Allkem Limited

25% to get us to that 1500 and that's to build a robust economic mind. So let's, we're not doing our price forecasts on that. Our sales and marketing team under Christian will provide those to us in terms of our cash flow modeling, but let's not confuse what that 1500 is there for. It's to create robust longterm minds where we don't have to go restate this resource.

I think the important part is the largest part of the increase in reserves and resources in James Bay. It's a direct consequence of the drilling campaign that was performed during the year. It's a great asset.

Yeah, it's a good outcome. So if I've understood that well, that $1,500 is essentially 75% of the long-term price, which suggests about $2,000 a tonne spodumene.

For a 40 year asset that's what we're doing.

Okay and also I'm just wondering on the resource there's sort of overall plant recoveries for James Bay expected at 71% and they sort of declined to 67% that's part of what was released in the resource update. Can you provide some detail on what's driving that decline? Thanks.

That's more a grade relationship that we've done. You'll also notice that part of our recommendations in there is to test composites below 0.5 cutover grade. That was the lowest composite sample we had. So as we extend that down, we hope to improve those recoveries on, let's say, the lower grade samples and improve that recovery going forward. So a lot of test work for us to do, especially with the north-west sector, to confirm and to potentially bring more into the resource.

Sure, that's great. Appreciate it. I'll pass it on. Thanks.

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

Hi, good morning, Martin. On Salda Vida, when can we expect an update for capital cost expectations and timing on first production there? Or are we still on track for mid-calendar year 24, I think was the last timing you gave the market?

Listen, Kate, thank you very much for your question. We're finalizing the baseline for costs and timing for the project that should be quickly released. We do expect that mechanical completion to approach more towards the end of the year and initial production right after that. But those analysis are coming together and we will be putting them out within the DSK 1300 report that we're updating for the merger process.

Okay, so just to be clear, mechanical completion at the end of next calendar year? Yes. Okay. And then secondly, if we could get some comments on the impacts of the inflation and devaluation of the PISO that we've seen recently, is that ultimately a positive thing for costs?

Well, I will let Christian Cortés expand more on this. The initial reaction is that when devaluation runs faster than inflation, which is what we have seen over the last two weeks, it improves our cost performance. As we have seen in Argentina, over time, inflation regains terrain against the devaluation and it matches the situation. So, short term, it is positive on the cost side. Christian, this is working a lot, and lots of things have been done last year to fetch the principal position in Argentina, and we don't expect significant negative results from the movement. Christian can tell you more detail about those things. Christian, please.

Hi, Kate. Yeah, Martin, just building up on a bit more detail to your point, we've obviously come off a two-year period where inflation at local level was running ahead the devaluation of the local currency. So in FY23, we saw that arbitrage being around a 10% pass-on to real U.S. dollar inflation terms for operating costs at Oloross. As Martin alluded to, the immediate effect that we expect is to see some level of relief on the back of having that devaluation now surpassing inflation. We don't obviously know how long that's gonna go for, but to the extent that the currency maintains relatively stable for the next few months until the elections, it would effectively mean that we have probably a good three to four month period where we can bank some of those savings.

Yeah, perfect. Okay, thanks for the colour question, Martin.

Your next question comes from the line of Reg Spencer from Canaccord. Your line is open.

Thanks. Morning, Martin. First question's around OLROS guidance. You guys have always put forth a relatively conservative ramp-up timeline, but just looking at your guidance number for It feels like it does look a little conservative, knowing that you did do 5,000 tonnes in the June quarter. Is that a fair comment? Would you agree that your guidance for the next 12 months is a little conservative?

Well, Rich, yes, you can look at it that way. We always said that a ramp-up period for a lot of states too could take between 12 to 18 months. And as you know, I'm cautious. on the ability to ramp up that faster than the expected time horizon. So that's a way to look into it. And that's why it's also a wide range from 22 to 26. We feel comfortable within that range, even stable production from stage one and what we can reasonably expect from stage two. And as I said before, we've been through a lot of stage one, so bear with us until we We'll ramp it up completely.

Okay. Can I ask Martina, is there any specific part of the process that you're most concerned about? Clearly, you've got some good stocks of concentrated brine. The front end of the carbonate plant seems to always work well, or at least it certainly did in stage one. Are there any specific parts of the process where you're more concerned than others, and that's what's driving that caution?

No, listen, we incorporated some new improvements to the process, particularly in carbonation reaction and the filter pressing. And it all worked very well with initial production. So we got from stage two, just being conservative on the issues that may happen as you ramp up volumes in a plant that operates at 4,000 meters height when you have two plants in parallel. And, you know, there are a few things that... may create some potential interference between two plants. It's just getting familiar with that and getting the team used to running both processes in parallel what makes us think conservative. We feel pretty confident with the process and we've already tested the carbonation reaction, filter pressing, and it all goes very well in stage two and very good results. In the first attempt, we got... Good quality product.

Excellent. Thanks, Martin. Just lastly, upcoming election, based on what I can read in the media, the frontrunner would appear to be, how should I describe this, non-conventional, a little bit outside of the lanes, especially compared to the existing politics there. If Milo wins this election, do you think we could see any changes to any of the legislation or tax or royalties or anything like that? And what might the potential implications be for synergies to be developed with Liban's operations?

Quite a lot of questions in one, Reg.

We'll stick with the first one.

First one, yes, he's a newcomer. He was not of the The winner of the primary elections had only a couple of representatives in the legislative power in the last election, so it has been a surprise to all politicians in Argentina the amount of support that he has had in the primary. It also was to mention that only two-thirds of the people that had to vote did vote, so it's still an open end for the election. What I would consider as a positive from the results of the primary is that all three running up candidates, the largest one has been around 20% and the shortest part is the official government with around 25%. So when you look at the overall offering, all three candidates have manifested the support of the lithium industry. and quite supportive of Argentina continuing to export and grow lithium. So based on the results, I don't foresee problems or challenges neither for Olkem nor for the merger with Livent. With regards to economic measures, it's a bit of confusion now of what every one of the parties would like to say, would like to do. But what we are seeing is more than 50% of the votes have been on right-side candidates that have been announcing government austerity measures and reaching fiscal balance and unifying the foreign exchange. So that, I think, is going forward a positive news coupled with the support that all three candidates have manifested for the lithium industry.

Okay, excellent. Excellent. That's great. Thanks, Martin. I'll pass it on.

Your next question comes from the line of Joel Jackson from BMO Capital Markets. Your line is open.

Good morning. A couple of questions for me. First, we're seeing conversion margins really get smaller as the weeks go on here. What are your views on that and how that may impact spotting pricing, lifting pricing? So what are your views on that and what it may impact the industry?

Thank you, Joel. Christian, Bobby, I think you're better positioned than me to answer that one.

Yes, good morning, Joel. Thank you for the question. So look, conversion has always been a business with relatively limited constraint margins. You have a feedstock and you're producing a chemical. Depending on the speed of growth of one chemical versus another, prices can fluctuate in different directions, and carbonates and hydroxides can fluctuate in different directions. Likewise, the supply and demand balance between each segment in the supply chain can affect especially in the conversion process, which is probably the one that, if you're not integrated, is more susceptible to fluctuations in terms of margin. That's probably all I would say at this point. There's still a need for conversion. There will always be a need for conversion. Converters in China at the moment, are still profitable, albeit from one month to another. They are possibly at different levels of profitability. Everyone in the supply chain is making money. So I'm not too concerned about this situation.

Okay. And you gave some costs. guidance for Mount Catlin for fiscal 24. Can you give us an idea of maybe how all the rows, costs, cash costs, meet fair in 24 relative to fiscal 23?

Thank you, Joel. Christian, you can explain the cost evolution in all rows.

Hi, Joel. The challenge of providing cost guidance on all rows comes down to the stage of where we're at now with effectively completing and ramping up the expansion at stage two. Our estimate currently is we'll continue to see costs similar to where we closed in the previous quarter. However, that comes with a caveat as to obviously depending on how the yields are looking like from the new plant.

If I could slip one more in. When we think of Quebec and Canada, I mean, you've got, with live, you have two big projects you're pushing through. You know, one project has some government involvement already with IQ. One doesn't. I mean, how does James Bay, does it have to be where Lubuchi or Namaska has to go first considering the involvement with the government just may politically work out better? and James Bay has to be slowed down a bit to focus on Wabuchi first, or how do you think about that?

We don't see any, as I said, any implication from one project into the other. Both projects are moving forward, and the expectation is to continue to move them forward at the speed that we both have planned live and with the Wabuchi mine and with the James Bay project. We think it's a great asset. It's demonstrated a great upside opportunity, and we want to start developing it as quickly as we can. We're in the final stages of the approvals, and we don't foresee government involvement as any reason to speed up or delay one project or the other. Both projects have to go in as quickly as possible because the demand in North America is going to be very large.

Thank you.

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

Sure, thanks. Morning, Martin and team. Maybe while we're talking on that point on James Bay, can you remind us exactly where you're up to in the approvals process? Obviously, the COMEX approval is still outstanding, and you mentioned IBA as well. Can you expand on that? And also, whether... the resource updates that you've announced, whether that has any impact or whether you would contemplate any changes in that approvals process as a result of that growing resource. Thanks.

Thank you very much, Matthew, for your question. Listen, as I said before, in the month of January of this calendar year, we secured the approval from the federal government. That approval came with a series of requests to complete certain studies that have all been completed and done. We're in the final stages of approval with COMEX and all of the questions have been answered. COMEX is just into the final process of processing the resolution and issuing the approval. We expect that to happen soon. However, COMEX does not have a timeline as the federal government does. With regards to the IBA, it's also in the final stages and we have had to delay twice a public hearing with the community of East Main on the IBA because of the need to evacuate the city of East Main as a consequence of the wildfires. Communities have come back to their houses over the last two weeks and we expect to be able to complete this public hearing with the community on the IBA shortly. With those things completed, final stages of approval of IBA and COMEX, you know, clearly shouldn't be a long time until we get the final approval and go ahead on the project. However, as I said before, the COMEX does not have any deadline on the time they can take to approve the things, and I think we've seen that. We secured federal approval in January, and we're still working with COMEX on on finalizing the process. With regards to whether the project will change as a consequence of the due resources announced, no. The project in its initial stage remains at the 40,000 tons per annum capacity. The development of these resources is something that we'll look into after initiating the the development of the first stage of GEMSA. I don't want to delay the project anymore. I just want to move it as quickly as possible.

Thanks for that, Martin. And sorry, can you just remind me, is it still your intention to, I guess, publish an update in terms of capex and timing and costings, et cetera, once you've received all those relevant approvals? And will that be, I guess, irrespective of the timing on the merger discussions?

Yes, you will see an update which we expect to come across close to the assurance of the final approvals that should be coming for the merger discussions. We are updating all of our JORC and NF43-101s into SK1300s, and that will come. We'll take advantage of that to update costs and schedules for all the projects, as I said before, with the case of Saldivilla.

Okay, that's very helpful. Thank you for that. Maybe just quickly, Christian gave some commentary and Carla before around how you're seeing pricing in terms of your products in the September quarter. Can I just ask, in prior quarters, you have withheld on spot sales and chosen to build inventories into a falling market or into volatile pricing environments. Can we expect that that's still the strategy and that you'll continue doing that where appropriate?

Yes, Matthew, this is Christian. Thanks for the question. Look, we have not withheld on spotty mean sales. We had withheld on cabinet sales when the pricing wasn't attractive and demand was very soft. And we explained that. that we would release tonnage as pricing conditions are better. And this is what we have been doing over the last couple of months. So during the course of this quarter, you can expect to see a reduction of the level of inventory, which we expect will continue into the December quarter. We will always do this progressively without compromising the average selling price.

got it that's very clear thanks for taking my questions your next question comes from the line of al harvey from jp morgan your line is open good morning martin and team um just on the other oz guidance just wanted to get a sense if you're able to provide uh the battery grade split um that you're expecting in that guidance um and obviously had a very strong final quarter but that was with a relatively low battery grade share so Maybe any guidance there or if you can remind us your contractual obligations on providing battery grade spec carbonate from Oleroz?

For the exact number of battery grade, I have to devote it to Christian Barbier. What I can tell you is that all of the battery grade that we are producing is what the customers are requiring and according to the contracts that we have. I estimate we'll have a similar quantity as we had last year of battery grade. But Christian, you can correct me on that one.

Yeah, we are producing both battery grade and technical grade as per demand from our customers. But also, if your question comes from the spread between battery grade and technical grade in spot prices, I probably would not focus excessively on this because from one contract to another, performance can change. So looking at the split battery grade versus technical grade in ourselves may not be necessarily a good indicator of what future price performance will be.

Yeah, thanks. I guess I was just trying to get a bit more of a sense on yields. I mean, I guess the primary-grade spec product does tend to yield better, so I was just trying to get a guide there. But, yeah, I think I'll leave it at that.

What I can tell you is that all of the production from Oleros 2 is going to be technical grade, and, you know, so we'll continue to produce similar grade on battery from Oleros Stage 1.

Sure. Thanks, Martijn.

Your next question comes from the line of Mitch Bryan from Jefferies. Your line is open.

Morning, my team. Thank you for taking my question. I note that earlier this month you announced the new Top Code board, which has a proposed 12 members. If I look across, and it's not an exhaustive list, but I compare it to BHP at 10, Albemarle at 10, SQM at 8 members, Pilbara at 6. The only company that I've seen is Rio at 13, so I just want to understand, why that's the appropriate number of board members and is it reflective of complexity within the business that requires that sort of skilled matrix?

Well, thank you for your question, Mitch. I think you have to consider this in the context of a merger. It's two companies that are coming together and maximizing the expertise that's coming from both sides. It's important. It's not going to be a definitive number. but it's something that the board will evaluate over time, what is the right number of board members that the new company will have. Initially, I think it is the right decision because it enables both companies to keep as much as their legacy and track record that they can have.

Okay, thank you. Thank you for taking my question.

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

Oh, morning, Martine and team. Thanks for taking the questions. Maybe just one for James and kind of a follow-up on James Bay. I was just wondering if you were able to provide a bit of timing, clarity, just around the potential for converting the updated resource to reserve. Appreciate you doing another drilling campaign from November, but just when we should think about kind of getting that update in terms of timing.

Yeah, thanks, Hugo, for the question. we are planning in this winter season to do a lot of the conversion around the northwest sector whilst we focus on extensions of the zones i'll remind you that this was discovered undercover and so we're pretty exciting about the rest of the deformation corridor so to your point uh we know the spacing that's a we know the spacing and angles we need to attack this beast at we're targeting this season so we can get the spacing in accordance with what's required to bring it into an indicator category and we look forward to bringing it to a to our board within the next year in 2024 itself. Obviously, we'll finish up drilling March, April, and then we'll get going with the resource update and potentially look at what that looks like from a reserve perspective as well. But that'll be early days.

Great. Thanks a lot. So to clarify then, it sounds like about this time next year that we'll probably get that next sort of set of updates then?

Exactly. And hopefully we'll find a north-northwest.

Yeah, hopefully. Good luck. Next one just around that then would be just around, obviously, James Bay and part of the kind of rationale for the Moody Revival with the ability to feed James Bay products through kind of an already permitted and in construction hydroxide facility. To the extent that James Bay is now obviously a considerably large-sized resource, what are the considerations there that you might contemplate in terms of feeding James Bay material through a different facility versus now maybe building something standalone for James Bay given the size. Thanks.

Those are still considerations that we're hosting internally. We are looking at its own site versus a Beckencourt site. We'll count on these studies and preserve the optionality going forward. So we won't pin ourselves down into any one case, but yes, sites are open to us and there are more logical sites out there.

Great. Thanks for that. I'll pass it on.

Thank you. Your next question comes from the line of David Fang from CICC. Your line is open.

Morning, Christian and team. Thanks for taking my question. Just a quick question regarding your volume guidance for all of us. May we have any ballpark breakdown for stage one and stage two volume for us just to better understand your expectation for the ramp up? Also, shall we expect around like 9,500 tons amount of these volumes to be delivered to Nara High during FY24?

Thank you. Thank you, David, for your question. A couple of things on that. As you know, there's some interference in the demand for brine from both plants. So giving you a pretty detailed split until seeing how both plants operate and work together, it's a bit difficult. And as I said before, we have factored in a wide variety of ramp-up ranges for stage 2 into the guidance. I expect a very similar and robust production as we had this year for model stage one, and most of the wiggle room within the range coming from model stage two. That's a good way to look into it. However, there's going to be some interference between both assets. On the other question, yes, Naraha is able to produce at full capacity now. The plant has been ramped up to full capacity. and demonstrated its ability to produce at good quality at that level. However, the final demand for Naranja is going to be determined by the amount of battery-grade hydroxide contracts that we sign following the qualification process that is taking place now. So that is what will finally determine total demand from the Naranja plant.

Okay. Thanks a lot, Kyle and Martin. That's really helpful. I'll pass it on.

As we are approaching the end of the session, our next question will be our final question. If you do have any further questions, please don't hesitate to reach out to the investor relations team. And your final question comes from the line of Ben Lyons from Jarden Securities. Your line is open.

Thanks. Good morning, everyone. Just one question on the mining physicals at Mount Catlin, please. Noting on this call last year it was indicated that that elevated strip ratio that we've been observing of pretty close to 13 to 1 would revert back to a number much closer to 1 to 1. Now obviously acknowledging that mine plans are organic beasts, just note the comment on the guidance slide that we should now expect a higher strip ratio profile due to that stage 4 cutback coming into the mine plan. Can you please confirm what strip ratio is embedded in the unit cost guidance of $850 for this year and how that strip ratio profile performs over the remaining four to five year life of mine for the open pit operations? Thank you.

Thank you Dan for your question. Liam will answer that in detail to you but strip ratio analysis is in line with what we announced for the open pit for stage four. Liam, you're silenced. We can't hear you.

If he's not available, Martin, I can follow it up, post the call.

Yes, we'll follow up. I'll ask Liam to give you a detailed call on that one. But this strip ratio that you are seeing on the cost is pretty much in line with the strip ratio that we are foreseeing for Stage 4. Yeah, okay, right. Thank you. Thank you very much, Ben.

As that does conclude our Q&A session, I would like to hand back over to Martin for closing remarks.

Thank you very much, Paulie. As I said, our achievements today demonstrate the commitment of our team to deliver sustainable production and development across our global portfolio. We remain dedicated to keeping this momentum in the future. If you have any further questions, please contact our investor relations team.