Q3 2023 Sigma Lithium Corp Earnings Call
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Sorry for the delay the Sigma lithium call will begin momentarily. We appreciate your patience.
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Good day, everyone welcome to the Sigma lithium third quarter 2023 earnings conference call. Today's call is being recorded and is broadcast live on Cigna's website, all participants will be in listen only mode for those on the phone there will be an opportunity to ask question. That's a question you May Press Star then one when you touch.
Don phone to withdraw your question. Please press Star then to.
Should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
Please note. This event is being recorded I would now like to turn the conference over to Matthew Matthew T O Executive Vice President of corporate Affairs and strategic development at Sigma. Please go ahead.
Thank you, Jason and good morning, everyone and thank you for joining us on our three key earnings call on the call with me today is company CEO Anna Cabral. This morning before the market opened and really actually last night, we posted our Q3 financial results as.
As well as our SEC filings before we begin I'd like to cover two items first during the presentation you will hear certain forward looking statements concerning our plans and expectations, we know what that actual events or results could differ materially changes in market conditions in our operations and Additionally earnings referenced in this presentation exclude certain noncore or nonrecurring.
Items reconciliations to the most comparable GAAP financial measures and other associated disclosures, including descriptions of adjustments can be found in the.
Back with or at least with that I will pass the call over to Anna.
Uh huh.
Yeah, Hi, everyone. Thank you, Matt well first of all it's a pleasure to be here with all of you to present, our third quarter 2023 financials. We are delighted to present to our very first operational quarter and we are profitable right.
So with that I'll go straight into the first stage with the operational highlight well we're not a large tree June sure. We we of course, so good in the lithium industry and we basically achieved one.
Possible, when you're delivering zero carbon zero th Lee.
They can produce without toxic chemicals, we have basically been produced the very best product in the lithium industry as far as concentrate.
We have always managed to do that delivering a very successful ramp up Oh, you can see a green dot plot has reached 90% throughput we've been consistently shifting monthly 20000 tons off the triple zero grade concentrate.
Sports shipment is expected by the end of November which is gonna be site minutes 20000 ton.
He goes to Glencore in fact on that I just came back from almost two weeks in China shouldn't do all over where we ascertained underground drastic rest of acuity of our product as far as behavior throughout the refining will talk a lot more about that.
As a result, we are moving forward with the detail engineering for the expansion I mean, there's not enough of this material to supply the demand for our well we are break he gets value added.
So the selection that the design engineering.
Connected to this strategic review conclusion, depending on the strategic review partner of choice of Winter a choice, we're going to select an engineering company, but with Boeing.
Pension because we can basically sell every gram this broad product and there's more there's going to be a lot more of this lithium we have also delivered in this quarter a substantial potential inquiry. After a mineral resource we got chase for that's going to be approximately 30 million.
And then a phase five for another approximately 20 million times. So we expect to see give us.
Total mineral resource all the way to phases 125 to reach 130 million tonnes.
With that I'll move to the next page financial highlights.
Every financial target has been deliberate we are profitable on the first operating coy there.
Which means that.
We have an incredible degree of operation operational efficiency.
We are the second lowest cost producer of lithium concentrate globally, which means we will try in any pricing environment for lithium and that is the key message is these financials, we crystallizing our position as.
Second lowest cost producer of lithium concentrate.
And that's the result of tremendous financial discipline, I mean, we are profitable.
And we also happens to pure your product I mean, we do we do things that no one else does such as not having a tailing dam.
And we deliver a zero carbon lithium and despite that we are profitable and we are low cost.
This basically demonstrates our resilience to the lithium cycles, we're gonna driving any pricing environment for the commodity and depending on where the cycle goes when you didn't have the ability to capture market shares with this triple zero lithium.
This material is the material of choice for any downstream clients all the way up to car makers.
Which are procuring batteries bolt or European Union. This is all in preparation for the E. U battery passport Twenty-twenty Stakes no matter in the world, but its batteries produced.
A bit of the highlights of the numbers, we posted a Q3 revenue of $96 million.
We also produced to date.
<unk> produced to date 70.
Kevin you want 71.
71, but 71650 <unk>.
The high grade product.
The low grade product is 100000 ton.
We also have delivered an adjusted EBITDA of 50 554 billion.
Our unit operating cost F O B port is 570 $777 per ton.
And we have a very solid.
$86 million in the third quarter, so very profitable with significant recurring cash generation and liquidity.
The next slide.
Yeah.
Shows our production highlights.
We have the triple zero lithium.
Is it Kim Marshall success in other words, there's not enough of our triple zero green lithium to satisfy demand.
Some of the highlights of the third quarter and production to date.
We produced 38500 tonnes off this five and a half triple zero Green led to him.
Year to date.
Production is 71650 times.
We have also.
Successful you ramped up the green that plant without a tailings dam, which means we have 62000 tons of triple zero Green byproduct.
Year to date 100000 tons of Triple zero cream byproduct.
In other words the.
The next target will be to sustain the plant recoveries at these design level, which.
Basically shows global recoveries, including ultra find losses of 65%, we have trish shipments that failed.
Have a port shipment underway are failing at the end of November.
Scale will be approximately 20000 tons to 22000 gosh on that shipment, which means we're maintaining guidance because amongst all about Prague products, we're going to hit 130000 tons in equivalent revenues up Triple zero Green.
Lithium and byproduct so for a company that just became a producer getting there having successfully ramped up if you multiply 20 to 22500 by 12. It means we got there you get to 270000 tons a year. So the plant work.
The dry stacking work dailies are byproducts had been successfully combine shouldn't so they're spectacular demand for that product given its spirit T. A N in the picture on the right of the slide you can see are the third module, which is something.
That always take me lithium has managed to achieve that.
By stacking at ultra fine at two.
<unk> percent. So here, we are delivering on our promise to make this supply chain a whole lot more sustainable and paving the way for the zero carbon battery.
The next slide shows the resilience.
It shows that our thinking that can generate cash and to bear.
After all the off the off the cycle at the bears at the bottom of the lithium cycle in other words, we have low cost.
And therefore.
We have been delivering consistent rather than use in large volumes both in by products and also in the main concentrate.
More importantly, as we have one of the lowest cost in the industry.
We are able to essentially maintain its operational resilience and <unk>.
Generate cash flow no matter, what so we have in front of you with simulation.
The hypothetical is showing the lithium prices for concentrates reaching 1500, but because of our low cost we are able to get to.
Uh huh.
Our significant cash generation, both with phase one and also with the expansion and then you have the byproduct credits, which were keeping separate just for the sake of transparency and clarity now.
Why do we have such low cost well basically because of decisions. We made early during the development. We chose the dense media separation the DNS.
And at that we powered with very very inexpensive renewable power. So the combination of a simpler processing flow sheet and a low cost renewable power needs us to do.
Tacky results right out of the gate.
First quarter with finance.
So we are clearly extremely proud of what we've achieved here.
Another interesting point.
On the second on the second on the next slide.
We will show you why.
The product is actually better so despite us selecting dense media separation, which back in the day.
A very unique riskier selection, we actually made it mainstream of damage.
Because it preserves the Doug Ricky off the mineralization of the product.
And it allowed us to deliver this incredible superior quality visual when you look at this slide the next slide with the with the quality, we have a unique high grade high purity and coarse grain products.
No.
You don't even need the laboratory analysis to us and saying that you know the course product is different than the ultra fine.
That is produced by our peers and then it's a much in the light green color. So peers, so our purity batching Dallas hungry bullshit.
Look at the bottom you have products here your quality, which are the powder.
Product with loaded with you know iron oxide and other impurities, sometimes even like so it's a picture that says a thousand words at this product drive cost savings to clients of up to catch its ascent.
The next stage is a bit more on quality on low cost and on this tremendous competitive advantage, which translates into commercial success and also on low cost and cycle lithium cycle resilience as far as generate.
Free cash flow.
Essentially the chemistry of the high purity, the Triple zero, plus low alkali you see low iron oxide low Micah.
And then mow alkali tier which are.
Low potassium oxide and low so I didn't ask the oxide. So the product is better and is also environmentally competitive which is an advantage for the European Union bolt batteries and again, we'll get to it batteries out produce all over Asia.
The cells and their ships to the European Union Becky factories, we have a tremendous advantage when supply to these filmmakers in South Korea, Japan, China everywhere with this product.
Why is that the next slide shows the cost savings to clients.
We bring significant cost savings to downstream clients.
In matters of law, especially in a tight market, where the downstream is trying to squeeze cost.
Cost out of the supply chain are specifically on the refiners. So when you look at the slide here you can see that there's a potential of up to $6000 per ton of hydroxide for the downstream for the refiner, which is part of a downstream.
Supply chain, which is perhaps stoli, which represents a 26% higher margin toward that refiner or battery maker, that's going through that refinery and that is sick and we'd be working with glencore and their customers to premium <unk>.
That product in the market so even in that 9%.
The price of lithium hydroxide, our premiums spud our premium lithium concentrate can drive basketball's saving two converters to downstream in the current market, which is a tremendous competitive advantage on quality on value.
Thank you.
I'm stressing that point just to demonstrate how our product comes first because.
We have a chemical or physical technical measurable cost savings and we're delivering the best or the most sustainable triple zero lithium product and we're not charging for it the environmental zero carbon zero tales low can Nicole.
This is for free right. So it's a fantastic attribute for client delivering their sales are into.
Into the European Union.
On this slide here is actually a fascinating exercise that we produced in other words I product will always have demand at premium prices up because of the chemical attributes. The chart compares the margin our clients would achieve D. S fishing.
Seeks a visa visa Inc.
The competitors product on the spot market you can clearly see the game the spot margin.
In light degree is lower.
And Sigma customer margin, even at 9% is actually higher why because the 9% premium ization doesn't capture the full cost savings that the client has so it's a win win situation that's why.
The demand and acceptance of the product has been so spectacular I mean I was in China for almost two weeks I brought my home.
Pardon me everyone.
Looks like the Speaker line has disconnected please standby while we reconnect. Thank you for your patience.
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Yeah.
Pardon me everyone. Thank you for your patience, we have reconnected with the speakers Anna you May. Please proceed.
Yeah, So I got disconnected.
Ah accidentally still I was sorry, I was talking through the slide where we have to start with a demonstrated efficiency driving demand for sigma product in any market.
And I think basically wrapping up that fly with that chart comparing you know the premium product driving measurable efficiencies for the client.
You can clearly see why the client with the spot.
Client today has two choices by the competitors' product at spot market and buy cigarettes product at a premium a premium value. That's just chalk you all see on the screen now and.
And we showed you on the graph that our clients achieve higher margins.
No matter what happens in other words like purchasing shaken much broader he's always better off.
So.
Essentially that drives the commercial success that we'd be the T V.
And in this industry.
Our commercial teams to camped in in China, basically working with all possible score the low grade ore Fi and with Glencore for the high grade our triple zero concentrate and the response has been spectacular from carmakers battery.
Makers that the soldiers all refiners themselves. So we're very proud of what we built we're very proud to have been able to deliver a product that's not only the lead there or the reference environmentally.
Come on like zero carbon knowing that zero tailing dam.
And we don't use hazardous chemicals, but also we actually have physical and chemical properties that deliver value for the customer. So this is I've been going to just going to repeatedly to make it clear that we don't have a demand problem because we see.
Woot place every gram at off price.
Given all these competitive advantages and value in use.
The next page so Dan.
The summary of all that I can say.
Where does it only does well leads us into a tremendous competitive advantage when it comes to cell, making bound for batteries to be back in euro or bounds for cars, they're going to be sold.
In Europe as you know.
You know their battery cell factors located all over the world.
China, Japan, and South Korea, and for now they ship the cells to battery bankers that have their European factories. So destocking taking place in Europe that is directed to the carmakers located in Europe. So the sourcing of those cells.
Shocking walk themselves within the battery maker is actually happening as we speak.
And Sigma our Triple Zero Green lithium is a recognizable grant clients ask for it they want to have a material. They ask their downstream worse for our materials. So that makes us very proud and then when you look at the European auto market. This year.
Our production here, that's where you can clearly see that you know there's not enough about product just to satisfy the European demand, which is fantastic I mean, remember again C. A T. L. L. G Xscape Panasonic, they're all base elsewhere, but they're making this.
Felt that wound up in European cars, and that's that is the battery passport 2026 of these supply chains are getting ready as we speak.
So the next page.
A bit off the triple zero greeting the cube this is being our.
Put that all in.
As investors as operators as executives as partners here. This is what we set out to do meaning enabling best in class carbon intensity for batteries and eventually enabling the Holy Grail of the zero carbon battery as far as lithium he's concerned.
In other words.
The lithium hydroxide chemical producer in China today, if it's best in class using natural gas.
Using renewable power he can actually have a total carbon footprint of just two and a half tons of copper per ton of lithium hydroxide in other words, that's very easy to tackle with carbon credit because this does get glass has done the homework.
Far as replacing coal guy for natural gas and replacing coal power for renewable power, so with our material which is zero.
Essentially you have that.
Plastic position as far as our baking the final of Beijing up D Cob.
Cobham loads with carbon credits.
Again, we enable the zero carbon battery for lithium as far as the lithium material is concerned.
The next slide I'll go quickly through it because you're all very familiar with that the triple zero zero carbon euro chemicals and zero tailing.
The key element, our dailies recycling dry stacking.
You know, we have zero, whereas if you're buying it because we got rid of all the theories we sell the byproduct or price that's 10% of the main product that's an important point.
The water, we basically reuse the water and how we source the water with U S. So this is huge degree water that comes in gets treated in our us a water treatment station inbound to make it suitable for the Green Tech blog.
And you know we ended up with a close.
Be reused water.
And more importantly, we power the plant with clean energy clean energy in Brazil too.
All the dollar per kilowatt hour I mean, he is the cheapest the lowest cost in the world except for the Middle Ware subsidized. So we're in a drastic position here as far as renewable power lowered it anywhere you actually have the price of cattle.
So with that I'm moving to operational operational and resource expansion updates that could go next page moving to the next section.
So.
The next slide is successful commissioning of dry stacking.
Here, we show that we basically successfully commissioned on dry stacking and when you see this chart, which shows recovery.
In the chart the portion of the period, when we actually nailed the dry stacking commissioning by delivering the ultrafine golfs that dry stacking up 12% moisture, which meant we could then ex salary the production.
So they're they media separation. So you can clearly see us reaching stability on recoveries are.
And again Ricci. They you do level that we had been striving to do so that explaining to every one.
Yield is.
How much of every channel or that gets into this process module, one crushing becomes final product become triple zero lithium concentrate main product.
Recoveries dictate how much lithium we actually recover from the materials. So we've got our productivity right.
As we calibrate to the plant to achieve target production volume.
Cover you have the mid tier is that leading to volume. So here at Sigma we actually have a very high class problem.
Because we need to strive to adjust down the lithium concentrate grade two five and a half.
As you May recall, our first shipment was north of 6%, which is an operational ideal calibration and that's because we start with exceptional quality feedstock answering the the the prostitute block so as we achieve that.
Calibration down too.
To get to the market standard grade of five and a half to sand and let him walk side, we basically achieved you and recovery that increased substantially as you can see on this slide.
Again, very very very proud of what our operational team on site are two general managers running marketing plan have a G.
And we keep on improving now installing and I wont accept greater on the ultra fine circuit, which is going to give us a boost on recoveries, but you know the work is there we've already got with it at 22 and a half thousand a month multiply by 12, we're already annualizing.
At 270000 Cod.
The next stage maintaining had grade three successful operational integration.
The next page is basically showing that there are no tricks here right. As we said our focus has been to lower the grade two five and a half you can see that the grades being clearly above five.
We don't get paid for delivering more great acting industries, delivering five and a half and below so the challenge is to bring it down to five and a half which is again, a very high class product a testament to the quality of our feedstock.
Yeah.
Another important point on this slide is that we're not doing something typically known as high grading, meaning goalie too rich areas of the ore body just to achieve a successful ramp up in recovery and then suffering that in year two no we're not doing that.
If you look at the auctions on the right you can see that the head grade has been called.
At 11414, 6% that is the Baidu feed we showed on the feasibility studies so incredible consistency on the feed which shows that the challenge is to keep degree gas.
<unk> basically down from 6% down from six and a half this time.
Although we are able to deliver great that you know are light with the market as opposed to going above market and not get properly compensated for it.
The next slide slide.
Slide 18.
It shows that a well.
Going to expand the S. P. L creep detail engineering going this life stage, we're doing the final quoting.
As we're going through a strategic review the selection of the contractual engineering, it's going to be a function.
The winter the box Guardian of speaking about each one of them has their own views it could be going to eastern construction company, which actually has been building you know transmission lines at large scale generation power generation Ah Ah Ah Ah Ah.
Structures in Brazil for <unk>.
Very successfully very low cost.
We're gonna be funding it via debt and buyer operational cash flow in the plan is to triple production by next year why there's a market for every gram of this product, there's just not enough of it to satisfy demand and that's just totally because theater.
European Union bound cell.
Al.
Theres blockchain to at all just tracing throughout the supply chain and we bodes really well for that tracing.
As I said earlier, our product has become a brand and you can clearly see here on the map how easy you would be to expand either that most of the infrastructure preparation of industrial size has all ABB.
The next slide will show.
Our ability to scale up production organically, how big you suddenly get we just don't know that all the mineral resource base for phase five goes up 202 million tonnes. So there's another 50 million tons.
Noting over.
On page four and five so we can easily think through another line.
And that line could be potentially integrated again.
The Pan don't get winter off the Streeteasy regime, and going back to engineered points I want to make it clear put them all will be there driving the actual construction in Brazil. What are we talking about is engineering sort of bringing management dairy, which stigma robust owners teens off is it.
Already built one with all the all the engineers that built that are now working with us with adult learners take so you will be who would be the flooring engineering company that we would care with Globo to support our in house owner's team right.
And and and again, we are trying to do is to achieve optimum construction and achieve a you know optimal cost effectiveness.
The expansion of the plant so.
Lastly on this ability to scale up production organically this light.
It shows that both shrimp up this is what we're gonna look like so if you look at the slide on page 19, you can clean you got in other words, we have phase. One then we're gonna have a triplet which is two phases built at one to two lines trains built at once.
That would lead us to 766000 tons, and then potentially a fourth afford a lot a fourth line.
That's the obvious strategic choice.
Choice I mean, it's just the obvious strategic choice and other was a ramping up we're going to be big we have four schools, who do need this and we are one of the lithium next majors potentially going above 100000 tons LTE a year depending on.
Oh that sport line is going to be strategically are directed to perhaps intermediate chemicals integration, which leads me to the next slide.
Uh huh.
The slides up the next slide shows that August finalists in the strategic review I think what you typically do not move to finals.
The group's up Bob.
I'll go with the consortium, which is very healthy because there's efficiency.
Every consortium has expressed a wish to produce intermediate chemicals in Brazil, why it it's quite straightforward.
If the industry is going to be shy now.
Partially it has to go to a geography attached to a company that can actually deliver competitive products I mean, even when you think China, which is what we'd be doing for the last two weeks. They are you know the sole producers of lithium chemicals.
As we all know so when when do you think supply chain them, we actually gained quite a lot of PT Fi.
Because its own their interests chi to build intermediate chemicals, we've called doubled.
Meaning zero carbon zero waste, they do a fantastic job won't be inside it and the location of this country to delivering to immediate chemicals has to be a country like Brazil, why we have cheap.
And renewable power.
Kilowatt hour.
We have abundant natural gas at a competitive price.
We have a very large domestic market that can clearly digest because that's the word they use all the byproduct.
Gary key characteristic because the byproducts go into a multi phased construction industry.
And into a cleaning products this purchase.
Domestic industry in Brazil has spoke so Brazil can actually deliver zero waste just like China can.
And we can also deliver zero carbon that is why we can coexist with what is still a sinus centered chemical supply chain.
By delivering last fall are you off a extremely sustainable product that will catch up as you showed in the previous slide.
The lowest carbon and.
Here zero carbon lithium hydroxide chemicals, so we can actually enable the development of the lithium hydroxide chemical industry globally by delivering chemicals to cabinet Kohl's intermediate double zero zero waste zero car.
But in Brazil into anywhere in the world.
Another interesting point in Brazil, We also have killed labor for chemistry, Brazil never Deindustrialize. So we have quite a large chemical industrial park in Brazil and basic chemicals.
The level of specializations isn't the triangles specialization required to be in our kidney is because we call our Chinese friends I mean, they're the ALCHEMIST with it crystallizes with their abilities to do this is an incredibly low cod, we would just be doing intermediate chemistry with you today.
This chemistry and for that we do have the human capital in the country.
So now I'm changing tack and talking about how big how relevant how strategic relevance is shaking out so moving on to page four and phase five.
That's the next slide.
All these phases four and phase five.
What do we have here is.
Yeah.
Substantial additional growth in the scale of the mineral resource.
Well, we didnt tally all along on page 22, what we have is just a recap of how big we are.
We have four properties.
We've been focusing our Chile.
In the middle property called Blockages to you because that property concentrated most of the previous artisanal mine that we're offering when we go through this.
When we start to think about in 2012, but which are fishing to conquer shaky.
So phases 1234, and five are all here.
At this stage of the lung deliver $130 million.
For taking those mineral resource potentially to be confirmed by the 43 one to one.
And therefore, it just gives us the the the the reservoir, let's put it that way.
The scale of resources.
That would allow us to keep growing keep on increasing scale to think about integration one of the line to basically be the foundation to our growth large scale plant should begin next year with your major because this is the kind of scale.
Mineral resources required for a company the planes should be the next let your major.
Are on the right you see the map that we put forth with the exploration date announcements for phase four that was just an exploration update we were just trying to give investors a flavor of what scummy. We're gonna put out a 343 101, whose cases four and five.
So increasing it upwards of 50 million com.
The next slide is the closing comments I think how do we wrap it all up what does it all mean what is what is what is you need all that I've been saying here as far as our share price creation of shareholder value and what's going on.
In the industry well, we have not yet been related as opposed to insert that pooling full rerating yet to offshore and in the screen makes it argues their producers which are delivery.
Scale and proportionately getting your valuation current production that's way higher than ours.
And there are developers theyre getting a valuation too.
Five year forward production that is way higher than out this year.
The work that my partner here at <unk>.
It can take longer to Sigma while we don't conclude the strategic review back a day, who came to lead I think it was a bit of confusion about what's not doing it slipped my well he's joined Hanesbrands as a partner he said and he came to how the principles of the cancer Congress to Sigma Nasally My fellow.
And I and all of them on up to basically be there maybe that's your interface in order to communicate all the we've been doing to hopefully bridge that gap. The gap is tremendous where we're basically a third of our you know producer peers non majors and we do plan to close this disconnect on fundamentals.
You alone and our costs are so competitive but as far as Crawford, which we've just delivered straight out of our vegan financial quarter.
And cash flow generation that you know this company could be valued at anything at three times forward EBITDA, which as you know a very attractive value.
Value proposition right.
The next slide.
Shows why are we going to be the non smoking major we are already one of the worlds largest producers at 270000.
About 270000 tons, but add to where we are now if you take our monthly you know.
Production shipment that's going on at the Cajuns multiply by 12, that's why we get so we got here Oh, yeah, becoming one of the lithium majors. Because then we'd be expansion of 760000 tons for lithium of concentrate per year.
I mean, we get to the Super club of companies that can produce an equivalent of 100000 tons LTE, but yeah. So we have a special product high purity course lithium.
We have a very low cost.
And we have the triple zero carbon neutral.
Dry stack tailings dam, which was fully sell these byproducts ultra fine. So it's a very unique competitive position and then I want to close this call and thank you because.
We you've been you know, believing in us since the beginning and the least you could do to all of our investors is what we'd be doing delivering like clockwork on every front.
Now we delivered cost, meaning we just crystallize a physician as second lowest cost producer in the world again, when you do byproducts baffled out cost you got to remember there's literally on top of that literally batching the all in sustaining costs.
Put out.
There'd be a fast which is.
Custom into our obsession with operational efficiency. So every frog consistency smokers relentless that'd be it.
First I want to leave you with that thought when I was in China I received probably one of the biggest compliments there's ever been there where they told me what you.
You absolutely Outwork US you burden you know the three a M.
I said, well, that's what needs to happen.
In this century, where asus driving the work ethic, right, so where literally you know out working and working as hard as our competition and that's what we want to leave you with.
On these earnings calls and I really want to thank you for staying with US Trust me on that even in this price environment, where lithium enters a down cycle. We're here to stay because we'll try try in an environment of the old cycle given that.
We can produce free cash flow and earning no matter what.
So with that I'll pass on to Q&A and I want to thank you very much for listening to.
Todays call.
We will now begin the question and answer session for those on the phone to ask a question you May Press Star then one on your Touchtone phone.
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Our first question comes from Joel Jackson from BMO capital markets. Please go ahead.
Hi, good morning, everyone.
I think I read in your disclosure.
You still expect 500000 tonnes of spodumene production or sales next year.
That'd be about double what 'twenty, what your run rate is now.
Can you talk about the miles that you've got a hit because you haven't got the feasibility study for phase two three so what do you have to hit when it would be in production. How do you have to ramp. However lessons learned that you can get to 5000 tons of production for next year.
Pardon me everyone appears the speaker line has again trumped. Please standby while we reconnect we thank you for your patience.
Okay.
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Yeah.
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Yeah.
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Pardon me everyone.
We have reconnected with the speakers you May proceed.
Yes, so I'll start again.
Yeah can you. Please repeat the question because trying to sure I would love to draw sure. So.
In your disclosure you talked about.
1000 tonnes of spodumene production in 'twenty 'twenty four for next year, you know, we're very about double the run rate right. Now so what has to happen you don't put the feasibility study out yet for that expansion what has to happen for you to ramp up getting production and get to 5000 tonnes next year, maybe you could talk about lessons learned from the phase.
One.
Absolutely well, we learned quite a lot as you all know specifically when it comes to the dry stacking of the tailings, which significantly delayed us reaching nameplate capacity of the production. So we refine best surrogate, we learned a lot on fluctuation and Kevin.
So we could use in order to make this circuit very efficient again is the first circuit in the world isn't innovation, we pioneered it but we got it out with Steve how it's dry stacking beautiful eight so.
That was factored into the new engineering so.
So I think this was actually a very important learning because all the learnings from actually commissioning this plant and enhancements to the flow sheet.
We're going to are going to be stacked or worked back to already on the design.
And so we've seen we are very confident that well we have now is a fantastic flow sheet because it comes battle tested by all the pain and all the lessons we've been through in the commissioning.
So what milestones you have to hit like would you have to be commission you have to be commissioned by the state 5000 tonnes next year.
But what's the mouse, yeah won't be walking through with where basically it's interesting because we use the same slash and cut that we we applied to phase one even though we don't foresee waiting like April May June July.
Right I mean, because with the dry stacking circuit that works from the get go we can actually unleash and turn on plant two which is the dense media separation immediately because now we know what is the right flow sheet for actually getting to the 12% moisture which is the idea.
Oh Boy is sure to be maintained in the cage that goes into the mainframe because the drugs that can filter enhanced go into the conveyer belt is the dry stack. So that was actually the one you know black box, we have to solve again you can ovation. Ryan. This is why we've been here.
As financial sponsors and investors for six years, we promised that we'd promised that to our stakeholders in Brazil, and we delivered it. So we're not gonna have that that wait anymore. So that cut.
Commissioning significantly I mean four months its quite a lot.
And then more importantly, yeah more importantly, we also know what the issue is with the water. When we first started this we didn't realize that the water was actually stewards grades and we had to build a a sewage treatment stations to actually get the water from the river.
The solid FICO residue can make it suitable for the plants. So there's a myriad of lapsing fear that factor that we actually that we actually incorporated into the design.
All this new to do this to new cloud.
And therefore, we see a construction timeline could be.
More streamlined way more than the first construction timetable and then I think on the bigger picture. When you look at that page and I can go back to that slide that is like if the moderator could please go back to this slide which is page 18.
Usually you can see that we have to do a lot left in.
Industrial site preparations there.
Then we had to do for phase one because we built phase one from scratch. So we have to prepare one square kilometre.
Kilometers of industrial area, which we don't anymore, given that the fixed green Tech and infrastructure are up already here the byte being off six kilometers that brings this water does he was water from the river into the treatment stations.
As already here, so a whole lot of what we call industrial psyche constructors here, where life is as you can see the expansion little square off that slide again moderator could go to slide <unk>.
Sorry, slide 18 that'll be very helpful.
We actually tackling the Earth works on fast year areas, which against you shorten Earth works by four months.
Because we don't have to do any more capture we don't have to do well.
Well, we called vegetation classification, there's a whole lot of steps that you know are skipped because we're going into what we call untrusted sized vegetation area. So a lot of saving a lot more streamlining. So what is what is the key piece of the puzzle now that we got all the work.
Teed up.
Who is going to drive engineering, because obviously each strategic.
Partner buyer.
Potential M&A counterparty here has a preference and we don't want to impose our preference is to them and given that we're now literally in the last leg of it.
There's no appointing gun jumping with an engineering company promo will be there that's the Brazilian company has done a marvelous job marvellous job in managing over a thousand people. We had on site doing construction. So they are the experts of executing on the ground.
And then who pair them up with an engineering company, which will drive equipment procurement I mean equipment procurement can be.
Basically concentrated in different parts of the world depending on the strategic you know potential.
Acquire counterparty offtake.
We will do this together will be here, helping you know the next Guardian has taken up to 216, that's what we want.
The success over the next garden is the success of Brazil.
Okay.
Just following up on that and I'll.
I'll pass over the.
But as you talk about the strategic review and you're talking about words like Guardian counterparty has a lot of broad sort of different terms. There Hum maybe you can give us a sense of sort of how has the process gone the range of beds the range of kind of.
Plans are or proposals and how are you managing this environment, Okay, yes, lower lithium prices like the commodity things go up and down that people can now handle that how did you manage it in a time of clearly lower lithium multiples in the industry across the year.
Look the screen is not a benchmark for a strategic buyer I mean, it it's sort of they don't think corridors you don't build a resilient business on a quarter to quarter basis I'll give you. An example, when he gets to 2028.
It isn't like someone's Gonna Pier two quarters earlier say, Oh I need to figure. This out I mean these these these discussions are happening now battery passport Europe 2026 is a reality and it affect battery makers all over the world.
Batteries made in trying to sell sells meeting China sales made in Japan sells maybe South Korea, South made everywhere are affected by it so.
There's going to be a lot of at least you need it into the you know materialization of the plan off somebody's Giga factories that have been announced and are being built all over or are operating right now.
So ultimately it's it's 2024th in.
Practically speaking so the plans for the remainder of this decade, which is the decades of lithium are happening as we speak and I mean, I'll give you. An example, C. A T L and now this year in the Shanghai Auto show that they're going to deliver it to zero carbon battery there'll be zero carbon.
25 zero problem battery comes in 20 countries five that just shows that this is a global concern it isn't something that just the fact, the western because as you all know C. A T L supplies. The world. So this is a this is a global conversation and what what do you see them.
Just let's leave you know commodity cycle.
Aside for a moment because again, we demonstrated good we'll try it no matter what right.
<unk> is a company that has a clean shareholder registry.
There's not a single strategic here is basically financial investors with financial sponsors. So we can deliver a transaction without the inter looping theres been plaguing recent strategic.
Strategic movement to we have unencumbered sizable thousands.
Hundreds of thousands of units, which means we are easily integrated bull for massive topline M&A synergies. So we are almost like the perfect target and we are in a country that is extremely welcoming to mining the population once we actually manage to that.
<unk> Street that Theres a new.
Model for the industry of mining processing to be followed in terms of lifting the people and sharing prosperity and not being less profitable I mean come on with posted a profit right.
So I think we represent quite a lot for the industry.
So this is just a long way to say that.
The process is going incredibly well and I can't say much more given sort of the imminence of it right.
The release, Thanks, Ana very shelf containing yep.
Sorry, sorry to cut you off but thank you very much.
No it's all right.
Again, if you have a question. Please press Star then one.
We have a question over the webcast from Marcello S. M. At Everest capital Good morning, everyone and congratulations for the results does the company expect EBITDA margins and net margin to improve over the next few quarters does the company expect north net margin to reach 75% as reported and Institute.
<unk> presentations.
We do we do it and I think it's part of the process of easy this period of commissioning and.
You can tell by the bridge of EBITDA, we posted on the institutional presentation on our website. The further we move.
Goodbye nonrecurring items, our financials become so you'll become more streamlined and more clear and the ability to our ability to deliver superior margin obviously that.
We need we're now showing simulations against our price backdrop that has gone down and that obviously affect our margins right. So when you we weren't we were not running at.
$1500 per ton off.
<unk> Triple zero lithium concentrate we are cheating right now 1000, 800900, which was the price war.
Sure.
Our shipment calculation using the formula on spot hydroxide, a 23000, but again.
Well, we are trying to show is that we are profitable.
Structurally profitable because our cost is so low we're well below the marginal cost required for the industry to meet the supply expectations off demand, even when you look at softer demand backdrop drop even when you look at what we call. The full bear case, we're always going to be here we're gonna.
Make more profit less profit, it's a commodity after all but we are resilient to cycles and that's what makes sneak my very special are fundamental.
Asset fundamental company here, we're here no matter what so we are the supermajor in volume.
<unk> has managed to keep costs very low and I think connects to the previous question going forward as we expand our costs will go down because the G&A, it's a bit of what happens to Dallas and they're so big the G&A gets diluted over they are now at one 4 million.
Concentrate so is a giant number that is about a five times our size. So we're tripling so the more we increase the scale of production. The last did you need batteries.
Because it gets diluted down so when you look at the fundamentals of the cost of just gets better by simply basically diluting down our fixed cost over a larger number of units right. So essentially this is this is actually the demonstration of the resilience of the business I mean, we can expand confidently because the.
Cause sexual degrees.
There are no more questions in the queue. This concludes our question and answer session.
I would like to turn the conference back over to CEO and a couple for any closing remarks.
Well I want to really thank all of our investors that have believed in us. They have stayed with US we have a very steady roaster top investors that have you know stage, let's take them up over the cycle almost like financial sponsors that we are.
And the fundamental investors you have seen through the value and.
Well, we are hoping to do is to reward them beautifully with our the execution to flawless execution.
<unk> strategic vision and the execution of the strategic review.
We do see a sigma as a key key instrumental a player in the global lithium industry, a real force for good because we brought the conversation off.
Zero carbon zero tailing.
And environmental sustainability, and social sustainability and lifting the people in achieving a social goals achieving climate goals, while delivering you know sure.
Our profitability on the metrics, while delivering an incredibly profitable and incredibly.
Our resilient business. So he has not affected us at all to be the most sustainable lithium company in the world as far as metrics, which shows the way forward for the industry. It's a matter of will right. It's a matter of cost discipline operational efficiency and then you become.
Well, we are which is the bedrock of the zero carbon batteries. So we're very very proud of this quarter, whereas they were very proud of being profitable in the first operating revenue corridor and that's thanks to you all into your you know unwavering support over the years, so I'm very honored.
You have the investor base that I have and with that I'll close my remarks.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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