Allkem Limited

Pauli. Welcome, everybody, and thank you for joining us for Auckland's June quarterly results briefing. As usual, I will be providing an update on our business, and Christian Barbier, Chief Sales and Marketing Officer, will be providing us with a market update. Also joining us for the Q&A is James Connolly, our Chief Project Development Officer, Liam Franklin, Head of Mount Catlin Operations, and Christian Cortez, our Acting CFO. We have concluded the financial year with a very strong performance at both our operations. We have achieved record annual and quarterly production of lithium carbonate at Olaros. At Mount Kathleen, quarterly production increased 50% from the prior quarter, and annual spotting in concentrate exceeded current guidance. Across the portfolio, we have made solid advancements in project execution. In Argentina, we are proud to have successfully achieved the milestone of first web production at Olaro Stage 2, while also advancing construction of Salde Vida Stage 1. At Mount Katling, we confirmed the additional four to five-year mine life via open pit methods. In Canada, we progressed the IBA in relation to the chainsaw project to final stages. And in Japan, Naraha is commencing battery grade qualifications with customers. We continue to be in a very strong financial position. This quarter, we generated group revenue of 334 million, a slight improvement from prior quarter. We also achieved significant group cash operating margins of 82 percent. Group net cash at the end of the quarter was approximately 648 million. we continue to focus on our long-term strategy to deliver scale and product flexibility to customers and remain fully committed to the delivery and execution of our growth pipeline. The proposed merger with Liban helps us accelerate our strategy and the risk our growth profile while driving higher vertical integration into the EV value chain. We have advanced the transaction and we are still targeting completion by the end of calendar year 23. From a sustainability perspective, starting with safety, we recorded a 12-month moving average total recordable injury frequency rate of 1.98 at the end of June, achieving our financial year 23 fund safety target. Financial year 23 TRIFR evidences a 24 improvement year on year, but a 15% increase quarter on quarter of four recordable injuries occurred in Argentina. Investigations have been carried out with corrective actions implemented. The 12-month moving average lost time injury frequency rate target was also achieved, closing financial year 23 with 3.62 incidents per million hours. Community engagement and share value continues across all our projects and regions in which we operate. Some highlights include positive community engagement with increased stakeholders in relation to the GENESER project to agree on local economic benefits and also the installation of eight photovoltaic systems to generate electricity for families residing in the Salar del Hombre Muerto near Sal de Vida. We also recently signed a 130 million project finance facility with the IFC for Sal de Vida stage one. This facility is structured as a sustainably linked grid loan that combines environmental and social targets. these targets and reinforce commitment to support our responsible and sustainable development of lithium for a greener future and economic growth in the province of Catamarca. Moving to our operations at Oloros, we achieved record annual production of 16,700 tons of lithium carbonate and record quarterly production of over 5,000 tons. This is a result of a strong operating performance, excellent plant reliability, low downtime, and improved energy efficiency. Lithium carbonate sales of over 3,400 tons were up 18% quarter-on-quarter and generated revenue of $132 million. Approximately 380 tons slipped into early July due to delayed solar arrivals. Strong production formula of stage one significantly exceeded budget sales forecast and sales for the September quarter are expected to be much really higher. Gross cash margins remained at 85%. Third party sales were completed at $38,062 per tonne FOB and cash cost of goods sold was $5,882 per tonne. Up 19% quarter on quarter. due to elimination of extra incentives coming to effect and the raise of materials, labor, and energy, which have been impacted by inflation. Over time, unit costs will be offset as we progressively increase production volumes at all our stage two, where we will focus on achieving product volumes and quality specification over a 12 to 18-month ramp-up period. At Mount Katling, we produced over 58,000 tons of dry metric tons of spodumene concentrate and achieved a 67% recovery. This demonstrates significant improvement in grade and favorable mineralization as mining has moved into the central zones of the main ore body. We shipped over 46,700 tons of spodumene concentrate and generated revenue of $123 million. shipment of additional 11,700 tons slipped into the July due to severe weather conditions delaying loading at the port. The gross cash margin of 80 percent was based on cost of production of $830 per ton for the quarter, an average pricing of $4,979 per metric ton. At Naraha, we implemented some equipment repairs and improvements during the quarter, and we continue to focus on increasing product quality and volume through design capacity. We sold 464 tons of technical grade lithium hydroxide, and we're also commencing the battery grade hydroxide qualification process with customers. At Sal de Vida, we reached 98% construction completion of the first two strings of ponds. The first nine ponds have been completed and filled with vines. All ponds have now been lined. The engineering for the third string of ponds has also been completed and earthworks have commenced. The detailed engineering of the process plant progress during the quarter. Process plant construction also advanced with mobilization of the EPC contractor and continuation of civil works including delivery and installation of precast foundations and associated concrete works. Engineering at James Bay advanced to 72% completion by the end of the quarter with a process plan package at 81% completion. Procurement of mechanical process equipment and mobile mine equipment are complete to 94% and 88% respectively. Stakeholder and community engagement remains very positive. We've made significant progress on the IBA with the Cree First Nations and reached the last stages of the approval process However, this has been delayed slightly with the evacuation of the local community due to severe forest fires. We will recommend, once the situation returns to normal, and we will continue to support them through this difficult time. I will now hand over to Christian Bravier, who will provide us a market update.

Thank you, Martin, and good morning, everyone. The markets over the last 12 months have been a tale of two halves. from the extremely tight high market conditions in the first half of the fiscal year to the dramatic correction in the second half. This volatility has created a lot of noise in the markets. However, the truth remains that market fundamentals are strong. Decarbonization is still unimperated, and battery storage remains a key enabler. Direct electrification through the use of batteries has been identified as the most efficient, cost-effective, and commercially available route to fully decarbonize road transport. We already observed that the transportation sector is undergoing profound transformation, and we can all agree that electrification is a foregone conclusion when we see penetration rates have reached 34 percent in China, 24 percent in Europe, and now 9 percent in the U.S. EV sales continue to increase at a significant rate, from 3 million in 2020, 10.5 million in 2022, to closer to 14 million in 2023. And according to BNF, 27 million by 2026. We should not and cannot afford to become distracted by short-term volatility. There's been some concern over the recent futures exchange outcomes. Keep in mind that futures markets are not commonly used for markets for lithium product sales. They represent very limited small volumes relative to the lithium chemical market. And as such, price indications are driven by short-term speculative sentiments and are not representative of the underlying physical market. During the June quarter, lithium chemical prices were observed to have rebounded and stabilized. Consensus views suggest a relatively stable pricing environment over the next six months, based on expectations of balance, supply, and demand dynamics. However, I note that the market continues to be regularly surprised on the upside in relation to demand, with being repeatedly surprised on the downside on supply. We believe the market will be at best tightly balanced overall, and prices likely to be responsive to factors that may upset this tight balance. Olkem has delivered, in the last quarter, better than expected production rates, both at Olharoz and Mount Catlin. We expect this to continue. We're fortunate to be in the position to offer more volumes in an improved market. Olkem has demonstrated discipline in withholding from selling at low prices into sluggish markets, And over the coming quarter or two, we expect to monetize at current recovered prices or better. Thank you. I will now hand back to Martin.

Thank you, Christian. And I will now hand back to the operator to commence the Q&A.

Thank you. And at this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. For the sake of time and to accommodate as many participants as possible, kindly limit your turn to one question and one follow-up. Additional questions may be entertained if our schedule allows. We will now take a short pause to organize the Q&A roster. And your first question comes from the line of Rahul Anand from Morgan Stanley. Your line is open.

Hi, Martijn and team. Congratulations on the result and thanks for the opportunity. Look, I just want to talk on production for my one question. Obviously, production coming in quite strong and ahead of consensus and us. I just wanted to perhaps get a bit of colour, you know, for both assets. Oleros stage one, obviously, production. How much was it helped by the extra brine availability? And if we had to take that away, what is the underlying production rate? now for stage one is it starting to perform much better than before is what I'm trying to get some color on. And then on Catlin, yeah, again, good result there as well. How are we thinking about the setup of the asset going into next year? So just production related from me. Thanks.

Well, thank you very much, Rahul, for your questions. Listen, as we discussed before in the case of stage one, clearly, INCREASE AVAILABILITY OF THE OPERATION AREA FROM THE PONTS DEVOTED TO STAGE TWO HAS HELPED STAGE ONE, BUT CLEARLY THERE'S SIGNIFICANT IMPROVEMENT IN THE PLAN. THE PLAN IS CURRENTLY OPERATING AT HIGHER RATES, HIGHER RECOVERIES, HIGHER VOLUMES FLOWING THROUGH THE PLAN AND SIGNIFICANTLY HIGHER EQUIPMENT AVAILABILITY TIME AS IMPROVED MAINTENANCE PROGRAMS HAVE OCCURRED. moving into a significantly better ground, but there's some additional production coming from additional operation areas we discussed before. In cattle, it's a significant recovery after a difficult first half of the year, and with a very solid second half of the year, I think returning to normal operations in cattle is what we should expect in terms of volumes. And we are working on the production numbers to be guided along with the yearly financial statements that would be released around the 24th of August.

Sure. Just one follow-up there, Martin. In terms of stage one itself, do you think we start getting close to that nameplate that we've had as a target for a long time pre your tenure at the firm?

We're getting closer. We're almost there if you were to look at it in terms of prime equivalent production. But it would also depend on the breakdown between prime and battery grade products produced from stage one. So yes, it has improved a lot from where it was about five years ago.

Yeah. Perfect. Thank you very much. I'll pass it on.

Your next question comes from the line of Tom Hayes from CLSA. Your line is open.

Hi, Martin and Tim. Congratulations on the production result. Just one on James Bay. You've just called out, you know, the delay there has some sort of effect given the forest fires, given that the community has been evacuated and also some of that environmental monitoring related activities have been suspended. I'm just wondering if you can give me some more colour on what is the main driver here? Were there environmental monitoring activities that have come out of your discussions with the communities that are sort of a follow-up on that draft environmental assessment report? Or is there a meeting coming up with the community that's delaying an outcome? I'm just interested to hear from you if you could sort of lay out the next steps to conclude that permanent process.

Thank you very much for your question, Tom. Listen, many things to answer there. The good news is that the community were returning today to East Main, and that's very good news. You know, the quality of the air is back breathable there. What's holding the IBA process is the final discussion with the community on the IBA agreement was going to happen two weeks ago. That was delayed. We hope it's going to happen soon. soon and we're almost finalized with the IDEA with the community. Then regarding the ESIA, if you remember, we secured the approval from the federal authorities back in January. That approval came with certain requirements of environmental monitoring. It was basically flora and fauna to be completed before starting construction. Those works have already been completed, and all requirements to start construction there have been completed. The remaining approval comes from COMEX. That is the joint body between the province of Quebec and the Cree national government. And that is, you know, in the final stages, COMEX is having another meeting toward the end of July, the next few days. in which we expect to have some clarity around the finalization of the process, you know, now should go into after all questions have been answered and, you know, all clarifications have been put forward, we expect to progress in getting that final approval quickly. However, I don't know how quickly quickly is in Quebec these days.

Thank you for that. Maybe just one follow-up. You flagged that once we get that permitting approval, then you'll sort of tell us about first production. I'm just wondering, will that come with sort of an updated view on capex and costs?

Well, clearly, once we've got the permit and we know that the key issue there is how many winters we have to go through in the construction because they do have a significant impact on indirect costs. So once we get the permit in, we will come out with an updated timeline and, of course, schedule for James Bay.

Thank you very much. I'll leave it there.

Your next question comes from the line of Max Vickerson from Morgans. Your line is open.

Good morning, Martin. Can I just ask a quick question about the difference between sales volumes and production at Oleroz, just especially given that it sounds like the production improvements may have been slightly anticipated. So just wanting to tease out whether there's any marketing decisions behind why sales volumes did so much, or was it just because production was kind of weighted towards the back end of the quarter?

No, I think, well, production has been quite stable through the quarter, but I'll let Christian Bavier answer the detailed question on sales forecasts.

Yes, Max, thank you for your question. So look, yes, we've had a very strong production from Olaros over the last two quarters. You may remember at the end of the March quarter, we had an inventory increase because production was already above forecast. And we also had reduced internal requirements from Nara at the time. So we said then that we decided selling, we decided against selling immediately. at the Chinese spot price because at the time the spot price was quite low, around $25, and that didn't really make sense for us to destroy value for shareholders. That price did not reflect market fundamentals. It was the right thing to do. The spot price inside China has recovered from $25 to $40 during the second half of May, and it has more or less stabilized since. So during the June quarter, what we did is that we increased the level of spot sales and short-term contracts as soon as prices recovered, which is during the second half of the quarter. Most of the impact would be seen during the September quarter because of order lead time and also some shipping delays that we've had at the end of June into July. And we also had, as you mentioned, a higher-than-forecast production in our RRs thanks to really strong operational performance, which is great, about 1,200 tons higher than what we expected. And again, our consumption in Nara has remained reduced because we continue our process improvements and we now have started the qualification with our key customers. So overall, good news. it has resulted in a temporary increase in finished product inventory, but we're not concerned. Sales level will be higher and already are higher in the current quarter and will continue in the December quarter without compromising the realized price.

Fantastic. That's very clear. Thank you. Just a quick follow-up then. You mentioned Naraha with, you know, not necessarily needing a lot of volume at the moment, but does the extra inventory do anything to the timeline for qualification or are you still waiting for stage two to ramp?

The qualification for hydroxide with our customers is not impacted by stage two. We've started that process. We've had an audit from one of our key customers already and the technical qualification has already started. We expect it will take some time. You know, in battery production, qualification of hydroxide takes anywhere between six and 12 months.

Excellent. Thanks very much.

Your next question comes from the line of Kate McCutcheon from Citi. Your line is open.

Hi. Good morning, Martin. When I was at Oleraz this quarter, it seems like a big feat to deliver stage two, so congrats to the team there. My question was on costs at Olaraz. The removal of the export duties at the Puna credit, which I think you said is 4% of revenue or thereabouts. And is it fair to think that half of that goes to cost of good sales? And so should we expect cash costs to come down as stage two ramps up, given it doesn't have the purification circuit? And how should we think about weight of costs over the long term on a real basis there? There's been a lot that's moved around since the last... kind of update, I guess, on expected pricing for all of our expected costs, I should say. Thanks.

Thank you. Thank you, Kate, for your question. And yes, you're right. The impact on cost is on the PUNA refund, which we estimate to around $1,000 in total. But Christian Cortez can give you more details on the expected cost evolution.

Hi, Kate. Thank you for your question. Yeah, the export refund was eliminated in February. So when you're comparing to the previous quarter, we would have had an impact approximately of about $750 a ton, quarter on quarter. Now, the explanation provided in the past is that benefit was effectively about half taken to a reduction to cost of sales. and about half was effectively impacting another line item in the profit and loss statement. So, your question around looking forward, obviously, we'll go through a process of commissioning and ramping up. At steady state, we will effectively expect to see benefits from incremental production as we will see a lower portion of fixed costs attributable to those volumes. So we'll keep the market updated as we go along through the journey.

Okay. And can we expect cost guidance for both assets or guidance in general, I guess, with your financials in August?

Well, we won't be providing commentary around all of us, particularly. on the basis that, you know, there's a certain period on which how that's going to look like during commissioning. And as we've said in the past, that process takes over a 12-month period. So, we don't think it would be reasonable for us to estimate that with a level of accuracy for the market. For Catlin, once we talk about volumes, we can then provide colour around what that expected cost may look like.

Okay. Thanks, Christian.

Thank you. Your next question comes from the line of Mitch Ryan from Jefferies. Your line is open.

Morning, all. Thank you very much for taking my question. A simple one. We are starting to ramp up quite well. I'm just wondering if you can provide some colour on just the ramp-up profile to nameplate.

Thank you, Mitch. Yes, listen, Naraha started quite well. As you know, during the ramp-up period, you evidenced some issues which we sorted out during the quarter in general maintenance of some of the equipment. The plant continues to do very well. There's not a significant market for technical grade hydroxide, so we are not pushing product, and we focused on improving the quality of the product to be able to start the qualification process with the customers. So as we complete qualification process and we start locking in the long-term contracts for product, you will see the volume of Naraha ramping up to 9-plate. There's no issue in getting to 9-plate capacity there from what we have seen during the ramp-up period.

Yes, so I was just waiting for some more colour on just the timing of when you will expect to be hitting that.

It's a combination of... How quickly the customers answer on the qualification of the products and, you know, we're getting to those customers. We could start producing more, but it wouldn't make sense to sell technical-related hydroxide into a market that doesn't price it well. Okay. Thank you.

Your next question comes from the line of Al Harvey from JP Morgan. Your line is open.

Yeah, morning, Martine. Just wanted to touch on the merger. Logged all the antitrust documents. Just trying to get a sense of if there's any jurisdictions you're particularly concerned about. And I guess as a quick follow-up, when we should expect the independent expert review, if that's still in September.

Yes. Listen, there are no particular jurisdictions that we are concerned. We are following the approval processes in the different jurisdictions. And so far, so good. It's, you know, according to expected timing and nothing to update on that one. With regards to the dependent expert report, as you know, it has to be produced with updated financial information. So it will incorporate the annual financials that are expected to be delivered to us the second half of August. And from that, it may take another three or four weeks to complete the independent export. So we should be seeing it in the second half of September, according to our current schedule.

Thanks, Martin. And just one quick one, if I may. You did mention in the release a lithium carbonate by-product was sold. not small, but just what was that and what kind of customer or end use was that for?

Yeah, Christian, can you help me with that one, please?

Yes. Yeah, we sold a few hundred tons of a of a byproduct that we had been producing progressively over the last two or three years, and we took advantage of the high spot prices between October and April to sell these. These were sold to technical applications, industrial applications, non-battery applications. Does that answer your question?

Yeah, thanks for that.

Okay. Your next question comes from the line of Hugo Nicolasi from Goldman Sachs. Your line is open.

Morning, Martin, Christian, James. Thanks for the update this morning. Maybe just a quick initial one for Christian. Just looking at your tax paid in the quarter, and I guess last quarter as well, looks a little bit light. Just wondering if we'd expect to see a catch-up on the cash tax paid in the first half of FY24?

Hi, Hugo.

Sorry. I chose, sorry. Yes, the tax paid both previous quarter and current quarter relate to Mount Catlin. That's effectively an advance payment, which will drop once we close the year. Does that answer your question? Sorry.

Yeah, so if all the tax paid in relation to Mount Catlin, I guess, how should we think about OLROS sort of tax payment going forward?

Yeah, yeah, absolutely. OLROS will certainly be paying cash this financial year. It's a matter of effectively finishing the year and submitting our tax return. And the expectation is that we'll be paying tax from here onwards.

Great. That's helpful. Thanks, Christian. Then maybe just one for James. Any progress on the daily technology selection at all? I mean, are you still expecting to start piloting some of the short-listing technologies later this year, and how are studies progressing on a potential stage three there? Thanks.

Thanks, Hugo, for the question. Yes, the technology screening has gone extremely well. As we indicated, we are going more conventional on that side, focusing on let's say a first stage evaporation. On the DLE itself, we'd be looking at absorption technologies. Which one? We're still making the decision around, and our process design team will be looking at that. In terms of the advancement around that, obviously, we've focused on the hydrodynamic models. We've completed that work. We're quite happy with the results, and that will lay the basis for our teams both to explore that evaporation case as well as a future state DLE case. So very good on the hydrodynamic side. In terms of piloting, the process development team has scheduled piloting for this financial year coming. So we look forward to updating you as soon as we get that piloted. We will be using the site, which will be a great, where we did some really good work on and we'll use that same laboratory, just kit it out with the DLE technology and advance that going forward.

Great. Thanks for that, James. Pass it on.

Your next question comes from the line of David Fang from CIACC. Your line is open.

Good morning, Martin and Tim. Thanks for taking my question. So, my question is on the latest timeline of Saudi Arabia. It's great to see that we are making further progress this quarter and maybe have more color on the impact of the delayed caused by resourcing and procurement issue at South Nevada, as you mentioned last quarter. Are we still expecting first production in mid-2094 now?

So, David, we've made good progress. Sorry, Martin. We engaged with Turner and Townsend, as we spoke the last time. They are at the latest stages of that review on The re-baseline activities, we're currently doing the quantitative risk assessments at the moment. So within this quarter, we will be in a position to update the market both on cost and on schedule. At the moment, we will keep the guidance as is until we do the work and can have that spread and certainty around what our forecast will be.

Okay, thanks, Christian. That's really helpful. And a quick question on Mount Kaplan's low-grade spartan cells from a – we noticed that there's no low-grade cells recorded this quarter. So is this just a pause of cells, or shall we expect no further low-grade cells in the future?

We said, David, when we started those lower-grade cells that we had to sort out the problems we were creating to our customers by the lower production of cattling as we returned to normal operation. we make a lot more money selling the high-grade concentrate and the lower grade. So with regards to future outlook, we'll let Christian Bavière talk through it.

Yes, thanks, Martin. David, yeah, you may remember that we said it was really about giving additional lithium units where we experienced lower than anticipated production levels. It was always temporary. We are not in the current moment selling any low grades, although we do have a shipment that has been debated at this stage, and we did it both in the month of July. But that was basically a legacy from the past few months.

Okay, no problem. Thank you so much. I'll pass it on.

Your next question comes from the line of Austin Yoon from Macquarie. Your line is open.

Morning, Martin and the team. Just wondering if you could provide some colour on the Naraha plan to ramp up and the modification work you did during the quarter. Do you need to do more work or any further modifications in the next few months? Thank you.

Thank you, Austin. As I said, it was not modifications. It was... maintenance and adjustments after the initial ramp-up of the plant. It was basically work on the kiln that, you know, it's a large piece of equipment and being run for the first time in Raja, so some adjustments have been made there to ensure that we reached the required recycling of lime levels, and it's all good. I don't expect major modifications, and there hasn't been any major modification in Raja. It has mostly been I told you, you know, adjustments on equipment that were evident through the ramp-up period, as it usually happens.

Great. Thanks. Just one quick follow-up. So, any call that you can provide on the future shipment to NARA hub plant from the other operations? Thank you.

You're mostly related to the amount of sales. Amount of the product. Correct.

Yes, yes. Sorry, the... the amount of lithium carbonate sent to Naraha?

Well, as you know, Naraha at full capacity can produce 10,000 tons of lithium hydroxide, which requires about 9.5,000 tons of lithium carbonate to be produced. And, you know, the shipments to Naraha would be directly related to the amount of battery-grade hydroxyl cells that we achieve in Naraha after completing the qualification process with the customers.

Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. And we do have some follow-up questions. Your first is from Kate McCutcheon from Citi. Your line is open.

Hi, thank you. Just a quick market question. Usually you give us realised pricing expectations for the next quarter. You haven't done that this quarter unless I've missed it. What's the rationale there, or can you provide some expectation, please?

Yes, Kate. Thanks for your question. Look, when we look at the markets at the moment, as I mentioned in my opening comments, we expect stability during the September quarter. The market seems to have calmed down in terms of prices. And demand remains robust and is expected to continue to increase. Having said that, we've seen a lot of volatility in the last six months. And we do have quantities of spot material to sell, both in carbonate and in hydroxide. So our exposure to the spot is in our portfolio. And part of our quarter sales are not yet priced. So it would send a signal to customers and to competitors that would be totally inappropriate. So this is the reason why we're not communicating the guidance.

Okay. Understood. Thanks for the follow-up.

Your next follow-up question comes from the line of Tom Hayes from CLSA. Your line is open.

Thank you very much. Just to follow up on Mitch's question around the rampart of Naraha, is the implication here that you can actually run that plant sort of on a tonnes per day basis at 100% today? And if not, what have you achieved in terms of the percentage on a daily output basis?

No, the plant does not have any limitation to reach nine plate capacity as we proved through the rampart process, as I said before. The market for technical grade hydroxide is not very strong and doesn't make sense to produce a lot of technical grade hydroxide. So we are ramping up the plant after the modifications according to the sales orders that we expect from the customers after completing the product qualification process. There's no technical limitation on it. The plant was very quickly ramped up in terms of capacity.

Fantastic. Thank you. And just one quick follow-up. In May, we saw headlines of Mexico, Bolivia, Chile and Argentina forming some sort of alliance. You know, some other headlines that we've seen recently. Mexico amending their mining law to place high environmental standards and use of water in the mining sector. And also just headlines around the upcoming election. I'm just wondering if you could make some comments on... what that association might look like going forward, and also any comments that pertain to your lithium operation, you know, or any impact that the election has on your operations going forward.

Thank you, Tom. That's a difficult question, because it requires to do some forecasting on politics, which is quite difficult in this part of the world. Listen, yes, we all saw those news. Something that is important to bear in mind is that those news were mostly supported by the national government in Argentina. However, in Argentina, the natural resources are under the custody or under the responsibility of the provinces. Provincial governments are against changing anything within the existing mining laws. So we, based on the current configuration of the law and how the system works in Argentina, we don't foresee such an association having a direct impact on any of our operations for the time being. With regards to the potential impact of the elections, we have seen that most of the extreme candidates have weakened over the last few months in the run-up to the PRIMARY ELECTIONS THAT WILL HAPPEN WITHIN TWO WEEKS SO AS OF TODAY THE POLLS ARE SHOWING THAT MOST OF THE CENTER TYPE CANDIDATES ARE RUNNING UP AND IN THAT REGARD YOU KNOW ONE OF THE CANDIDATES COMES FROM THE PREVIOUS GOVERNMENT THAT WAS QUITE SUPPORTIVE OF THE LITHIUM INDUSTRY THE OTHER ONE COMES FROM THE CURRENT GOVERNMENT THAT WAS ALSO QUITE SUPPORTIVE OF THE LITHIUM INDUSTRY SO WE DON'T FORESEE significant challenge coming up from the elections in Argentina. I'm not sure if that answers everything or there was a second part in your question.

That's fine. Thank you very much for the cover.

Your next question comes from the line of David Deckelbaum from TD Cohen. Your line is open.

Thanks for fitting me in, guys. Martin, or maybe Christian, I just had a couple questions about Mount Catlin and the Ore Reserve update, if you had a moment. First, I just wanted to confirm that you still expect Stage 4 to be permitted by August of this year? And then my follow-up to that is just, as you think about, I know that you all are looking into a feasibility study for undergrounds mining. which I believe you're still targeting for the beginning of next calendar year or towards the early part of the calendar year. Is that an initiative solely to extend the mine life beyond the sort of 2028 time period?

Thank you, David. For a question, I will ask Liam to support us in the answers. He is the manager of the Mount Katling Asset.

Thank you. Yeah, thank you, David. Good question. So look, in terms of the mining permit that we lodged in May for the stage four expansion of Mount Kaplan, that is more likely looking at a September to October timeframe. Obviously, that's in the hands of our local regulator. We're regularly in contact with them. We don't anticipate much slippage from that timeline. However, we've factored in such risk into the profile of the waste stripping for stage four. So that's in hand and that won't impact obviously the FY23 spodumene production because we're still in the ore body for stage three. In terms of the potential for underground expansion, we're really looking at that as an alternative that may present economic benefits as opposed to a further cutback in the later stages of the already proven Stage 4, which may extend the life of the mine beyond 2028, as you infer. So we'll have to do the work, and the timeframe for that feasibility study remains early in the calendar year of 2024.

I appreciate the colour. Thank you, guys.

Your next question comes from the line of Matthew Friedman from MST Financial. Your line is open.

Sure, thanks. Morning, Martien and team. Just wondering if you can comment on the activity that you're seeing on the ground currently from other players, particularly in Argentina, particularly in terms of the construction and the ramp-up of new projects that are obviously coinciding with your own projects in-country. And I guess also thinking about how that feeds into your reassessment around the timing and the costs around Salta Vida. Do you expect these ongoing activities on other projects will impact you or feed into that process in terms of personnel or equipment availability or whatever the case may be?

Thank you, Matthew, for your question. As we said before, yes, there's a lot of activity going on in the region and availability of resources as well as The current restrictions that the government has imposed on imports are the main reasons for us to review the timeline on Sal de Vida. So that is clearly what underpins that review.

Yeah, thanks, Martín. I'm just wondering whether you'd be able to provide any colour on, I guess, specifically some of the other projects that are under construction in the region, and I guess how that's influencing

The availability of resources is directly related to many projects being constructed in the region. And you just saw EXA starting production, and there are quite a few others that, you know, some of them are a bit more delayed. I tried to push forward. I'll tell you, as advanced as we are, there's the Leiden plant in Phoenix on the other side of the Mremoto Salar, and all other projects are quite behind our progress in Sal de Vida. But, you know, lots are announcing that if they have not started construction, they will start construction shortly. So there is activity in the region. I think that shows confidence following that. Tom's question from before, I think that the market continues to be confident on the availability of resources in Argentina and the ability to develop them.

Yeah, that's pretty clear. Thanks for the additional detail there, Martin. Cheers.

Your next question, a follow-up from Hugo Nicolasi from Goldman Sachs. Your line is open.

Thanks for the opportunity to follow up. I was just more about a broader one. Back in May, we had a number of public comments from both U.S. and Argentinian officials around Argentinian lithium finding a path to some IRA support. That seems to have been pretty quiet recently. I mean, do you think that that's just linked to Argentinian election timing? Or maybe could you just comment on the latest you're hearing around what those discussions are looking like at the moment? Thanks.

Listen, Hugo, this may be a bit of speculation. It's an Argentine talking about U.S. legislation, but we have seen the Department of Treasury being slow in answering the questions or the comments that were posed on the IRA. I was talking to some lobbyists in Washington this week, and the view is that this may take a bit longer for the U.S. authorities to define the agreement that they got with Japan in terms of The Criterion Minerals Act boosted a number of comments and discussions, so we think those discussions are going to be a bit slower than we all expected. Nonetheless, and I was with the Argentine Embassy as well, and it is a country effort, and all of the companies operating in Argentina are supporting the country to find a path for the Argentine lithium into the the IRA requirements. So that continues to be the case. It's, you know, clearly we lose some focus from the Argentine authorities as we get into the middle of the election period. But the effort, the intention, and the focus continues to be there.

Great. Thanks so much, Dan. And maybe just one last one just around, like I say, seeing customer conversations in terms of offtake and volumes since announcing the merger. You know, those conversations, change in terms of what they're seeking, in terms of maybe being diversified contracts from different assets, now that you can potentially offer that, or maybe how, I guess, pricing discussions shift, given that maybe you have a greater sort of security of supply that you can provide from a bigger portfolio? Any sort of updates as to those discussions there?

First of all, you have to consider that given antitrust regulations, not a lot of customer engagement could happen around these days with regards to the merger. So until the deal is finally voted, both companies will operate separately. Nonetheless, support from customers and indications of interest have been quite good with regards to the merger because there will be a larger company with a larger asset base, with a larger industrial base, being able to supply customers globally and with a significant amount of flexibility, meeting all of their requirements. So, as you said, you know, having a larger asset base, being able to supply from different assets, it's all good news for customers. And live internet, we have both received quite optimistic or quite promising comments from the customers with regards to the merger. So, from that regard, I'll tell you it is as good as it could be given the current antitrust regulations that you are not able to get into detailed discussions at this point.

Thanks, Martin. I appreciate that.

There are no further questions at this time. I would like to turn the call back over to Martin for closing remarks.

Thank you very much, Pauli. Concluding remarks, I can tell you that we have achieved a strong quarter with solid progress, and we continue to focus on strong operational performance, project execution, and managing cost throughout our global portfolio. Thank you for joining us today. If you have any further questions, please don't hesitate to contact our investor relations team.