also gives us the optionality and the power to move forward. And lastly, and most importantly, we have a team at IGO whose passion, expertise and alignment with our purpose, strategy and values gives me great confidence in what we can achieve together. Safety is absolutely fundamental to stable and high performing operations. Throughout my career, I've been dedicated to delivering sustainable improvement in health and safety on all of the operations I've worked. As I've looked at IGO's focus in this area, I've been very pleased to observe a program of work that has been underway over the last 12 months and is delivering tangible results. The leading indicators show a considerable step up in the proactive actions and leadership engagement that are and will continue to be critical to delivering improved safety across our business. The TRIFA performance has improved over the quarter, reducing to 12 from 12.7, and that's happened even as the hours at Cosmos started to reduce back. I come from an environment where a TRIFA of 12 is still very high, and I'm deeply committed to supporting our team to reduce this. I was spending a lot of time personally in the operations focusing on this and supporting our leaders. Thank you. I'll now turn it over to Matt for an overview of operations through the December quarter.

Thanks, Ivan. To begin the operation portion of the presentation, I'll start with an overview of the lithium business. Moving to slide five. The recent market conditions have been a challenge for the entire sector as we work through this volatility. However, as Ivan has mentioned, we are in a uniquely positioned with a 25% interest in the world's best hard rock lithium assets. Greenbushes is the definition of world-class asset with an exceptional low cost base, which is generating strong margins throughout the cycle. As announced in the prior quarter, JV partners at Greenbushes, being Albemarle and TLEA, have been in discussions regarding pricing and offtake nominations arrangements at Taliesin. As we announced on Monday, the Winfield Board has agreed to amend the pricing mechanism, which will be applied to the SE6 spodumene concentrate. This will be reset monthly based on the average of the previous month using the existing four price reporting agencies including Fast Markets, Asian Metals, Benchmark Minerals Intelligence and S&P Platts. There's a 5% volume discount FOB Australia. The new mechanism is effective from 1st of January 2024 and we'll see this shift from a lagging quarterly price mechanism to a timelier pass-through of price. Additionally, the joint venture partners at Greenbushes have indicated their spodumene sales volume for the second half-24, which are expected to be approximately 20% lower than forecast production for this period. As a result of this, Taliesin is working through balancing stockpiles with production shipments. Production is expected to be marginally reduced with IGO's FY24 Greenbushes production guidance being revised downwards to 1.3 to 1.4 million tonnes for FY24 from 1.4 to 1.5 million tonnes. IGO expects the production and sales impact to be more skewed towards the March quarter, with June quarterly volumes more in line with previous forecasts. It's also important to note the JV partners remain committed to key growth projects, including the construction of CGP3, which remains on schedule and budget. Taliesin is finalising the CY24 budgets and capital review, after which IGO will provide any associated updates to cash costs and capital guidance alongside its half-year reporting in February 2024. This will coincide with the approval of the CY24 budget. Greenbushes is a world-class asset, and the JV partners are committed to unlocking the long-term growth and potential of this operation for all shareholders. Turning to slide six, which covers the quarterly results for Greenbushes. After record production in the September quarter, lower feed grades and process ore due to two major shutdowns drove a softer quarter production quarter-on-quarter, The lower production followed record output in first quarter 24, which resulted in a higher cash cost this quarter of $357 per tonne. Sales revenue was lower in December quarter, as expected, with lower sales volumes and lower price. On a 100% basis, EBITDA for the quarter fell to $1.1 billion. However, I note that the EBITDA margins continue to remain exceptional for greenbushes at over 85%. The realised spodumene price for the December quarter, including both chemical and technical grade product, was $3,016 US FOB per tonne, which compares to $3,740 US FOB per tonne received in the September quarter. Moving to slide 7, where I'll provide an update on the Kwinana lithium hydroxide refinery. Performance continued to be challenged at Kwinana. Production for the December quarter of 617 tonnes was below our expectation. We have seen positive improvement at Kwinana, which is a credit to the team. However, due to reliability challenges, we did not achieve consistent operations of 50% of nameplate during this quarter. Clearly, this is a challenging asset with sub-optimal engineering and construction driving difficulties in reliability and throughput. Having said this, the team has been making solid progress and we remain committed to supporting TLEA as we continue to improve performance from train one. Turning to slide nine and starting with Cosmos. As Ivan mentioned, we've announced today the transition of Cosmos into care and maintenance. This decision comes off the back of the project review, which identified a reduction in expected mine life, delays in getting the mine to full capacity and further escalation in capital and operating costs. Coupled with a deterioration in the nickel price since the review commenced, transitioning to care and maintenance is a difficult but necessary decision. This decision comes despite the great work the team have achieved on site. including the commissioning and ramp up of the processing plant in a timeframe well ahead of expectations. The plan at Cosmos now involves us preparing for care and maintenance, which is targeted by the end of May, with a priority on our people and safely preserving the asset. This will include a number of key work streams. The most important of these is how we support our people, which will be impacted by this decision. In terms of operations, complete commissioning of the processing plant and continue processing existing ore on the ROMs. Carrier maintenance will be diligent and carefully managed to provide us with the option to restart should market conditions improve. Turning to NOVA operation on slide 11. NOVA recorded a strong production quarter for all metals as compared to the prior quarter, with nickel production 7% stronger quarter on quarter despite some short-term operational issues while costs were in line with the prior quarter. Nova's financial results were impacted by lower nickel pricing with realised nickel pricing falling 8% quarter on quarter. It is important to note the EBITDA margins remain robust at approximately 50% and the quality of the Nova asset means it will continue to generate strong free cash flow through this low commodity price cycle. Looking ahead at NOVA, metal production is highly dependent on the sequencing of high-grade stopes. There has been some scheduled slip in the mining sequence which has high-grade stopes deferred into late FY24 and early FY25. As a result, and given where we are tracking against our guidance, we have amended FY24 production guidance to 21,000 tonnes to 22,000 tonnes of nickel metal and a C1 cash cost of $3.90 to $4.30 per pound of payable nickel. Turning to slide 11. At Forestania, the planned move to campaign milling resulted in lower milled tonnes and feed grade, which impacted production rates. As a result, production was down 15% to 2,007 tonnes of nickel and cash costs were 3% higher quarter on quarter at $12.03 per pound payable. Nickel revenue of $60 million was down quarter on quarter, driven by lower sale volumes, while cash flows remained positive, given the nickel hedging position that was put in place six months ago. We are continuing to assess options for efficiency and cost optimisation at Forestania as the operation transitions towards the end of the mine life. I'd like to highlight the safe, successful and strong finish to the end of the mine closure at Fine Fox at Forestania, which is a credit to the team on site. While FY24 production guidance remains unchanged at Forestania, cash costs are trending higher as we accelerate production of low-grade material and cost escalation with some areas of the business. As such, we are amending cash cost guidance to $10.50 to $11.50 per pound noting that forest only production is hedged at Australian $32,000 per tonne of nickel to December 2024. Turning to slide 14 where I provide a brief update on exploration activities for the December quarter. Exploration work is ongoing across our portfolio of prospect projects with several exciting developments. Activities are mentioned of mention that occurred this quarter include the receipt of assay results from the first dog-legged hole confirming the presence of high-grade nickel sulphides. A second hole was also completed this quarter with assay results pending. Further diamond drilling continued at the south iron cap prospect at Forestania targeting the main lithium-bearing pegmatite zone for a total of nine holes. Further drilling will continue in the March quarter. And finally, at a copper wolf project in partnership with Buxton Resources, a site visit was undertaken by an independent expert confirming the presence of a large mineralised porphyry copper moly mineralised system, which is very encouraging results for the team. Now I'd like to hand over to Kath to discuss the financial results for the quarter.

Thanks, Matt. Revenue, which only reflects revenue for our nickel business, decreased to $179 million, primarily driven by the falling nickel price and lower sales volumes. IGA's share of TLEA net profit was lower quarter on quarter at $167 million, as was its underlying EBITDA of $153 million, both reflecting lower lithium prices and sales volume realised in the quarter. The TLEA joint venture elected not to pay a dividend this quarter, reflecting the market volatility and our joint venture partners' conservative view on the lithium market in the short term. This, in conjunction with the challenges in the nickel market, have resulted in an underlying free cash outflow of $96 million. It's important to note Nova and Forrest A&R generated positive underlying free cash flow of almost $80 million. Cash at the end of the quarter was $276 million following a $360 million accelerated repayment of outstanding debt and the conversion of this amount to the revolving credit facility. This results in $720 million of undrawn debt at the end of the quarter, providing IGO with optionality for the future. As announced in December, IGO will record an additional impairment against the COSMOS assets and a small impairment against the Forrestania assets in the first half results. While the impairment assessments remain ongoing, IGO estimates the total non-cash impairment charge to be in the region of 160 to 190 million. What's really important to note, and as Ivan said earlier, our balance sheet is strong. We have liquidity of just under a billion dollars, which not only provides us optionality, but also provides a strong platform to withstand the current market conditions. Our quality assets enable us to manage through the commodity cycle. We remain disciplined and focused on cost control during this period. I'll now hand to Ivan to finish the presentation.

Thanks, Kath. Thanks, Matt. Look, before wrapping up, and opening up the Q&A, I just thought I'd make a few sort of summary remarks. First of all, as I said in some of my opening comments, IGO really is in a fundamentally strong position and I'm very excited to be here as I look into this business. Despite how tough it's been, we are taking some action, adjusting to this very, very fast-moving market and setting this business up for this next phase of success. I have every confidence that we can achieve some great things here with IGO in the future. And while we're an evolving business and we need to learn from our recent challenges, what really sets us apart are the following points. Firstly, our purpose and strategy. It's really well thought through and tied and connected to the global energy transition. Our lithium business at Greenbushes is a cornerstone asset and it's absolutely world class. Huge potential for growth. We're partnered with two of the best global lithium players out there. We have multiple options for organic growth, including through our exploration pipeline. And we've got a very strong balance sheet, which we will be disciplined and measured with, as Kath just commented. It gives us optionality and the power as we look forward. Finally, we've got a fantastic team here at IGO whose passion, their expertise, their alignment with our purpose, strategy and values gives me enormous confidence in what we can achieve together. Thanks for listening in so far. I'm going to hand back to the operator and we'll start taking your 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. In the interest of time, we ask that you please limit to one question with one follow-up per person. If you wish to ask a question via the webcast, please type your question into the ask a question box. Your first question is from the phones from Levi Spry from UBS. Please go ahead.

Good morning. Hello, Ivan and team. Thanks for your time today. Maybe if we just stick to green bushes, obviously the main value driver. So can you talk us through how the JV thinks about stockpiles at site? What are they now? What's their capacity? How high can they go before you potentially think about readjusting some of your growth plans? And maybe a question sort of related to that. Can you run us through the process around potential for third party sales that may or may not have been discussed.

Thank you. Thanks, Levi. I'll start and just talk through stockpiling. So Taliesin has some flexibility in stockpiling. That stockpiling volume can vary. Essentially, I mean, our maximum stockpiling capacity at the site will sit around about the 200 and 250,000 tonnes. What the Taliesin team is doing is effectively managing production around stockpiling capacity. And as a result, and obviously with logistics and sales, and as a result of that, there will be a marginal pullback in production. And that's why we reflected that in our guidance.

And Levi, let me pick up the question on third-party sales. Obviously, that's something that's been considered at different points over time. And the... The two partners, Abermarlin and Tiantia, both, as you know, integrated lithium market players, and they really deeply understand the value of that spodumene concentrate coming out of green bushes, and they're very reflective of how they best use that in their businesses to drive strength. And at this point, we've taken a decision to not proceed with any third-party sales. The market's still very uncertain at this point, and... You know, we're obviously looking at the business and optimising the production, but also making sure that we maintain strength in that overall lithium market as we think about it in an integrated manner.

Yeah, okay. Thank you. And so, sorry, just to confirm the capacity. So stockpiles are at 200, did I hear that correctly? 200,000 tonnes an hour.

No, total stockpiling capacity at Greenbushes sits around about that 200,000 and 250,000 tonnes. That would be maximum capacity.

But they're not at that level presently, no.

Okay, thank you. I'll get back in the queue. Thanks.

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

Hi, Ivan and Nat, and welcome to the role, Ivan. The decision to not pay a dividend from TLEA may be some color on the cash being built in the JV. Is it sitting above the minimum amounts that you'd like? What decisions or backdrop is key to come out of guidance before we see dividends resume? Would it be fair to expect an interim dividend this quarter, so perhaps two for the quarter? I guess I'm trying to get clarity around how we should think about the cash sweep mechanism out of that JV moving forward given today's decision.

Yeah, so I'll answer that, Kate. Obviously, Greenbushes generates really, really good cash flow, but we are in an extremely volatile market and therefore prudence around working capital has played into that decision not to pay the dividend through TLEA and obviously that uncertainty has played out in that, and we're in the middle of doing budgets, or they're in the middle of doing their budgets and everything, so it's a bit premature to start to comment on dividends in the next two quarters, and that needs to be completed. The other thing that is worth noting is that there's a reasonable amount of growth capital that's happening at Greenbushes, and that needs to be managed as well through the cash flow. Hopefully that's answered your question.

Okay, and with the financials that are coming out, it's been a while since we've had an update on the debt and some of those metrics sitting inside the JV. Is that something that we could possibly get in the future?

Look, that sits within the joint venture and as we've advised previously, we don't provide that guidance to the market because that is within the joint venture.

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

Good morning, Ivan, and great to meet you virtually. And thank you to Matt and Kath for your time this morning. Just a couple of questions. Just to take up from Levi's question, you've obviously resolved the pricing mechanism within Winfield, but there has been some allusion to a nomination mechanism. So obviously in the current situation where there's a stockpile build, is the joint venture looking at a mechanism where either party can over-nominate?

Yeah, hey John. So essentially when we talk about nominations, it's just about the volumes that the parties want during that period of time. So we understand what the second half will be for this financial year. As a result of that, the two parties are taking a little bit less volume than production capacity will be at Greenbushes. Resulting in that is we'll build inventory at Greenbushes up to a spot where we can manage effectively and then also manage a little bit of production during that half to match that. In terms of... We'll have that inventory build at Greenbushes during that period.

Yeah, OK. I guess what I'm asking is, is there... scope for a situation where the pro rata joint venture allocation can Tianqi or TLEA and Albemarle over-nominate pro rata? Is that a mechanism that's available or being considered?

That is a mechanism that's available to the shareholders. So if one party is short, then the other party can pick up volumes as well.

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

Hi, Jane. Thanks for taking the question. In your review of the acquisition, Ivan, can you give us a bit of an outline on what you think went wrong? I mean, obviously nickel prices haven't helped, but do you think there was enough due diligence done on the asset? And ultimately the board approved this acquisition. Was there enough done at that board level questioning the quality of these assets?

Yeah, thanks, Tim. Great questions. As Mike signposted at the AGM and I think we've talked about, we've had an independent review completed on this. That's in sort of its final stages and we'll share the outcomes or the headlines from that and our half results in a few weeks' time and give you an insight into what we've learned from that. I won't go into it all now because that work's not quite finished, but clearly there's some important lessons we'll take from this Western Areas acquisition and the ensuing project that came out of it. So I guess I'd say watch this space.

Excellent, thanks. And perhaps for my follow-up question, Kwinana sort of fails to sort of ramp up or deliver much, and I know that there's a pricing structure issue here. But is this going deeper? Is there a potential that this asset doesn't ramp up and we might have to turn it off as well?

Yeah, look, it's early days for me as I sort of look into this. I know you have been along this story for a while and there's been a lot of, I guess, targets set that the team, we haven't been able to hit. I guess what I'm eager to do is work through with the team at Kwinana to understand that bottom-up plan, and they are making progress. The issue is our forecasting is still not at a level where we can rely on it, and understanding why and what's driving that is very important before we can stand back and say, well, this is what a clear ramp-up plan is. What I will say, though, is from what I've seen and the conversations with Tianqi, I mean, they've got deep capability in this space. I mean, I saw it firsthand in China. The the commitment and dedication from both sides is strong and we need to continue to support the team at Kwinana to work through the plan they've got. I've seen the capital items they have scheduled this year and how that will make a change through the refinery and I guess my focus is to absorb that, work through that, get some confidence myself in the work that they've done and their plan looking forward and then come back and share that with you which is It's also why I'm not going to sort of put out some number at this point. I just don't think that's helpful to say we'll be at this level by this time because I haven't had the chance to get into that depth with them. But I don't want to leave you with the impression that, you know, I think this is good money after bad. The team has made some good progress. There are some green shoots. They have dealt with a lot of complex engineering and design challenges and I went through that personally when I visited the site late last year. And so I guess I'll update you in the next release further on the outcomes of the discussions that are ongoing on this.

Thank you. Your next question comes from Raoul Anand from Morgan Stanley. Please go ahead.

Hi Ivan and team. Thanks for the call. Look, I just have a quick follow up on the expansions at greenbushes. Obviously it's not a unilateral decision. For IGO, it's a joint venture structure. And what I wanted to understand was, given where Chianki's profit warning sits today in terms of their result, do you think in terms of the medium-term forecast for those expansions coming in, CGP3, CGP4, everything perhaps needs a fresher look at before you come back to the market? Or should we think that all those are still current? That's the first part and then I'll come back with a second on on quinana as well.

Thanks Yeah, maybe look might give Matt to make some more specific comments there and I'll give you some more broader Impressions and reflections on what I've seen. Yeah.

Thanks role. So you mean as the joint venture and wind fields remain committed to CGP three units on schedule on schedule a couple of key milestones were achieved in the quarter and There's been no change to that program of work. It's fair to say that we'll continue to look through some of those capital projects and work through that with shareholders. In terms of CGP4, we're still doing the front-end engineering design. We're still looking through that capital. No decision has been made on CGP4 at the Taliesin board level.

Okay. Sorry, go ahead, Armin.

I was just going to build on that and say, look, This is a world-class asset. It's obviously got a different focus on it now with the lithium market looking forward. And I think the team's got a really clear plan through CGB3, as Matt just said, and there's full commitment from the partners on that. What's also an opportunity, in my view, is for IGO to bring more of its mining capability to support Greenbush's Taliesin in their work. and really help to find that full potential from that operation. As you go and look around, there is plenty of upside still. So that's a big focus for me. And I think it's not to say you throw everything in the air, but clearly, as we go through that, we're going to take in those reflections as we look at other capital that's proposed going forward. But I want to be absolutely clear, there's Commitment, focus and a huge amount of progress on the existing approved capital projects on that site. The mine services area is just ramping up now. The camp's nearly complete. CGV3 is tracking well and I look through the existing CGV2. It's a very well-run plant with a very professional team. They know their business inside out, but it's a question of how do we make the very best out of that ore body.

Yeah, and I think Ro is also putting context to that we're looking at short-term volatility, but there's no change to that long-term look-through for all of us. And when you're looking at such a low-cost producer like Greenbushes, then some of these capital return projects would still make a fantastic return.

No, absolutely. I mean, it's interesting to see that the lowest-cost producers are paring back production, and I guess that's where the questions are coming from, but it does make sense. Look, I'll ditch my follow-up for Kwinana just because Tim did address part of it. Just one quick semantics question really around NOVA copper guidance which has been abandoned. Any further colour you want to provide around that? Is that mainly around mine planning or lack of confidence or what's really happened there to the copper guidance?

Nothing's really happened to it. It's still in line with what we've had in the past. So it's probably just an oversight in terms of popping it in the quarterly, but there's no reason behind that.

Yeah, we haven't reset copper guidance.

No, we haven't reset it. Oh, you're talking about the guidance at the back. Yep. No, it's not being reset.

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

Thanks very much. Just to pick up on the green bushes growth, so is there any certainty about CGP4 at this stage?

Well, Lyndon, as Matt said before, it's still in feasibility feed. Until we've been through that process, we can't sort of comment on an investment decision. I guess, you know, everyone can talk about the broader lithium market and we know that this is the place you'd want growth. So we'll take that into our decision when the time comes.

Okay, thanks. And I guess, Ivan, just being new to the business, I'm interested in your perspective on how is it sitting with you that we've got the best lithium mine behaving as a marginal producer? And I guess that raises a lot of uncertainty around the volume outlook for FY25 growth and six even if we're still in a surplus market. I mean, should we be expecting that Greenbushes is doing the heavy lifting here or is there some sort of other mechanism to change this situation?

Well, I mean, let's start with the crystal ball. Mine's as good as yours on the future of the lithium market, how it plays. I think the challenge there is this is, you know, demand side is driven by so many factors that, It's very hard to follow. It's not a simple GDP growth or some other industrial trigger here when we talk about EVs and policies that different governments are taking and so on. So that aside, yes, you know, the conventional wisdom is, well, you've got the lowest cost position, so of course you must produce and push your tons into the market. I think what that misses and the insights I'm gathering in its early days is that the production of the lithium hydroxides and carbonates is not homogenous, let's say, and not completely consistent. The spodumene concentrate that we produce out of green bushes is unique and it is valuable and both partners are very sensitive to that. They really want to maintain and protect that as an asset in its own right. And so then it comes to a balancing position of how they think about their overall integrated business and the value of those And of course, the inherent value of that concentrate in an open market. And we are talking with them actively on that. And we are trying to find that balance point in a market which is changing rapidly. I think the setting that we've got is good. We've been through very substantial discussions around that. And I think a view that says it's the cheapest ton, so just push it in the market is a bit simplistic in the context that I've seen.

Thanks, and just a really quick follow-up. Is the dividend or the lack thereof a timing issue, i.e. are we going to see one at all for the quarter?

So no, it's more a prudence question around maintaining the working capital within those businesses during this volatile time.

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

Good morning Ian, Matt and Kath and congrats Ian on the new role. Tough time to be taking the reins. With Mikkel, just wanted to get an idea of what's stopping spotted quoll from being put in care and maintenance. I mean it's high cost, short mine life, it's losing cash. Is it the hedging profile? And from what I understand, that comes to an end in 2024?

Yeah, Karn, look, you've answered your question there. The hedging position we've got in place keeps this cash positive and so it's a good business to keep running and we have a plan to close early next year. The business will keep making cash and I think we're in a great position. Obviously, the focus there is just managing cash the impact and transition for our people. We're really thinking that through and that work's already underway, making the most of the asset. They closed Flying Fox late last year. I went and saw that incredibly professional ramp down and management of that part of the asset and they're now getting the very best out of spotted quoll.

There's no concentrate tied to any offtake with spotted quoll?

No, there is an offtake. that's there, it's hedged, but if you think about it, we've got other nickel tonnes that are hitting the market. So we're working through that. We're up for renewal of the nickel offtake, which we're working through at this present moment.

Sure, and just maybe a quick one, and I'll hand it over, but with Cosmos, I'm sure you've done some sort of initial numbers. What nickel price would be needed to reconsider remobilising that?

Yeah, it's a good question and it's one I've been asking as well. I mean, you know, there's some work to do. We need to take a pause and do a full study, look at that ore body, look at how we bring it back online, what it would take, what the conditions are and it's certainly, you know, there's a price factor in that but there's other issues that we need to think through as well. So I can't sort of put a number out there right now given we haven't done that work and Obviously, it's a very difficult situation where we've invested so much money into the asset. The mill, as I called out in my opening comments, has ramped up wonderfully. The recovery, the performance, just outstanding. The team's done a great job. We know we've got some really good pieces to work with, but as you know, it all starts with the ore body and understanding how we extract value from that in a sustained manner. Again, I'll hold that question for the future and certainly come back once we've done that work.

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

Hi, Ivan. A quick question on quinana. Why no sales during the quarter and a build of inventory now to 3,000 tonnes, particularly as it's a chemical that might degrade? Part of my concern is specifically JV slash governance where Tianqi's interests might not be aligned with yours and that they might wish to sell their 100% owned product into the market rather than their 50% owned Quinana volume. Thank you.

Yeah, look, I mean, great question. This isn't a function of governance and that sort of decision making. The first issue is, of course, with new lithium hydroxide, you have to be qualified with your customers and that's still a work in progress as they've come online. What I think is important to note is the majority of their production has been battery grade, which is really important. So we've got the quality. Yes, they've got a stockpile there. And so as they go through that process of engaging the market and finding the customers that we want to build the right sort of long-term connection with to get full value for that product, then we can start to place it. So I think, again, it's about just being calm looking into the market and making sure we set this up for success for the long term rather than looking for some short-term cash flow out of it.

And maybe just a clarification on the earnings of Quinana where you've got no sales but you've got losses or EBITDA losses. Is that reflecting the fact that you've purchased Greenbush's spot during the quarter and does that come through there at that level?

Yeah, that generally goes through to inventory because as you buy it and you don't sell it, you keep it in inventory. But obviously they are also operating the Kunana site and there is some support functions that support that as well. Included in that actually, just one thing to add in there is You know, there have been some NRV adjustments to spodumene that have hit their P&L as well because of this falling market as they've bought it at higher prices of, you know, the $3,000 during the period, but the market has turned towards the end of the quarter because remembering that $3,000 was set on the prior three months, they've had to put through some NRV test, I mean, NRV write-downs of the inventory that they've got there in the spodumene.

Thank you. Your next question comes from Hugo Nicolacci from Goldman Sachs. Please go ahead.

Morning, Matt, Ivan, Cass. Thanks for the update this morning. Maybe just two quick clarifications from me before moving to my main question. I just wanted to confirm, firstly, are you expecting any catch-up tax at Greenbushes as a result of the pricing mechanism change? And then at Cosmos, just based on the study, how much capex do you think you'd need today to actually finish that project, even though it's not going ahead?

I actually missed the first part of that question. I'm really sorry.

Yeah, so is tax associated with pricing change?

Yeah, so from a transfer pricing perspective, which was something that was flagged previously, we're satisfied that the risk of that is minimal. Obviously, as time goes by and it all gets reset and the market is actually pricing on this basis, it provides a very valid reason to actually reset pricing. And that has been reviewed at the Taliesin level, at the TLEA level and at IGA level. So we're comfortable with that. In respect of the Cosmos, you know, CapEx and everything, look, this is hot off the press. We're working through that. And we will come back to you in the course of the next, three weeks, probably at the February half with a little bit more colour on that, but it's a little bit premature right now. Do you want to add anything to that, Ivan?

Yeah, I mean, as Kath said, we'll come back with more. The all-body, you know, AM6, AM5, we need to really understand where they might fit into the picture and what that takes. In CapEx, obviously the material handling program of work, we stood down late last year, which just made sense given where we're at. not to keep putting more money into it. And what we then have to start to calculate is think about the ore body and how we'd see that coming to bear, but then equally coming out of care and maintenance as much as we'll take great care to put these assets in wraps in good shape, what extra do we have to allow for to bring them back online? So there's a bit of homework to do. We've had our focus absolutely fully on trying to find a pathway for Cosmos and we have turned over every rock you can imagine. to do that, and it's just not there in this market environment. We will then use those insights and seek to complete a feasibility and understand then that full picture of what it would look like to finish or to finish the capital required for the shape of the business that we would believe in in the future. So I think in all of that, we'll give you an update in the half, in a few weeks, and then obviously as that work progresses and keep you informed.

Great, thanks for that. And then maybe, Ivan, just one for you. I mean, with the benefit of coming from a global mining major, I mean, what's your pecking order of commodities that you might want to look at for future exploration or assets? And is IDEO broadly open to further growth in the lithium business into places like South America?

So, look, I mean, I think our purpose and strategy is clear and said we'll do a refresh, but the foundations are really strong. We're in the business of battery minerals. That is more than lithium and nickel. Clearly, lithium, there is, and I said in my opening remarks, there's lots of opinions and there's lots of uncertainty. We will continue to try and build our own insights there and our own view. For me, coming from a global mining company, I'm very clear that having very low cost, large assets is a foundation for success and Greenbush gives us that. if we move away from that, I think we need to be really clear about why we would be doing that in any other asset, whether it's lithium or any other relevant battery mineral. And to your sort of earlier part of your question, you know, what's my favourite? It's a bit like your kids, you don't want to pick favourites. It doesn't end well, but, you know, I think we want to make sure we continue to keep our eyes open to that landscape and not just focus in on one place. There's enormous value in my view in having that diversification, but we just need to do it in a very, very measured way.

Thank you. Your next question comes from Matthew Freedman from MST Financial. Please go ahead.

Matthew Freedman Sure. Thanks. Morning, Ivan and team. Look, you made a decision today which will reduce the number of operations that you actively manage across the business and obviously there's others that are declining more naturally. But I'm looking at corporate and exploration spend currently running at $265 million a year. That seems like an awful lot relative to, I guess, your operational footprint. And I don't think I'm being unfair in saying that the exploration spend has delivered pretty limited success in recent years. So just wondering, feet under the desk, if you have any initial thoughts on where that $265 million a year can go as the operating footprint gets smaller and how actively do you intend to

Matthew, thanks. Let me let Kath give us some initial reflections and then I'll add to that.

Yeah, so the first thing to note is when you actually add those two numbers together, the corporate expenditure is corporate and other and it does include tax in there. So about 50% of that quarterly amount is actually tax instalments that we do during the period. So it's not as simple as adding them all up. Obviously, from an exploration perspective, it's a good question. But the reality of the situation is we maintain discipline around cost. We work very carefully around where we put that money and why we put it there. We have a large portfolio of tenements which need to have commitments made on them. But we are extremely disciplined about turning those as well. The question and the reality is, is many of that, much of that tenement build has happened in recent years. So in order to turn them more quickly, you've actually got to do enough work to make sure that you're not giving up something that's worth something. Having said that, we are in a very volatile market and the level of cost control and prudence needs to continue, but it probably needs a little bit more of a light shine on in some areas. It's not a time... to make knee-jerk decisions and actually go and do what many of our competitors do and the market has done for years and turn everything off. We've got a long-term strategy. Our long-term strategy is sound and we need to be very disciplined around how we go about doing that and making decisions in that context.

Thanks, Kath. You've covered everything. Let me... Look, let me... add a couple of extra remarks there. I mean, first of all, you can absolutely take it that we will be extremely thoughtful about the business and how it changes on the back of Cosmos. We're going to go through that carefully, but what also needs to happen is that refresh of the strategy to make sure that we do this with a view looking forward as the business that we want to be. But the prudence and the careful management of our costs that Kath just talked about to me is a foundation piece for any resilient business working in the mining industry. Secondly, when we talk about exploration, it's always difficult until you have that discovery and then all of a sudden it looks different. I guess the point is it's a long-term game. It's not something that you see results from in a couple of quarters or a couple of cycles. And my experience coming, you know, having been in the industry for a long time, is that the tendency to heavily adjust exploration to the cycle actually destroys a lot of capability and momentum that's built up in those teams. When I came into IGO, I didn't probably fully appreciate the depth of capability experience and the incredible pipeline the exploration team's got. I'm still learning about it and working through that. But I want to be very careful that we are both very prudent and thoughtful with the investments that we're making, but also we're not making any knee-jerk reactions, as Kath said. So that's, you know, I guess an overview just building on top of what she's covered as we go there.

Let me get a drink of water. That's helpful. Thanks very much, Kath, and thanks for your thoughts there, Ivan. Can I just ask, I guess, a follow-up at a high level to your comments around reassessing the business and refreshing the strategy, and I guess also following on from some of the questions on Kwinana. Do you have any initial thoughts or views on, you know, obviously you're very familiar with vertically integrated businesses that include both mining and chemical processing. Do you have a view initially on whether IGO's lithium business needs to be vertically integrated? in general or specifically if you need to retain an economic interest in Kwinana or whether you have other options?

Yeah, great question. It's one of the ones on my little black book to work through. At this stage, what I see is this is an industry where vertical integration and that flow through to the end consumers is important. where and how you want to be positioned to extract the maximum value from that is still something that's, I think, A, evolving in the industry, and B, we need to get more clarity on. So I'm not in a position to give you a definitive picture on that very good question, but at this point, you know, I think where we stand, the integration with Greenbushes and Kwinana does offer real potential.

OK, thanks for your thoughts, Ivan.

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

Thanks, Ivan, Matt and Kath. Just very similar to Matt's questions, when do you think you'll be in a position to sort of delineate a refresh strategy? I know you said diversified batch materials is where you want to be, but the company pathway to growth via nickel is now... closed for at least the short to medium term, and any lithium growth has to be shown into TLEA. So when do we get an update on that strategy?

I couldn't hear you super well, Mitch, but I think you were sort of asking about that process to have a look through the strategy, refresh it, and timing. Look, the first point I want to make is don't read this as wholesale reset. That's definitely not the point. I mean, in my opening remarks, I was very clear that the purpose and strategy that we stand on is very well thought through, and I've got absolute conviction in. But equally, you know, it's a great chance to step back. There's a lot changing in the market. We've seen the nickel market or nickel industry moving very quickly, I think well ahead of anyone else's expectations as well. And lithium, Nathan, it's early. There's still a lot to play out there. I think it's an area that I want to get deeper insight into. And then other battery minerals as well, which fits into... to our current strategy so you know this first point don't assume wholesale change second point is um doing that refresh is obviously an imperative and i think out of that drives um our focus in our our agenda in the business so it's for me a real priority to get through in the in the near term certainly in this financial year i'd expect that's complete and i'd like to be giving you an update at that point okay okay so yeah i guess thank you and sorry if it wasn't clear but i guess yeah part of my question was very much

If you want to stay in battery materials, but nickel is closed for the serial future, all lithium growth happens in TLEA, so it's not within IGO's direct control, that sort of implies that it's M&A into another battery material. Is that a fair assumption?

Well, yeah. I think he's drawing conclusions at this point that I can't really stand behind nickel and is a fast-moving situation. We've closed... We're going to put Cosmos in the care and maintenance. That doesn't mean to say that there's no future in nickel. We really need to think that through and look at our situation. And obviously, you all know the logic behind Western Areas and the strategic imperative, which was very sound in the macro position, and we're still working on our downstream technology there with the nickel processing. So there's a number of things we need to take into account as we reflect on it. But equally, you're right in saying there are other minerals in that battery mineral space that potentially offer some value and synergy in our business that we need to work through. So I just don't want to leave you with a view or try and draw some conclusion that we're trying to pick a winner at this point. That's not the case.

Okay. I really appreciate the call. Thank you.

Thank you. Unfortunately, that is all the time we have for questions today. I'll now hand the conference back to Mr Vela for closing remarks.

Look, thanks. I'll keep it short because I know we're right at the top of the hour. As I've said, IGI is in a fundamentally strong position. We can see that even at this point in the cycle that this business is still delivering cash, still performing. Very excited to be here and despite how tough it's been, my sort of onboarding in the last two months, I can really see the potential and the opportunities that we can realise through this business. We are taking action and adjusting to the prevailing market. We've just talked to that, setting the business up for the next phase. I've got great confidence in our people across this business that we can deliver on those changes. We're an evolving business and there is more work to do and we really need to learn from the recent challenges and I've said we'll talk more to that in the coming period. What really stands us apart, to really summarise again, our purpose and strategy is very well thought through. It is tied to the global energy transition and I'm convinced that that's a foundation for success in the future. Our lithium business has green bushes as a cornerstone. It is a world-class asset and it has significant potential for growth and improvement, and we partnered there with two of the best lithium players in the industry. We have multiple options for organic growth, and that includes our exploration pipeline. Very good balance sheet, and we will be disciplined and measured with that. It does give us optionality, but we'll be very thoughtful how we apply that balance sheet. And as I've said multiple times, a fantastic team across IGO with passion, expertise, and huge alignment with our purpose, strategy, and values. All of this together gives me a lot of confidence for the future. Thanks for joining us this morning. It's good for my first call to connect. Unfortunately, a very difficult day with the announcements on Cosmos. I'm heading out to site now to go and see the team and I'll be at NOVA in Forestania tomorrow. You can only imagine the conversations that are coming and the emotion. It's never easy having been through these things before and we will continue that focus. You know, you depend on or expect from IGO in caring for our people. Work through this and we'll keep you updated in the half as things unfold. Thanks again. Back to you, Operator.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.