Q3 2023 Livent Corp Earnings Call

Please standby were about to begin.

Good afternoon, everyone and welcome to the third quarter 2023 earnings release Conference call for <unk> Corporation phone lines will be placed on listen only mode. Throughout the conference. After the Speakers' presentation. There will be a question and answer period I will now turn the conference over to Mr. Daniel Rosen Investor Relations and strategy for Lydall Corporation.

Mr. Rosen you may begin.

Great. Thank you Bob Good evening, everyone and welcome to <unk> third quarter 2023 earnings call. Joining me today are Paul Graves, President and Chief Executive Officer, Andrew Burrito, and Tony <unk>, Chief Financial Officer.

The slide presentation that accompanies our results along with our earnings release can be found in the Investor Relations section of our website.

Prepared remarks from today's discussion will be made available after the call.

Following our prepared remarks, Collyn Gilbert who will be available to address your questions.

Given the number of participants on the call we will request to limit one question and one follow up color, we'd be happy to address any additional questions. After the call.

Before we begin let me remind you that today's discussion will include forward looking statements are subject to various risks and uncertainties concerning specific factors, including but not limited to those factors identified in our Form 10-K, and other filings with the Securities Exchange Commission.

Information presented represents our best judgment based on today's information actual results may vary based upon these risks and uncertainties.

Ladies discussion will include references to various non-GAAP financial metrics definitions of these terms as well as a reconciliation to most directly comparable financial measure calculated and presented in accordance with GAAP provided on our Investor Relations.

With that I'll turn the call over to Paul.

Yes.

Thank you Tom Good evening, everyone I promise no bad Halloween jokes can I promise.

We reported third quarter results.

Highlighted by adjusted EBITDA of $121 million up 8% on a year over year basis with a margin that was roughly flat versus the prior quarter.

On a nine percentage point higher margin than a year ago.

We are providing an update on progress with our multiple capacity expansion projects, including the impact on expected sales volumes over the remainder of 2023 and into 2024.

We will touch on the recent feasibility study released for the Nebraska lithium project in Quebec.

Which further underscores both the quality and the masks with assets as well as its importance and serving growing supply chains in North America.

Finally, we will provide an update on our pending merger with <unk>, including the continued progress that has been made.

What you can expect in the coming months as we move to meet the targets would close or around the end of 2023.

Before providing some market perspectives and alive and business update I'll turn the call over to Gilberto to discuss our third quarter performance as well as a revised full year 2023 financial guidance.

Thanks, Paul and good evening everyone.

Turning to slide four.

Reported.

Third quarter revenue of $211 million.

Just an EBITDA of $120 million.

Adjusted earnings of 44 cents per diluted share.

Volumes sold were roughly flat.

And lower average realized prices were offset by lower overall costs versus the second quarter of 2023, and the third quarter of 2022.

Although revenue was down 9% on a year over year basis.

We were able to increase adjusted EBITDA by 8% over the same period.

Despite some of the recent declines seen in the lead to market prices.

<unk> adjusted EBITDA and margin continue to be near all time high.

Reflecting the benefits of our commercial strategy as well as.

The low cost position.

For resource in Argentina.

Third quarter volumes sold were in line with our expectations as.

As we stated that any meaningful expansion volumes would only be available in the fourth quarter.

On pricing <unk>.

<unk> average realized price in the third quarter were lower than the first half of this year as anticipated, reflecting the continued price declines seen in the market since late Q2, particularly in China.

Setting this wasn't an improvement in overall costs.

This was driven by a few factors.

Most notably lower royalties due to the timing of Argentina, and Chile export reference prices.

As well as lower input costs for our other specialty businesses, particularly for butyl lithium.

This resulted in our adjusted EBITDA margins remaining unchanged compared to the second quarter of this year and nine percentage points higher than a year ago.

<unk> total capital spending year to date was $239 million.

Below adjusted cash from operations of 270 $574 million.

We expect spending to increase in the fourth quarter as we progress multiple expansions.

And our estimate for 2023 total capital expenditures between 2325 and $375 million remains unchanged.

Our balance sheet and overall liquidity.

Remains very strong.

We ended the quarter with $130 million in cash and no draw under our $500 million revolving credit facility.

The combination of our current cash position.

Strong outlook for cash generation.

Our ability to draw on the credit facility give us continued confidence in our ability to internally fund our capacity expansions.

Moving to slide five.

You will see.

<unk> has adjusted its guidance for full year 2023 financial performance.

Compared to the prior guidance.

Compared to the prior year guidance. This is driven primarily by lower expected volumes sold.

Along with a smaller smaller expected price increase year over year versus 2022.

For volumes the company now expect medium incremental volumes from capacity expansion in the fourth quarter of this year, resulting in roughly flat volumes for the full year.

This will result in higher volume growth in 2024.

As we still expect a substantial portion of the 10000 metric tons of new lithium carbonate capacity to be available.

Paul will go into further detail on our expansion shortly.

For pricing, we still expect meaningfully higher average realized prices for LC versus 2022.

The year over year increase in the 10% to 15% range based on our guidance.

Blowing the roughly 130% increase we saw in 2022.

We also expect lower cost versus the prior year, primarily related to raw materials.

Party purchases.

The company now projects full year 2023 revenue to be in the range of 100 890 <unk>.

$940 million and adjusted EBITDA to be in the range of 500 million to $530 million.

Is it still represents significant group of 13 and 14% respectively.

Good points versus prior year.

I will now turn the call back to Paul.

Thank you that's all.

With the significant downward moves we've seen in lithium market prices in recent months I wanted to give you our perspectives on what we believe drove these movements and what we might be able to expect in the future.

When looking at the main lithium indices, it's clear the prices moved lower during the third quarter.

Unknown Attendee: Please stand by, we're about to begin.

And we've seen that with our own market price based customers as well from data reported by others in the industry. However.

Unknown Attendee: Good afternoon everyone, and welcome to the third quarter of 2023 earnings release conference call for live incorporation. All lines will be placed on listen only mode throughout the conference after the speaker's presentation, there will be a question and answer period.

However, when.

When we look at the underlying demand and supply data points year to date, we don't see strong evidence that either is meaningfully different to what we had previously expected.

Daniel Rosen: I will now turn the conference over to Mr. Daniel Rosen, investor relations and strategy for live incorporation Mr. Rosen, you may begin. Thank you, Bo. Good evening everyone and welcome to live in third quarter of 2023.

On the demand side, we can see the customer buying activity for electric and Q3 was weaker than what end market demand indicators would imply for example, and EV battery installations in China were up 24% year over year for the third quarter.

Daniel Rosen: Joining me today are Paul Graves, president and chief executive officer and Roberto Antoniazzi, chief financial officer. This slide presentation that accompanies our results, along with our earnings release, can be found in the investor relations section of our website. Prepare remarks from today's discussion will be made available after the call. Following our prepare remarks, Paul and Roberto will be available to address your questions. Given the number of participants on the call, we request to limit one question and one follow-up for caller. We'd be happy to address any additional questions and after the call.

32% higher through the first three quarters of 2023.

<unk> sales in China continued to reach New records during the third quarter.

Globally EV sales grew 25% in the month of September and are up 37% year to date.

But it's fair to say that in the third quarter, we did not see demand for lithium.

Levels that are consistent with these numbers.

On the supply side, the third quarter typically has higher seasonal production in China.

Daniel Rosen: Before we begin, let me remind you that today's discussion will include forward-looking statements that are subject to various risks and uncertainties concerning specific factors, including but not limited to those factors identified in our form 10K and other filings with the Securities and Exchange Commission. Information presented represents our best judgment based on today's information. Actual results may vary based upon these risks and uncertainties.

But the amount of new supply that actually came to market was not meaningfully higher than most analysts forecast it.

We continue to see production expansion delays globally and keep in mind that the increased sources of supply. The most top service typically point to namely African spodumene or Chinese lepidolite, a much higher cost material on the global cost curve and certainly our highest cost in todays indices are pointing to.

Daniel Rosen: Today's discussion will include references to various non-gap financial metrics, definitions of these terms, as well as a reconciliation to the most directly comparable financial measure calculated and presented in accordance with gap provided on our investor relations.

In fact, we've already started to see reduced production from some of these higher cost and largely unintegrated operators.

And as we've said in the past the massive lepidolite production that has come into the market.

Daniel Rosen: With that, I'll turn the call over to Paul. Thank you, Dan.

He is actually a symptom of insufficient supply from other sources.

Paul Graves: Good evening, everyone. I promise no bad Halloween jokes tonight. I promise. We reported third quarter results that were highlighted by a just a new desire of $120 million, up 8% on a year-over-year basis, with a margin that was roughly flat versus the prior quarter and a 9% percentage point higher margin than a year ago. We're providing an update on progress with our multiple capacity expansion projects, including the impact on expected sales volumes over the remainder of 2023 and into 2024.

Also it's worth noting that the average lithium content and hard rock production has been lower than most operations resulted in great to output higher processing costs and lower downstream utilization rates.

What we see is that the energy storage supply chain broadly speaking is working through inventories that were built at the end of 'twenty two and in early 2023.

We see this destocking occurring well downstream of lithium itself with battery cell producers, mainly in China, curtailing or even stopping production as they reduced their inventory levels of finished shells.

Paul Graves: We will touch on the recent feasibility study released for the Namaskha Lithium Project in Quebec, which further underscores both the quality of Namaskha's assets, as well as its importance in serving growing supply change in North America.

As we've seen in prior lithium price cycles, the magnitude of price moves for lithium is being amplified by the behavior of lithium purchases, particularly in China.

Paul Graves: Finally, we will provide an update on our pending merger with Alchem, including the continued progress that has been made and what you can expect in the coming months as we move to meet the targeted close of around the end of 2023.

With underlying long term end market demand remaining strong and supply chain inventory levels declining to levels that cannot support more than a few weeks or maybe months of sales if history is repeated.

Gilberto Antoniazzi: Before providing some market perspectives and a live and business update, I'll turn the call over to Gilberto to discuss our third quarter performance, as well as our revised full year 2023 financial guidance. Thanks Paul and good evening, everyone.

We will see a rapid increase in the price of battery materials when buying restarts.

It is important to note that this dynamic we referred to is not being driven by the behavior of <unk> core customer base, namely the global Oems.

We continue to be highly focused on secure and reliable sources of long term lithium supply and.

Gilberto Antoniazzi: Turn it to slide four. Live and reported, third quarter revenue of $211 million. I'd just an EBDA of $120 million, and I'd just an earnings of $0.44 per diluted share. Volume sold were roughly flat and lower average realized prices were offset by lower overall cost versus the second quarter of 2023 and the third quarter of 2022. Although revenue was about 9% on a year over a year basis, we were able to increase adjusted EBDA by 8% over the same period.

And especially through supply chains that are able to be all or in part Iowa subsidy eligible.

This key customer base is also focusing more closely on its role as a partner and providing commercial technical and financial support for lithium development projects and while we expect Oems to continue to seek out ways to stimulate more lithium production in the future. We believe they will be far more focused on supporting proven.

Companies, rather than those with more expensive or technically challenging resources.

The key takeaway I would leave you with is that today's market conditions do not to us reflect equilibrium supply demand conditions for lithium.

Gilberto Antoniazzi: Despite some of the recent decline seen in the Lithium market prices, livens adjusted EBDA and margin continued to be near all-time highs, reflecting the benefits of our commercial strategy as well as the low cost position of our resource in Argentina.

The factors that give us confidence and sustainably higher lithium prices in the foreseeable future haven't changed.

<unk> growth for qualified high quality product continues to be extremely challenging for the supply side to meet in the near to medium term.

The trend of greater customer demands and tighter product standards continues.

Gilberto Antoniazzi: Third quarter volumes sold were in line with our expectations, as we stated that any meaningful expansion volumes would only be available in the fourth quarter. On pricing, livens average realized price in the third quarter were lower than the first half of this year as anticipated, reflecting the continued price decline seen in the market since late Q2, particularly in China. What we said in this was an improvement in overall costs. This was driven by a few factors, most notably lower royalties due to the decline in Argentina until the X or reference prices, as well as lower input costs for our other specialty businesses, particularly for putillitium. This resulted in an adjusted EBDA mortgage, remaining unchanged compared to the second quarter of this year, in 9% points higher than a year ago.

<unk> produces continue to have production costs in excess of the current index prices.

And then in addition, we see no strong indications that a pullback in underlying energy storage market demand is imminent.

There've been fundamental changes to the longer term growth trajectory for the lithium industry.

I'd like to go into more detail now on the status of license multiple ongoing expansion projects on slide seven.

Argentina work continues on the companies to equal 10000 metric ton phases of lithium carbonate expansion construction.

Construction for the first phase is complete and was finished in line with the timing expectations laid out at the beginning of this year.

But the process of commissioning the new units has been slower than we had previously forecast.

So always issues discovered in the transition from construction to early stage commissioning.

However, we are finding they are more challenging to resolve when operating in remote regions and especially in jurisdictions, where access to specialized skilled labor is limited due to a lack of local talent and challenges in bringing international expats into the country.

Gilberto Antoniazzi: 5 in total capital spending year-to-date was $239 million. Beware was just a cash from operations of $274 million. We expect spending to increase in the fourth quarter as we progress multiple expansions, and our estimate for 2023 total capital expenditures between $325 and $375 million remains unchanged. Our balance sheet in overall liquidity remains very strong. We enter the quarter with $113 million in cash, and no draw under our $500 million with all the credit facilities. The combination of our current cash position, a strong outlook for cash generation, and our ability to draw on the credit facility, give us continued confidence in our ability to internally fund our capacity expansions.

In addition, whether a greater controls around imports of replacement parts such as in Argentina further delays of taking place. These.

These challenges are not specific to live in all of our production processes. In fact, we don't even believe has limited the lithium industry as a whole of lithium expansion projects compete with projects in other sectors, such as oil and gas and mining.

<unk> manpower materials and equipment.

This delay in our first phase commissioning it means that <unk> no longer expects incremental expansion volumes to be available for sale in 2023, and this is reflected in our updated guidance. However, we are forecasting a substantial portion of the 10000 metric tons of capacity to be available in 2024.

With the first commercial volume sold in the first quarter.

In addition to this expansion the second 10000 ton carbonate expansion phase in Argentina is expecting first commercial volumes to be sold in the second half of 2024.

Gilberto Antoniazzi: Moving to slide 5, you will see who live and have adjusted its guidance for full year 2023 financial performance. Compared to the prior guidance, this is driven primarily by lower expected volume sold, along with a smaller expected price increase year-over-year versus 2022. For volumes, a company now expects minimum incremental volumes from capacity expansion in the fourth quarter of this year, resulting in roughly flat volumes for the full year.

Okay.

Lithium hydroxide expansions in the U S and China are progressing on track and as previously communicated.

The company has additional 5000 ton hydroxide unit investments city, which was completed last year has been producing material, while getting qualified with relevant customers and we'll wrap up ramp up next year alongside the first Argentina carbonate expansion page.

Construction is also well advanced at the 15000 metric ton.

Syed facilitated a new location in the province of Zhejiang, China with completion targeted for before year end 2023, which is slightly ahead of schedule.

Gilberto Antoniazzi: This will result in higher volume growth in 2024, as we still expect a substantial portion of the 10,000 metric tons of new lithium carbonate capacity to be available. Paul will go into further detail on our expansion shortly. For pricing, we still expect significantly higher average realized prices for LC versus 2022, with a year-over-year increase in the 10-15% range based on our guidance, following the roughly 130% increase we saw in 2022. We also expect lower costs of versus the prior year, primarily related to raw materials and through party purchases.

This 15000 metric ton facility will double <unk> production capacity in China.

By the end of 2024 live and it will be largely balanced between lithium hydroxide capacity and the carbonate production capabilities to accretive.

During the third quarter <unk> released an FCC SK <unk> hundred compliant feasibility study for the upstream will Gucci mine portion of the <unk> lithium project.

As a reminder, ligand has a 50% equity interest in and provides operational support to the integrated 34000 metric ton lithium hydroxide project located in Quebec, Canada.

Gilberto Antoniazzi: The company now projects full year 2023 revenue to be in the range of 890 to 940 million dollars, and adjusted EBDA to be in the range of 500 million to 530 million dollars. There is a fewer presence, significant growth of 13 and 14% respectively at the meet points versus prior year.

<unk> is providing technical and commercial expertise and has been appointed to engage in sales and marketing efforts on its behalf.

Domestic lithium comprises two development projects that were Gucci mine and Tibet <unk> lithium hydroxide plant.

Usability study for well Gucci is a comprehensive technical report supporting the underlying economics of the Nebraska lithium project.

This project continues to be very attractive due to its scale.

Paul Graves: I will now turn the call back to Paul. Thank you very much.

With an asset operating life of over 30 years based on current resource definition, it's strong relative cost position.

Paul Graves: With the significant downward moves we've seen in lithium market prices in recent months, I wanted to give you our perspectives on what we believe drove these movements and what we might be able to expect in the future. When looking at the main lithium indices, it's clear the prices moved lower during the third quarter, and we've seen that with our own market price-based customers as well from data reported by others in the industry.

Strategic location in North America to serve growing regional demand.

And its favorable sustainability profile, including access to low carbon hydro electric energy.

This study is consistent with our previously outlined expectations for the project.

<unk> capital requirement for the development of the <unk> Spodumene mine and the integrated lithium hydroxide facility and Beckham coal is projected at approximately U S $1 6 billion.

Paul Graves: However, when we look at the underlying demand and supply data points here to date, we don't see strong evidence that either is meaningfully different to what we had previously expected. On the demand side, we can see that customer buying activity for lithium in Q3 was weaker than what end market demand indicators would imply. For example, an EV battery installations in China were up 24% year over year for the third quarter, and was 32% higher through the first three quarters of 2023.

We do a boutique comprising roughly $400 million of the total amount.

Commercial sales of spodumene concentrate are expected to begin in 2025 and continue until the lithium hydroxide facility comes into full production.

Production of lithium hydroxide is expected in late 2026.

Having recently celebrated the five year anniversary of license IPO. We wanted to review what <unk> has achieved in that five year period, and what has been a very dynamic and often unpredictable market.

Paul Graves: EV sales in China continued to reach new records during the third quarter. Globally, EV sales grew 25% in the month of September, and are up 37% year today. But it's fair to say that in the third quarter we did not see demand for lithium that levels that are consistent with these numbers. On the supply side, the third quarter typically has higher seasonal production in China, but the amount of new supply that actually came to market was not meaningfully higher than most analysts forecasted.

Five years ago, although demand expectations for lithium or high driven by the rapid adoption of Evs that was much greater uncertainty about the pace of adoption I noticed today.

Only China had made a significant push via government support in the U S was not expected to play a major role in the near term demand or supply picture.

The fast growth of demand in Europe, largely due to EU policy setting and the direct incentives provided in the U S by legislation such as the U S. Inflation reduction Act was certainly not seen as likely.

Paul Graves: We continue to see production expansion delays globally, and keep in mind that the increased sources of supply that most observers typically point to, namely African Spodgamy, or Chinese Lapidolite, are much higher cost material on the global cost curve. And certainly, a higher cost than today's indices are points. In fact, we've already started to see reduced production from some of these higher costs and largely unintegrated operators. And as we've said in the past, the amount of lipid light production that has come into the market is actually a symptom of insufficient supply from other sources. Also, it's worth noting that the average lithium content in hard rock production has been lowered in most operations, resulting in greater output but higher processing costs and lower downstream utilization rates.

Battery technology, we are still in flux the debate between lithium carbonate lithium carbonate or hydroxide was going to be predominant was still a major debate at least with investors.

And on the supply side, the best pointed to massive expansions and low cost brine resources in South America, fulfilling all future demand needs and possibly more.

But we've seen what we've actually seen as brine based production steadily lose market share in this timeframe.

Others thought novel extraction technologies, such as direct lithium extraction, our DLA would move the cost curve lower.

But again, we've actually seen Chinese lepidolite resources with the production cost three to four times out of lithium triangle, Brian operations coming into operation to meet supply shortfalls.

Paul Graves: What we see is that the energy storage supply chain, broadly speaking, is working through inventories that were built at the end of 22 and early 2023. We see this destructing occurring well downstream of lithium itself with battery cell producers, mainly in China, cutailing or even stopping production as they reduce their inventory levels of finished cells. And as we've seen in prior lithium price cycles, the magnitude of price moves for lithium is being amplified by the behavior of lithium purchases, particularly in China, with underlying long-term end-market demand remaining strong and supply chain inventory levels declining to levels that cannot support more than a few weeks or maybe months of sales.

As these dynamics have unfolded, we have seen lithium indices mature and as they have done. So we've seen a fundamental shift take place and how high and how low lithium pricing can go.

Till the last few years the peak pricing, we saw for lithium carbonate and then really only for a few months within the low $20 per kilo.

The last two years, we saw multiple courses with carbonate pricing up two or three times that level.

And on the low end and 2020, we saw carbonate prices fell to six.

$6 per kilo, and even lower but as demand growth has required higher cost resources to come online and as the true capital cost of lithium projects has slowly been revealed.

Paul Graves: If history is repeated, we will see a rapid increase in the price of vacuum materials when buying restarts. It's important to note that this dynamic we were referring to is not being driven by the behavior of live and poor customer base, namely the global OEMs. They continue to be highly focused on securing reliable sources of long-term lithium supply, and especially through supply chains that are able to be all or in part IRA subsidy eligible.

Today, we see a cost curve with a meaningful proportion of global supply is today operating marginal costs that are at least three times that level.

Even prior to 2019 live and was looking for ways to improve its profitability profile. Both in absolute terms, but also in terms of predictability of earnings.

As always look to maximize the sale price of every lithium unit, we produce and also create a business that protects us from the most extreme volatility in lithium pricing.

The benefits of this approach can be seen when looking at our historical realized price per lithium carbonate equivalent LTE.

Paul Graves: This key customer base is also focusing more closely on its role as a partner in providing commercial, technical and financial support for lithium development projects. And while we expect OEMs to continue to seek out ways to stimulate more lithium products in the future, we believe they will be far more focused on supporting proven companies rather than those with more expensive or technically challenging resources.

Well as annualized and year over year changes in that realized price versus market based references.

We've attempted to summarize the results of this strategy on slide eight.

The first thing you can see it in almost every historical market environment we.

We have typically been able to generate a higher price for each unit of lithium we produced compared to selling lithium carbonate to customers at market prices.

Paul Graves: The key takeaway I would leave you with is that today's market conditions do not towards reflect equilibrium supply demand conditions for lithium. The factors that give us confidence in sustainably higher lithium prices in the foreseeable future haven't changed. Demand growth for qualified high quality product continues to be extremely challenging for the supply side to meet in the near to medium term. The trend of greater customer demands and tighter product standards continues.

By focusing on building a leading position in value added project products, we have meaningfully outperformed in pricing terms.

But just as important.

We have been able to reduce the volatility of our realized pricing year over year, creating greater predictability of earnings which is a key benefit when assessing the attractiveness of investing in multi year lithium projects.

Paul Graves: The marginal producers continue to have production costs in excess of the current index prices. And in addition we see no strong indications that a pullback in underlying energy storage market demand is imminent, or that there have been fundamental changes to the longer term growth trajectory for the lithium industry.

You can see from the state to that when market prices are at their lowest in the 2019 to 21 period.

<unk> had its greatest outperformance in terms of both pricing levels and predictability.

While the large and rapid run up in market prices in 2022 men, we underperformed in terms of pricing growth.

Paul Graves: I'd like to go into more detail now on the status of Leibniz Multiple Ongoing Expansion Project from Slide 7. In Argentina, work continues on the company's two equal 10,000 metric tonp phases of lithium carbonate expense. Construction for the first phase is complete and was furnished in line with the timing expectations laid out at the beginning of this year.

Let's pricing receives from these historic highs in 2023, we've restored our price premium and expect it to grow further still by the end of the year.

It is with the same perspective that lives on we'll look to operate its business moving forward and how the company ultimately believes it will drive the most value for shareholders.

With this said I want to highlight some of the key tailwind behind that business and what you can expect from <unk> as we move through 2024.

Paul Graves: But the process of commissioning the new units has been slower than we had previously forecast. And challenges in bringing international experts into the country. In addition, where there are greater controls around imports of replacement parts, such as in Argentina, further delays are taking place. These challenges are not specific to liven or our production processes. In fact, we don't even believe it's limited to lithium industries a whole. As lithium expansion projects compete with projects in other sectors, such as island gas and mining, the limited manpower materials and equipment.

First <unk> will be producing and selling meaningfully higher volumes to customers next year potentially 50% more than in 2023.

This is the result of multiple years of expansion of investment and this trend of increasing year over year volumes will continue for the next few years.

This also means that we will be generating higher cash flow in 2024 under a wide range of different price scenarios, including one way market prices remain at today's levels throughout 2024 and.

And we intend to continue to use this cash flow to fund multiple highly attractive capacity expansion opportunities available to us while maintaining a healthy balance sheet.

Five and also chose to lock in some pricing for the business, which will benefit us in 2020 for regardless of future market price movement.

Paul Graves: This delay in our first phase commissioning means that liven no longer expects incremental expansion volumes to be available for sale in 2023. And this is reflected in our updated guidance. However, we are forecasting a substantial portion of the 10,000 metric terms of capacity to be available in 2024 with the first commercial volume sold in the first quarter. In addition to this expansion, the second 10,000 ton carbonate expansion phase in Argentina is expecting first commercial volumes to be sold in the second half of 2024.

This was done as we continue to reset.

Lower price contracts that were entered into with long term customers prior to the run up in lithium prices that began around 2021.

Agreeing to fixed prices just for next year gives us some additional competence of delivering a year over year price increase on a meaningful portion of our volumes.

You should expect <unk> to continue bringing greater clarity to as business through its commercial strategy its diverse product offering and leading cost profile.

Paul Graves: Our lithium hydroxide expansions in the US and China are progressing on track and has previously communicated. The company's additional 5,000 ton hydroxide unit investment city, which was completed last year, has been producing material while getting qualified with relevant customers and will wrap up ramp up next year alongside the first Argentina carbonate expansion phase. Construction is also well advanced at the 15,000 metric ton hydroxide facility to new location in the province of Xinjiang, China, with completion targeted for before year and 2023, which is slightly ahead of schedule. This 15,000 metric ton facility will double liven production capacity in China. By the end of 2024, liven will be largely balanced between lithium hydroxide capacity and the carbonate production capabilities to feed it.

License customers value the high quality of our products and our growth capabilities and are willing to enter and long term agreements with firm volumes and other forms of commitment to supporters.

In order to be a reliable partner, we will structure these contracts to give us confidence to invest in expansion.

Also retaining the ability to take advantage of market opportunities when available.

<unk> also benefits from the diversification brought by its other lithium specialties products include in butyl lithium.

In addition to serving a variety of attractive end markets outside of energy storage. The fact, the price adjustments and these products are typically based on movements in key underlying input costs, because that tends to be more stability in the profit margins of these businesses.

Despite the recent decline in market prices alive and suggested EBITDA margin continues to be above 50% today.

Paul Graves: During the third quarter, liven released an SEC SK-1300 compliant feasibility study for the upstream Wibuchi mine portion of the Namaska lithium project. As a reminder, liven has a 50% equity interest in and provides operational support to the integrated 34,000 metric ton lithium hydroxide project located in Quebec, Canada. Liven is providing technical and commercial expertise and has been appointed to engage in sales and marketing efforts on its behalf.

This is a result of the company's best in class low cost resource base and its operating cost discipline, which supports profitability through different market cycles.

It is this discipline around pricing and costs that gives us confidence in our ability to continue to fund the investments in our world class resources internally generated funds.

Everything we just discussed refers to liven alone.

Of course, we are nearing the closing of our merger with <unk> to create a leading global global lithium chemicals producer.

Paul Graves: The Namaska lithium comprises two development projects, the Wibuchi mine and the Beckincore lithium hydroxide plant. The feasibility study for Wibuchi is a comprehensive technical report supporting the underlying economics of the Namaska lithium project. This project continues to be very attractive due to its scale, with an asset operating life of over 30 years based on current resource steps.

The merger will immediately increase our global scale and growth profile.

Further diversify our asset base and product offering and improve our vertically integrated footprint.

You've seen our shared long term vision for the new company before on slide 10.

While some of these strengths will take time to fully realize we expect to see real tangible benefits in 2024, including improved product flows between our production assets and lower combined operating costs as we work towards the run rate synergies of $125 million in.

Paul Graves: Finition. It's strong relative cost position. It's strategic location in North America to serve growing regional demand. And it's favorable sustainability profile, including access to low carbon hydroelectric energy. The study is consistent with our previously outlined expectations for the project. Total capital requirement for the development of the Wabuchis project being met US $1.6 billion, with Wabuchis comprising roughly $400 million of the total amount. Commercial sales of sponsoring concentrate are expected to begin in 2025 and continue until the lithium hydroxide facility comes into full production. First production of lithium hydroxide is expected in late 2026.

One time capital savings of $200 million.

We'll of course have more to share with you early next year after the close but we remain excited as ever about the opportunities. This merger will bring to all shareholders.

I want to conclude on slide 11 by highlighting some of the key merger related milestones since our last earnings call as well as what to expect ahead about targeted closing.

<unk> have received all required pre closing regulatory approvals for the transaction with the exception of foreign investment screening in Australia.

Approval is received include antitrust in Canada, China, Japan, South Korea, and the U S as well as completion of investment screenings in the UK and the U S.

Paul Graves: And having recently celebrated the five-year anniversary of live-in IPO, we wanted to review what live-in has achieved in that five-year period in what has been a very dynamic and often unpredictable market. Five years ago, although demand expectations for lithium were high, driven by the rapid adoption of EVs, there was much greater uncertainty about the pace of adoption than there is today. Only China had made a significant push via government support, and the US was not expected to play a major role in the near-term demand or supply picture.

Additionally, we have announced that the name of the combined company will be our KTM lithium.

Upon closing our KTM lithium is expected to trade on the New York stock exchange under the ticker eight <unk> P M.

Paul Graves: The fast growth of demand in Europe largely due to EU policy setting, and the direct incentives provided in the US by legislation such as the US inflation reduction act were certainly not seen as likely. The actually technology was still in flux. The debate between lithium carbonate, whether lithium carbonate or hydroxide, was going to be predominant, was still a major debate, at least with investors. And on the supply side, the bears pointed to massive expansions in low-cost grind resources in South America, fulfilling all future demand needs, and possibly more.

CDI or chess depository interests are expected to be quoted on the ASX under the ticker LTE M.

The Australian scheme, Buckler, which improves the independent expert report should be ready for <unk> investors shortly and.

And we also expect to provide the S. Four proxy statement to live and stockholders in the coming weeks.

Once all relevant documentation is approved by the applicable regulators and distributed <unk> and oil Chem will seek approval from their respective shareholders. A special meeting was expected to take place late in the fourth quarter.

Dates for the votes should be that shortly and the transaction is still expected to close around the end of calendar year 2023.

With your support we look forward to combining our teams assets collective strengths to create to create a leading integrated global lithium company.

Paul Graves: But we've seen what we've actually seen is a grind-based production steadily lose market share in this time frame. Others thought novel extraction technologies such as direct lithium extraction or DLE would move the cost curve lower. But again, we've actually seen Chinese lipid light resources with the production cost three to four times out of lithium-triangle dried operations coming into operation to meet supply shortfalls. As these dynamics have unfolded, we've seen lithium indices mature, and as they have done so, we've seen a fundamental shift take place in how high and how low lithium pricing can go.

I will now turn the call back to Dan for questions.

Thank you Paul.

You may now begin the Q&A session.

Thank you Ms Rosen, ladies and gentlemen, if you would like to ask a question at this time.

Star then the number one on your telephone keypad and we ask that you can't limit yourself to one question and one follow up if you have additional questions you can jump back in the queue and to withdraw your question simply press Star One again, we'll pause for a moment to compile the Q&A roster.

Sure.

Paul Graves: Until the last few years, the peak pricing we saw for lithium carbonate and then really only for a few months was in the low $20 per kilo. The last two years, we saw multiple forces with carbonate pricing of two or three times that level. And on the low end, in 2020, we saw carbonate prices fall to $6 per kilo and even lower. But as demand growth has required higher cost resources to come online, and as the true capital cost of lithium projects has slowly been revealed, today we see a cost curve with a meaningful proportion of global supply, is today operating a marginal cost that are at least three times Level.

We will go first this afternoon, Kevin Mccarthy at vertical research partners.

Yes.

Yes, good evening.

Paul is lithium market prices continue to descend.

What destruction of supply.

Have you witnessed and where do you think prices might stabilize based on your forward views demands.

Yes look I think we've seen probably three areas of supply interruption the obvious one.

Obviously, a few announcements overnight last night coming out of out of China, where non integrated.

Producers are shutting down.

Paul Graves: Even prior to 2018, Leivnt was looking for ways to improve its profitability profile, both in absolute terms but also in terms of predictability of earnings. Leivnt has always looked to maximise the sale price of every Lithium unit we produce and also create a business that protects us from the most extreme volatility in Lithium pricing. The benefits of this approach can be seen when looking at our historical realised price per Lithium carbonate equivalent or LCE, as well as analysing year-over-year changes in that realised price versus market-based references.

Whether that's for extended.

Maintenance periods or whatever the reason is we're certainly seeing.

The economics of running our plan such as that really required to produce it.

Two tradeoffs.

Keep them running and maybe cover your fixed costs.

On a contribution basis, but after a while it just becomes too expensive and so it's cheaper.

The plan on hold for a while so we've seen a few of those we've seen lepidolite production reduce it's not always as clear as we would like but some of the data I've seen suggests a portio.

Paul Graves: We've attempted to summarise the results of this strategy on slide 8. The first thing we can see is that in almost every historical market environment, we have typically been able to generate a higher price for each unit of Lithium we produced compared to selling Lithium carbonate to customers at market prices. By focusing on building a leading position in value added project products, we have meaningfully outperformed in pricing terms. But just as important, we've been able to reduce the volatility of our realised pricing year-over-year, creating greater predictability of earnings, which is a key benefit when assessing the attractiveness of investing in multi-year Lithium projects.

And also reduction in Lepidolite production started to take place in China.

Thank you we don't see many people looking to maximize production from existing operations I think by possible people are looking to.

Run the most efficient way that they can and if that means maybe dialing back some production for a while.

We've seen some of them do it the margins again, a few announcements, suggesting that there will be production cuts from some existing operators operations at all in terms of where it stabilizes.

The trillion dollar question I think you've heard me say in the past.

The pricing above $40 $50, a kilo just isn't rational couldnt be justified by fundamentals I think pricing in much below $20, a kilo with today's supply curve also coffee rationalize for long period of time and there has been supported by fundamentals doesn't mean, it can't happen for a couple of quarters.

Paul Graves: You can see from the space that when market prices were at their lowest in the 2019-21 period, life had its greatest outperformance in terms of both pricing levels and predictability. While the large and rapid run-up in market prices in 2022 meant we underperformed in terms of price and growth, let's pricing receipts from these historic highs in 2023, we've restored our price premium and expected to grow further still by the end of the year.

I think again, you've probably heard me talk.

Sort of.

Pick a number anywhere between low twenty's and high tier twos $1, a kilo depending on the grade depending on the product depending on the geography seems to be a place that you get both.

Appropriate with Ted on existing assets, but also sufficient reinvestment economics to continue to invest in the assets.

Paul Graves: It is with the same perspective that LiveWon will look to operate its business moving forward and how the company ultimately believes it will drive the most value for shareholders.

Unfortunately, I expect pricing will be constantly passing through that range upwards and downwards to a few years still to come.

Thank you for that and then secondly, if I may Paul.

Paul Graves: With this said, I want to highlight some of the key tailwinds behind our business and what you can expect from LiveWon as we move through 2024. First, LiveWon will be producing and selling meaning play higher volumes to customers next year, potentially 50% more than in 2023. This is the result of multiple years of expansionary investment, and this trend of increasing year-over-year volumes will continue for the next few years. This also means that we will be generating higher cash flow in 2024 under a wide range of different price scenarios, including one where market prices remain at to those levels throughout 2024.

If the current production expectations hold in Argentina.

How much would you expect your production capability to grow in 2024 is it fair to say it would be perhaps 40% or more.

I think by the end of the year I put up some capability will be almost double what it is today in Argentina in terms of if you talk about ability to produce and sell in and.

It became a bit gun shy over the challenges on commissioning, but certainly 40% is absolutely well within the range range. The first expansion 95000 tons is essentially largely complete to date.

Paul Graves: We intend to continue to use this cash flow to fund multiple highly attractive capacity expansion opportunities available to us while maintaining a healthy balance sheet. LiveWon also chose to lock in some pricing for the business, which will benefit us in 2024 regardless of future market price movement. This was done as we continue to reset lower price contracts that were entered into with long-term customers prior to the run-up and lithium prices that began around 2021. Agreeing to fixed prices just for next year gives us some additional confidence of delivering a year-over-year price increase on a meaningful portion of our volume.

It's just as final commissioning step and we're hoping to start production at some point in December which gives us commercial volumes early next month.

A month or two range of that and then it's just a function of how quickly we ramp up but certainly you can expect.

789000 tons more capacity, which itself represents a 35% to 45% increase with the second phase also looking to be mechanically complete by the middle of the year and we are by the way changing our commissioning process for the second phase just sort of an ongoing commissioning rather than wait until construction is complete in order to help.

Accelerating the gap between construction completion and connection we said expect to get some volumes out of that second expansion too. So certainly in those kind of arrange numbers, you're talking about absolutely based targets for us.

Paul Graves: You should expect Leivnt to continue bringing greater clarity to his business through its commercial strategy, its diverse product offering and leading cost profile Leivnt's customers value the high quality of our products and our growth capabilities and are willing to enter in long-term agreements with firm volumes and other forms of commitment to supporters. Leivnt will also retain the ability to take advantage of market opportunities one available. Leivnt also benefits from the diversification brought by its other Lithium specialties products including mutual lithium.

Perfect. Thanks very much.

Thank you we'll go next now to Chris cash at loop capital markets.

Yes, good afternoon.

About.

Your comments about the destocking activity in China.

Depose against a comment about the end market demand remaining relatively stable or unchanged in terms of its growth. So I'm. Just curious if you have any visibility into where.

Paul Graves: In addition to serving a variety of attractive and markets outside of energy storage, the fact that price adjustments in these products are typically based on movements in key underlying input costs means that there tends to be more stability in the profit margins of these businesses. Despite the recent decline in market prices, Leivnt had just an EBITDA margin continues to be about 50 percent today. This is a result of the company's best in-class low-cost resource base and its operating cost discipline which supports profitability through different market cycles. And it is this discipline around pricing and costs that gives us confidence in our ability to continue to fund the investment in our world-class resources from internally generated funds.

That overbuild has happened has it been more a function of.

<unk>.

An overbuild of the overall Giga factory capacity or is it existing.

Justifiable suppliers that just simply overbuilt their inventories.

As prices were going higher or maybe on better bigger expectations of growth rates any visibility there.

Yeah look I think the best I can offer you is the following we characterize battery cell producers in China tier one two and three.

And we've certainly seen some of the larger tier two guys.

Clearly.

Kian to pull back production, whether they were building to try and take market share from the big tier ones.

Whether they were running their assets.

Paul Graves: Now everything we just discussed refers to Leivnt alone, but of course we are nearing the closing of our merger with Alchem to create a leading global lithium chemicals producer. The merger will immediately increase our global scale and growth profile, further diversify our asset base and product offering and improve our vertically integrated footprint. You've seen our shared long-term vision for the new company before on flight 10. While some of these strengths will take time to fully realize we expect to see real tangible benefits in 2024 including improved product flows between our production assets and lower combined operating costs. As we work toward run rate synergies of $125 million and one-time capital savings of $200 million.

Okay.

<unk> built a platinum youre running it at 25% utilization that's not economically sensible.

We certainly believe that there's been a number of producers out there running at utilization rates that make the plants now profitable, but could you small cells and they actually have sold with the expectation that they can then go win market share by having these cells are available.

Hey, Matt.

We can't have 70 battery manufacturers in China, not only be for some of them are in stationary storage and other applications.

I'm sure a lot of commentary pushing.

Chinese policymakers for some consolidation in this in this entire supply chain. There's no doubt there's been financial pressures on some of those that have attempted to survive by lowering their unit cost building cells, and then trying to find business for them don't seem to have been particularly successful with that strategy and financial pressures appear to have caught up with them in the second.

Paul Graves: We will, of course, have more to share with you early next year after the close, but we remain excited as ever about the opportunities this merger will bring to all shareholders.

Half of the of forcing them to liquidate this inventory largely to state.

Paul Graves: I want to conclude on slide 11 by highlighting some of the key merger-related milestones since our last earnings call, as well as what to expect ahead of our targeted closing. Leivnt and Norkim have received all required pre-closing regulatory approvals for the transaction with the exception of foreign investment screening in Australia. Approvals received include antitrust in Canada, China, Japan, South Korea and the US, as well as completion of investment screenings in the UK and the US.

To stay alive I don't think they will stay alive, but thats sort of a trend that we've seen happening.

Okay. Thanks for that and then my follow up question is.

Just on your <unk>.

Your portrayal of the industry certainly more sanguine than I don't know how to describe it the anxiety and mood of the stock market. That's just.

Devaluing lithium equities right now so I'm curious if it's one of the.

The themes that feeds into that.

Paul Graves: Additionally, we have announced that the name of the combined new company will be Arcadium Lithium. Upon closing, Arcadium Lithium is expected to trade in the New York Stock Exchange under the ticker A-L-T-M. And CDIs or chest depository interests are expected to be quoted on the ASX under the ticker LT. M.

That investor sentiment is just more about perceptions of slowdown in North America, where your commentary is a little bit more about China, where the market is bigger so but im wondering if youre seeing are acknowledging any slowdown in demand.

In North America based on your conversations with that ecosystem and a little bit more nuance to the extent that there is slowdown and its about the price points, we've seen test to lower their prices that are needed to get these evs.

Paul Graves: The Australian Scheme Buckler, which includes the independent expert report, should be ready for all Kim's investors shortly, and we also expect to provide the S4 Prox statement to live and start holders in the coming weeks. Once all relevant documentation is approved by the applicable regulators and distributed, live and all Kim will seek approval from their respective shareholders as special meetings expected to take place late in the fourth quarter. Dates for the votes should be announced shortly, and the transaction is still expected to close around the end of calendar year 2023.

More within reach of mainstream consumers one way to do that is to reduce battery costs, one way to reduce battery cost is LLP over NMC I'm wondering if that whole theme is manifesting in a way that that shifting a little bit of the market.

In North America more towards LSP based on your commercial engagement with these customers.

Paul Graves: With your support, we look forward to combining our teams, assets and collective strengths to create a leading integrated global lithium company.

Yes, sorry for the nuances, but no doubt.

A lot of questions in there, but let me tackle a couple of them maybe in reverse order I don't see any change in the LSP versus high nickel trend, we always expected lower nickel batteries, whether it's <unk> or others.

Daniel Rosen: I will now turn the call back to Dan for questions. Thank you, Paul.

Daniel Rosen: You may now begin the Q&A session. Thank you, Mr. Rosen. Ladies and gentlemen, we would like to ask a question at this time, three-press star, then the number one on your telephone key text, and we ask that you translate yourself to one question and one follow-up. If you do have additional questions, you can jump back in the queue. And two, what's your other question? Simply prep star one again.

To be an important part of the lower cost of vehicle market, a high volume market, but still expect that to be the case having.

Unknown Attendee: We'll pause for a moment to compile the Q&A roster.

The high nickel expectations, and therefore lithium hydroxide expectations.

I estimate will be careful with this right because I could go back two or three years anyway, sometimes important.

With the lithium industry is as you know.

We don't really have a precedent for it out there over the last 20 or 30 years, but what we are starting to see now is at least we're seeing some cycles that are going through and sort of if you will some kind of <unk> energy storage cycles rather than.

Kevin Mccarthy: We will first welcome you to Kevin McCarthy at Vertical Research Partners. Yes, good evening. Paul, with the market prices continue to descend.

Other industrial applications cycles, and what we're seeing in here when we go back and look at the last five or six years, which feels like a lifetime for some of us and we compare the first conversations we had with Oems, maybe not even two or three years ago, and they would share with us the expectation for lithium hydroxide demand and let's say 27 28.

Paul Graves: What destruction of supply have you witnessed, and where do you think prices might stabilize based on your four views demand? I think we've seen probably three areas of supply interruption. The obvious one, and we can publish a few announcements overnight, last night coming out of China, where non-integrated producers are shutting down, whether that's for extended maintenance periods or whatever the reason is, we're certainly seeing the economics of running a plan, such as that really require the producer to have two trade-offs.

Yes.

And in that two to three years the expectations for that number has more than tripled.

On a customer by customer basis.

We never thought that was achievable, we never seem that that is going to be possible in terms of building supply chain that quickly. We have always had cup big chunks of some of these independent or individual OEM statements about what their capabilities are.

And so ultimately so thats why its a difficult conversation when we say, we don't really see the market developing in any different way than what we expected.

Paul Graves: Keep the plan running, and maybe cover your fixed costs and run on a contribution basis. But after a while, it just becomes too expensive, and so it's cheaper to put the plan on hold for a while. So we've certainly seen a few of those. We've seen the PID-like production reduce. It's not only as clear as we would like, but some of the data I've seen suggest a 40% or so reduction in the PID-like production sites take place in China.

The fact that we expect it may not be what the market expected, but we've tried to be relatively transparent about this but we don't see we see supply continuing to be the constraint on the Mac that we treat today supply will be the constraint on demand for the next few years for the foreseeable future.

Paul Graves: And frankly, we don't see many people looking to maximize production from existing operations. I think where possible people are looking to run the most efficient way that they can, and if that means maybe dying in back some production for a while, then that's what we've seen some of them do at the margins.

I don't think really changes in.

Sentiment with the major Oems.

Italy dramatic I think they are a natural part of the process of the teething problems that North America is absolutely going to go through in this inevitable transition to evs, whether it's smaller cheaper vehicles of not whether its challenges with charging infrastructure.

Paul Graves: Again, a few announcements suggesting that there will be production cuts from some existing[inaudible] you know, I think you've heard me say in the past. The pricing above $4,250 kilo just isn't rational, and couldn't be justified by fundamentals. I think pricing on much below $20 kilo with today's supply curve also can't be rationalized for a long period of time, and isn't supported by fundamentals. Doesn't mean it can't happen for a couple of quarters.

That needs to be addressed first over the next few years.

Bumps in the road, but the long term trend is not impacted at all to be honest crushed by this.

Helpful color. Thank you.

Thank you the next now to Corrine glass jar at Deutsche Bank.

Hi, Good afternoon. Thank you for taking my question could you go back a little bit on the guidance revision I think you mentioned in your focus quieter it out on the volume impacting most of it but could you give us the taken towards.

Paul Graves: I think again, you've probably heard me talk, you know, the source. Picket, picket number anywhere between low 20s and high 30s, $1.00 a kilo, depending on the grade, depending on the product, depending on the geography, seems to be a place that you get both appropriate return on existing assets, but also sufficient reinvestment economics to continue to invest in the assets. Unfortunately, I suspect pricing will be constantly passing through that range. I'll put Jen down for a few years still to come. Thank you for that.

Two other low and the high end of the guidance.

Sure.

Sure.

Yes, so Craig.

In terms of the guidance.

The revision down is again, primarily driven by volume and the way you're going to look at that is we're taking approximately 3500 metric tons down in.

Paul Graves: And secondly, if I may, Paul, if the current production expectations hold in Argentina, how much would you expect your production capability to grow in 2024? Is it fair to say it would be perhaps 40 percent or more? I think by the end of the year, I put it from capability will be almost double what it is today in Argentina. In terms, if you talk about ability to produce and sell and you know, I've become a big gun shy over the challenges on commissioning, but it's certainly 40 percent is absolutely well within the range range.

In terms of volumes for this year.

And that's primarily what is driving our our revenue and EBITDA.

For this year and from a EBITDA perspective.

By losing this volume part of this has been offset.

Improved cost that we're getting.

Particularly for some inputs that we use in butyl lithium uneven.

On hydroxide and carbonate production and the lower royalties in Argentina, so pretty much from a revenue.

Perspective is 3500 metric tons of Lcs and from an EBITDA perspective.

Paul Graves: The first expansion nine and a half thousand tons is essentially largely complete today. It's just this final commissioning step and we're hoping to stop production at some point in December, which gives us commercial volumes early next year, month or two range of that. And then it's just a function of how quickly we ramp up, but certainly you can expect, you know, 7, 8, 9,000 tons more capacity, which itself represents, you know, 35 to 45 percent increase with the second phase also looking to be mechanically complete by the middle of the year.

Price the benefit effect of this 3500 metric tonnes offset by cost improvement that we are achieving.

Drug is essentially the second half of the year.

Thank you.

And then just my last follow up I wanted to stick with you Joe Bento box entellus cost expectation because I think you are seeing.

Doing pricing going in terms of cost control and the cops.

Paul Graves: And we are, by the way, changing our commissioning process for the second phase to sort of have an ongoing commissioning rather than waiting till all construction is complete in order to help accelerate the gap between construction completion and production. We certainly expect to get some volumes out of that second expansion too. So certainly in those kind of range numbers, you're talking about absolutely based targets for us. Perfect. Thanks very much. Thank you.

Katherine data point here can you just try to give us any color I want to thank for their last quarter or two.

For 2024.

In terms of cost you said.

Yes mhm.

Look.

From a cost perspective actually we'd be having some good news as you probably seen this in the deck to slide we have we actually have a favorable quarter over quarter on cost.

Again, driven by some of the royalties and some inputs that we purchased from third parties and we expect to see the same in Q4, so again.

Chris Cash: We'll go next now to Chris Cash at loop capital markets. Yeah, good afternoon. I'm curious about your comments about the destocking activity in China. Just to pose against a comment about, you know, the end market, the man remaining relatively stable or unchanged in terms of its growth. So just curious if you have any visibility into where that overbuild has happened, has it been more a function of an overbuild of the overall giga factory capacity or is it existing, you know, justifiable suppliers that just simply overbuilt their inventory as prices were going higher or maybe on better bigger expectations of growth rates.

We continue to see some.

Frankly, not expected, but very good cost improvements over the second half of this year and look into next year again for you just a little early.

And process.

So we're planning for next year, but we will.

Some inputs that we buy are driven by bike companies price the China to be honest. So if prices remain what it is we're going to have some improvement costs.

Specialty business and I think we might have some benefits also.

For currency as some other countries, but again, it's a little early to to to say that to confirm that.

Alright, thank you.

Chris Cash: Any visibility there. Yeah, look, any of the best I can offer you is, is the following week, we characterized factory self-reduced was in China or tier one, two and three. And we've certainly seen some of the larger tier two guys, be particularly keen to pull back production, whether they were building to try and take market share from the big two ones, whether they were running their assets at, you know, if you built a plant and you're running it at 25% utilization.

Thank you the next now to Alexia <unk> at Keybanc.

Thanks, and good luck.

Hello, everyone.

Paul.

Prepayments from customers still a potential source of attractive funds for putting a master in current environment.

Okay.

<unk> is a different formula for many of the customers in terms of what we're trying to do and I think securing low cost IRA qualified material.

Chris Cash: That's not economic sensible. So we've certainly believed that it's been a number of producers out there running at the utilization rates that make the plant now profitable, but produce more self than they actually have sold with the expectation that they can then go win market share by having these cells available. You know, if they're mad, they're about week, I think we counted 70 factory manufacturers in China, not only be some other in station storage and other Africa.

In my conversations today.

Compensation.

The opportunities for support unhelpful, but we saw a year or two ago. Its still on the table today, Matt now does it we've never thought this was available to everybody else on every single every single investment opportunity.

<unk> certainly has some characteristics to it that you would think lend themselves pretty well to what a lot of Oems are trying to do in North America, and if a prepayment helps shaquille favorable treatment at Nebraska than generally speaking absolutely I think that conversation as it warmed up many Oems are willing to have.

Chris Cash: Communications. And I'm sure seeing a lot of commentary pushing from Chinese policy makers for some consolidation in this in this entire supply chain. There's no doubt there's been financial pressures on some and those that have attempted to survive by lowering their unit cast building cells and then trying to find business for them. Don't seem to have been particularly successful with that strategy and financial pressures appear to have caught up with them in the second half of the forcing them to liquidate this inventory largely to state it to stay alive. I don't think that they all will stay alive, but that's sort of the trend that we've seen happening.

Thanks, Paul and maybe to follow up on <unk>.

Given let's say, we stay with car and pricing environment for a while and in the current capital markets environment.

Is it still your expectation that you can internally fund your share of the Alaska Capex was sort of a.

Paul Graves: Okay, thanks for that. And then my my follow up question is just on your, you know, your portrayal of the industry certainly more sanguine than, I don't know, how to describe it. The anxiety infused mood of the stock market that's just, you know, devaluing lithium equities right now. So I'm curious if, if one of the themes that feeds into that, that investor sentiment is just more about perceptions of slowdown in North America, where your commentaries a little bit more about China, where the market is bigger.

Free cash flow and whatever other meetings.

Don't need to go to the debt markets or something some new level, so new financing.

Yeah, absolutely look I think the Mexico itself makes up some debt markets we may.

I'm sure you know, there's a lot of capital out there hasnt been chasing lithium.

Not always necessarily what I'll call commercial opportunities some opportunities from incentives from governments.

Innovation type funds and so on and so forth.

It's definitely going to be opportunities for that.

Paul Graves: So, but I'm wondering if you're seeing or acknowledging any slowdown and demand in North America based on your conversations with that ecosystem and a little bit more nuance to the extent that there is slowdown. And it's about the price point, you know, we've seen Tesla lower the prices that are needed to get these EVs more within reach of mainstream consumers. One way to do that is to reduce battery costs. One way to reduce battery costs is LFP over NMC.

We absolutely expect to fund our portion of <unk>.

Domestic capital requirements on all of the conversations we have with our partner there IQ.

On the basis that LIBOR will be funding it.

The equity required in that from internal sources, we will not be heading into the debt or the equity markets to fund the Nebraska.

Great. Thanks, a lot.

Thank you. We'll go next now to Steve Byrne Bank of America.

Paul Graves: I'm wondering if that whole theme is manifesting in a way that's shifting a little bit of the market. In North America, more towards LFP based on your commercial engagement with these customers. Sorry for the nuances, but no. A lot of questions are there. Let me tackle a couple of them maybe in a bit of a sort of, don't see any change in the LFP versus high nickel trend. We always expected lower nickel batteries, whether it's LFP or others to be an important part of the lower cost of vehicle market, the high volume market.

Okay.

Thank you and your due diligence with all come.

And you.

Yes.

Certainly dug into them that all rose.

Lithium extraction facility in Argentina, I'm curious, whether you see opportunities to to improve that operation was your technology.

Or benefit from.

The access to labor challenges and replacement parts that you that you highlighted Paul.

Paul Graves: It's like still expect that to be the case and the high nickel expectations and therefore relative hydroxide expectations. I have to be a little bit careful with this, right, because I can go back two or three years and it's sometimes important, you know, one problem with the lithium industry is, as you know, we don't really have a precedent for it out there over the last 20 or 30 years. But what we are starting to see now is at least we've seen some cycles that are going through sort of, if you will, some kind of EVO energy storage cycles, rather than, you know, other industrial application cycles and what we're seeing in here when we go back and look at the last five or six years, which feels like a lifetime to some of us.

<unk> could this lead to a pull forward of the of.

Saul Davita.

<unk> to that I think all come.

Paul Graves: And we compare the first conversations we had with OEMs, maybe not even two or three years ago, and they would share with us their expectations for the lithium hydroxide demand in, let's say, 27 or 28. And in that two or three years, their expectations for that member has more than tripled on a customer by customer basis. We never thought that was achievable. We never seem that that is going to be possible in terms of building supply chain that quickly.

Yes.

Pushed back a couple of years.

Hmm.

Welcome back Dave by the way.

Yeah look I think I think there's definitely opportunities, let me step back a little.

Look at anything that will come it's been doing in Argentina, I think it needs to be fixed and they're doing a fine job with what they have what they built I think we all know that there are certain decisions that get made at various points in the life of a project that somehow constrained that project capabilities in the future. So I think what all Kevin Auto Cobra did originally is could you.

You're seeing a mix of technical and battery grade that is probably not going to change I don't think we've got a big focus of ours to try to change that mix and I think they are doing actually a very good job of improving their production rates and their operating rates there, but the expansions of different conversation and I think we both recognize how we can help each other on how for example expertise we have and we mentioned this before.

And DLA it.

At some point yellows, fasola who's going to run out of land to expand to two pond based systems and so.

Paul Graves: We have always had a big chunks of some of these independent or individual OEM statements about what their capabilities are. And so for us at least, and it's why it's a difficult conversation when we say we don't really see the market developing in any different way than what we expected. We're very sensitive the fact that what we expect it may not be what the market expected. But we've tried to be relatively transparent about this, but that we don't see we see supply continuing to be the constraint on demand and we see today.

Moving into some form of daily based process, which all came at <unk> been looking at we can absolutely accelerate we can also determine whether actually some pond based expansions maybe of the right way forward for both our operations of Phoenix, but also integrate two maybe what sell Davita does I think there's a big opportunities potentially to share infrastructure and somebody might.

So between sell Davita and trying to extend our fall away from each other.

Paul Graves: Supply will be the constraint on demand for the next few years for the foreseeable future. I don't think really changes in. And sentiment with the major OEMs are particularly dramatic. I think they are a natural part of the process of the teasing problems that North America is absolutely going to go through in this inevitable transition to EVs, whether it's smaller cheaper vehicles or not, whether it's, you know, challenges with charging infrastructure that need to be addressed first of the next few years. So all bumps in the road, but the long term trend is not impacted at all to be honest, Chris, by this.

Shipping, Brian 10 kilometers from from sell Davita to our processing capability, that's a drop in the ocean no pun intended relative to other Brian trucking routes that we know exist out there.

Chris Cash: Helpful color, thank you.

The lithium world so.

I do think that we're going to be some pretty meaningful opportunities to both accelerate and optimize our expansion plans for both parties.

And then maybe moving North do you think that Youre, well buchi mine might benefit from.

What they've learned and James Bay Pardon me in and I think all come was planning to ship the James Bay Spodumene to China is there the feasibility of processing that to Don to your second core facility.

Corinne Blanchard: Thank you with the next now to Corinne Blanchard at way to bank. Hi, good afternoon. Thank you for taking my question.

Yeah look I'm not sure well Kim will actually necessarily committed to shipping that spot concentrate to China I know it was one of the options, but I don't think of it that first option.

Gilberto Antoniazzi: Could you go back a little bit on the guidance revision. I think you mentioned and you focus quite a lot on the volume impacting most of it, but could you give us the tech input, you know, to other low and in the high end of the guidance. Should I take that? Yeah. So Corinne, the guidance that the revision down is again primarily driven by volume. And the way you got to look at that is we're taking approximately 3,500 metric tons down in terms of volume for this year.

Actually the benefits that we get from <unk> and we see this when we talked to they will come guys about cheddar space the expertise they have about catlin.

The expertise and the knowledge they have of <unk> spodumene concentrate operations trains mining everything absolutely makes a big difference to what we'll be able to do it we'll do chip.

Think in terms of James Bay itself, I think the options around Bakken core or certainly interesting while inspecting call was always designed to be expandable.

4000 ton unit, we have there was a thought.

Gilberto Antoniazzi: And that's primarily what is driving our revenue and EB down for this year. And from an EB the perspective, you know, by losing this volume, part of this has been offset by improved cost that we're getting. Particularly for for some inputs that we use in beauty, many even on hydroxide and carbonate production and the lower royalties in Argentina. So pretty much from our revenue perspective is 3,500 metric tons of LCDs. And from an EB the perspective is the price, the benefit impact of the 3,500 metric tons offset by cost improvement that we're achieving throughout this year, throughout essentially the second half of the year. Thank you.

Print is big enough to at least double if not more than maybe a few questions around infrastructure that we would have to answer but certainly we would.

We've already expressed an interest in exploring whether that's the right economic model for J&J Bay post close, but frankly I think some of the options all come out on the table, whether that's making it intermediate product they'll building elsewhere also absolutely there is a pretty serious consideration to.

Thank you.

Thank you the next now to per <unk> at Raymond James.

Yes, thanks for taking the question obviously.

Been other M&A headlines across the lithium value chain.

Once the merger of equals closes do you perceive the combined company as a consolidator.

Gilberto Antoniazzi: And then just as a follow-up, I'm going to keep with you a little bit. But in terms of cost expectations, because I think you have been doing pretty good in terms of cost control and cost and percentage of for you. Can you try to give us a little bit of color what to expect for the last quarter and also into 2024. In terms of cost you said. Yes. Look, from a cost perspective, actually, we'd be having some good news as you probably see in the back to slide we have.

For the future, particularly with regard to some of the junior miners.

Okay.

Look I think unimportant.

Capability, we have I just mentioned it is our Australia capabilities.

We have a mine that is getting toward will have a mine that's getting towards end of life above ground and so I think understanding and capabilities to go underground what those economics look like whether it makes sense, but I also think we have the capabilities that are absolutely to look at.

Gilberto Antoniazzi: We actually have a favorite, you know, quarter quarter on cost. Again, driven by some other royalties and some inputs that we purchased from third parties. And we expect to see the same in Q4. So again, we continue to see some frankly not expected, but very good cost improvements over the second half of this year. And looking to next year, again, for a little early, we're just, you know, in process of planning for next year.

Junior mining opportunities down there.

In Australia for sure.

Emerson's a value conversation right everything about it is a massive disconnect today massive.

Between the value of someone subscribing to a you know.

A very very very early stage or a technically challenging project in Australia.

With only a maiden resource without full ownership all sorts of technical points.

Gilberto Antoniazzi: But I think we will, you know, some inputs that we buy. They are driven by by carbonate prices in China, to be honest. So if price is remaining what it is, we're going to have some improvement costs in our specialty business. And I think we might have some benefits also for currency in some other countries. But again, it's a little early to say that to confirm that. Thank you.

A lot of value being assigned to those by various people down there in Australia, and so little challenging to me to be perfectly honest.

To know, where the Australia and M&A market plays out and therefore, what opportunities are going to be available to us, but we absolutely want to have a significant mining presence in Australia.

Well almost certainly means that we have to get pretty aggressive with our <unk>.

Strategy of acquiring new assets over there at some point post close.

Okay. So following up thinking about life and Standalone. Your capital program. This year is at a record level $350 million at the mid point Directionally, how much higher will that be in 2024.

Aleksey Yefremov: We're going to next now to Aleksey Yefremov at key date. Thanks.

Paul Graves: Good afternoon, everyone. Paul, is proponents from customers still potential source of attractive funds for NAMASCA in current environment? I think the IRA is a different formula for many of the customers in terms of what they're trying to do, and I think securing local IRA qualified material in my conversations today, the conversations and the opportunities for support and help that we show a year or two ago are still on the table today.

I can take that Paul.

I think for next year as <unk> stand alone will be a slightly lower level than we are this year.

Okay. That's really helpful. Thank you.

If I could maybe just add a comment to that though because I think there's an important point of course, it's important to know.

Paul Graves: Now, we've never thought this was available to everybody or for everything, or for every single investment opportunity. NAMASCA certainly has some characteristics to it that you would think lend themselves pretty well to what a lot of OEMs are trying to do in North America, and if a prepayment helps secure, favorable treatment at NAMASCA, then generally speaking, absolutely I think that conversation is a one that many OEMs are wanting to have. Thanks, Paul.

What the capital investment that we have I think you've seen the balance sheet that we have today is pretty solid you'll see the cash flow that we're generating today, we look into 2024 and when we look at the volume increase that we have coming when we look at the amount of our portfolio that is already either locked in an agreed pricing with customers already structured in such a way.

Because of the way, we price it off input costs with the possibilities couldn't stable pretty predictable pretty clear.

What I expect in cash flow.

Continue to grow in the future.

Paul Graves: And maybe to follow up on NAMASCA, let's say we stay with current pricing environment for a while, and the current capital markets environment, is it still your expectation that you can internally fund your share of NAMASCA with cat facts and with sort of pre-cashable and whatever other means, or don't need to go to the death markets or something. Some new level. Some new level of financing. Yeah, look, absolutely. Look, I think NAMASCA itself, we may tap some debt markets, we may...

Market practice stay exactly where they are today right now for all of next year, It's hard for me to imagine a scenario whereby our internally generated cash flow. Our EBITDA does not climb next year because of the way we structure that business and the way, we're going about taking our products to the market.

Understood.

Thank you we'll go next now to David song at CIBC.

Okay. Good afternoon, Paul and team this is David.

Paul Graves: There's a lot of... I'm sure you know, there's a lot of capital out there that has been chasing Lithium, and it's not always necessarily what I'll call commercial opportunities, because there's some opportunities from incentives, from governments, from innovation-type funds, and so on and so forth. And there's definitely going to be opportunities for that. We absolutely expect people to fund our portion of NAMASCA's capital requirements. And on all the conversations we have with our partner, like you, are all on the basis that live and will be funding it share of the equity required in that from internal sources. We will not be heading into the debt of the equity markets to fund NAMASCA. Great.

Aleksey Yefremov: Thanks a lot.

Thanks for taking my question.

Our first question is that given that comparing to your original plan. It may take more time for your carbonate from Argentina to catch up with their lithium hydroxide expansion. So how would you utilize these new hydroxide capacity.

Would it be possible to do something like co treatments or it is necessary to wait until your new accommodate broaden from CNA is online.

Yeah. Good question.

I don't think totaling them as a sensible at some point I'm not quite sure who we would tell fully would require somebody with excess carbonate, but that is maybe to make commitments in hydroxide that they company and are therefore looking for someone to talk to them. They're also not frankly, a business we want to get into the <unk> business is not it's not our business.

Steve Burns: Thank you. We're going to next now to Steve Burns at Bank of America. Yeah, thank you.

Could we purchased third party carbonate and use that third party covenant in those plants, maybe the challenge with that frankly, there's a couple of challenges one of them. We found the supply very unreliable people will supply of carbonate when they've got excess carbonate when a move at the minute. They can shifted somewhere at a higher price that ease of checkout price up or they won't.

Paul Graves: And you're due diligence with Alchem, and you, you know, certainly dug into that Ola Rose Lithium Extraction Facility in Argentina. I would be curious whether you see opportunities to improve that operation with your technology and or benefit from, you know, the access to labor challenges and replacement parts that you highlighted, Paul, and or could this lead to a pull forward of that, of that Saldavida project that I think Alchem has pushed back a couple of years. Welcome back to you, by the way. Yeah, look, I think there's definitely an opportunity.

We don't price up market. So the economics, a little complicated trust to be said enough, but the second and then just as importantly, our customers are pretty rigorous qualification processes. I mean, if we could just hydroxide from carbonate. If we change that company, we'd have to requalify isn't a planet necessarily lend themselves to switching <unk>.

<unk> very quickly we can of course, and we will and have in fact qualified more than one source of carbonate, but you have to have a lot of confidence that that covenant is going to be that to go through that process. I think frankly, our expectation is that we will if we're not running them flat tile on day, one we don't want them flat out and they want them and we wait for the both the car.

Paul Graves: Let me step back a little. I don't look at anything Orchem has been doing in Argentina. I think it needs to be fixed. I think they're doing a fine job with what they have, what they built. I think we all know that there are certain decisions that we get made at various points in the life of a project that somehow constrain that project's capabilities in the future. So I think what Orchem, or what we did originally, is producing a mix of technical and battery grade.

And it to be available and the appropriate customer contracts to be in place before we start producing them.

Thank you.

Crystal clear and quick follow up on your fixed price contracts of lithium hydroxide.

Paul Graves: That is probably not going to change. I don't think we're going to get this not a big focus of hours to try to change that mix. And I think they are doing actually a very good job of improving their production rates and their operating rates there.

While we still expect some like price reset again by the end of this year.

For now.

Yes, we don't actually I'm gonna be careful with the terminology, we don't actually have any fixed price contracts anymore. All of our contracts have moved to <unk>.

Paul Graves: But the expansions are different conversations. And I think we both recognize how we can help each other and how, for example, expertise we have, and we mentioned this before in DLE, you know, at some point the other facility is going to run out of land to expand to Ponderay systems. And so, moving into some form of DLE based process, which Orchem had already been looking at, we can absolutely accelerate. And we can also determine whether actually some pond-based expansions may be the right way forward for both our operations of Phoenix, but also integrating maybe what Salda Vida does.

Market based pricing that does not mean daily monthly weekly whatever pricing against an index in most cases, but we do have a structure with our customers where it either.

Panicky predefined so we know exactly where the price will go relative to market prices or we have the opportunity to sit down with them as we've done in the last year and we've done again and again from 2024 and say, let's agree on a price for 2020 full based on market conditions and that will be the price at which we told you in 2024.

Paul Graves: I think there's a big opportunity to potentially to share infrastructure in Amway, Meito, between Salda Vida and Phoenix. And I'll follow away from each other and, you know, shipping grind 10 kilometers from Salda Vida. To our processing capability, right? That's a drop in the ocean, no pun intended relative to other brine trucking routes that we know and just out there and ability world. So I do think there are going to be some pretty meaningful opportunities to both accelerate and optimize our expansion plans for both parties.

We will continue to explore those opportunities, but frankly as our portfolio grows as we have more material available to probably more contracts that are truly market based will continue to value even more some of the fixed agreed.

Agreements annual fixed agreements, which really kind of hop back to how lithium was probably six seven years ago to help bring some predictability to our earnings profile. So we will continue to do that I think you've seen from the data the oba cycles, we're not leaving value on the table from this approach quite the opposite we actually think that by having more predictability and adult.

Paul Graves: And then maybe moving north, do you think that your Wabuchi mine might benefit from what they've learned in James Bay, pardon me. And I think Orchem was planning to ship the James Bay Spodgy into China. Is there the feasibility of processing that down at your Beckincore facility? I'm not sure Orchem were actually necessary committed to shipping that spot concentrate to China. I know it was one of their options, but I don't think it was their first option.

Monthly premium pricing over.

Over with volatile market prices will actually generate more value from this strategy, even if in any given quarter.

You might see things a little differently from the outside.

Understood that's really helpful I'll pass it on.

Paul Graves: I think actually the benefits that we get from Wabuchi and we see this when we talk to the Orchem guys about James Bay is the expertise they have at Mount Catlin and the expertise and the knowledge they have of operating Spodgy in concentrate operations, trains, mining, everything. And they absolutely make a big difference to what we'll be able to do at Wabuchi. I think in terms of James Bay itself, I think the options around Beckincore are certainly interesting ones.

And ladies and gentlemen, it appears we have no further questions today, Mr. Rosen I'll hand things back over to you.

Great. That's all the time, we have for the call today, but we will certainly be around and following the call to address any additional questions that you may have.

Everyone have a good evening.

Thank you Ms Rosen, ladies and gentlemen, this does conclude the lagging Corporation third quarter 2022 earnings release Conference call. Thank you for joining you may now disconnect.

Please wait the conference will begin shortly.

Paul Graves: Beckincore was always designed to be expandable. So 34,000 units we have there with a footprint is quite big enough to at least double, if not more, there are maybe a few questions around infrastructure that we would have to answer. But certainly we would and we've already expressed an interest in exploring whether that's the right economic model for James Bay post blows. But frankly, I think some of the options all came out on the table, whether that's making an intermediate product or building elsewhere, also absolutely deserve pretty serious consideration too.

Aleksey Yefremov: Thank you.

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Paul Graves: The next now to put a little more chat off at Raymond James. Yeah, thanks for taking the question. Obviously there have been other M&A headlines across the Lithium value chain, and I'm curious, you know, once the merger of equals closes, do you perceive the combined company as a consolidator for the future, particularly with regard to some of the junior miners? Look, I think an important capability we have, I just mentioned there is our Australian capabilities, and we have a mind that is getting toward or will have a mind that's getting towards end of life above ground, and so I certainly think understanding and capabilities to go underground, what those economics don't like, whether it makes sense, but I also think we have the capabilities that are absolutely to look at, you know, junior mining opportunities down there in Australia.

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Paul Graves: For sure, everything's a value conversation, right? Everything's a good value, there's a massive disconnect today, massive, between the value of someone's describing to a very, very, very early stage or technically challenging project in Australia, you know, with only a maiden resource, with Apple ownership, you know, all sorts of technical points.

Gilberto Antoniazzi: A lot of value being assigned to those by various people down there in Australia, and so a little challenging to me to be perfectly honest, but to know where the Australian M&A market plays out, and therefore what opportunities are going to be available to us, but we absolutely want to have a significant mining presence in Australia, and that will almost certainly mean that we have to get pretty aggressive with our strategy of acquiring new assets over that at some point post-close. Okay, following up, thinking about live and standalone, your capital program this year is at a record level, 350 million, at the midpoint, directionally, how much higher will that be in 2024? I can think that Paul, yeah, I think for next year as a live and standalone will be a slightly lower level than we are this year. Okay, that's really helpful. Thank you.

Gilberto Antoniazzi: But it affected maybe just a comment to that though, because I think it's an important point. Of course, it's important to know what the capital investment that we have. I think you've seen the balance sheet that we have today is pretty solid. You see the cash flow that we're generating today. We look into 2024, and when we look at the volume increase that we have coming, when we look at the amount of our portfolio that is already either locked in and then repriced with customers or is structured in such a way, because of the way we price it off input costs where the profitability is pretty stable, pretty predictable, pretty clear.

Gilberto Antoniazzi: You know, we're expecting cash flow to continue to grow in the future. You know, if market practice is exactly where they are today right now for all of next year, it's hard for me to imagine a scenario where our in-term and generated cash flow, our EBITDA, does not climb next year because of the way we structure our business and the way we're going about taking our product to the market. Understood? Thank you.

David Song: We'll go next now to David Song at CICC.

David Song: Good afternoon, foreign team. This is David Song from CICC. Thanks for taking my question. My first question is that given that comparing to your original plan, it may take more time for your company from Argentina to catch up with your Lithium hydroxide expansion, so how do you utilize these new hydroxide capacity? Would it be possible to do something like tow treatment or it is necessary to weigh down to your new carbonate rodent from Argentina is online?

David Song: I don't think tolling them is a sensible option for them, I'm not quite sure who we would tow for. It would require somebody with excess carbonate, but that is maybe to make commitments in hydroxide that they can't meet and are therefore looking for someone to tow for them. Also, not frankly a business we want to get into, the toll in business is not our business. Could we purchase the party carbonate and use that the party carbonate in those plans?

David Song: Maybe the challenge with that, frankly, there's a couple of challenges. One of them we found the supply very unreliable. You know, people will supply us carbonate when they've got excess carbonate, want to move it. The minute they can shift it somewhere at a higher price, that either jack our price up or they won't. We don't price up market, so there's economics a little complicated choice to be certain of. But the second than just as important, our customers have pretty rigorous qualification processes.

David Song: If we produce hydroxide from carbonate, if we change that carbonate, we have to be qualified. These are not plans that necessarily lend themselves to switching supply very quickly. We can of course, and we will and have, in fact, qualified more than one source of carbonate. But you have to have a lot of confidence that carbonate is going to be there to go through that process. I think frankly, our expectation is that we will, if we're not running them flat out on day one, we don't run them flat out on day one, and we wait for the, for the carbonate to be available in the appropriate customer contracts to be in place before we start producing them.

David Song: I think it's important, crystal clear, and the tricks follow up on your six price contracts of lithium hydroxide. Will we still expect some like price we said again by the end of this year? Yeah, we don't actually, we're going to be careful with the terminology. We don't actually have any six price contracts anymore. All of our contracts have moved to market-based pricing that does not mean daily monthly weekly, whatever pricing against an index in most cases.

David Song: But we do have a structure with our customers where it either is mechanically predefined. So we know exactly where the price will go relative to market prices, or we have the opportunity to sit down with them as we've done in the last year. We've done again, done again from 2024 and say, let's agree on a price for 2024 based on market conditions, and that will be the price at which we sell you in 2024.

David Song: We'll continue to explore those opportunities. But frankly, as our portfolio grows, as we have more material available and probably more contracts that are truly market-based, we'll continue to value even more some of that fixed. Agreements, Annual Fixed Agreements, which really kind of hulked back to how Lithium was priced six, seven years ago to help bring some predictability to our energy profile. So we will continue to do that. I think you've seen from the data, the over cycles, we're not leaving value on the table for this approach quite opposite.

David Song: We actually think that by having more predictability and ultimately premium pricing over volatile market prices, we're actually generating more value from this strategy, even if in any given quarter, you might see things a little differently from the outside. Honest truth, that's really helpful.

Unknown Attendee: I'll pass it on. And ladies and gentlemen, it appears we have no further questions today. And Mr. Rosen, I'll hand things back over to you. Great. That's all the time we have for the call today, but we will certainly be around following call to address any additional questions that you may have. Thanks, everyone. And have a good evening. Thank you, Mr. Rosen.

Unknown Attendee: Ladies and gentlemen, this doesn't include the live incorporation third quarter 2023 earnings release conference call. Thanks for joining me now. Please wait. The conference will begin shortly.