Q4 2023 Arcadium Lithium PLC Earnings Call

Daniel Rosen: We will 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 that 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 and Exchange Commission. The information presented represents our best judgment based on today's information. Actual results may vary based upon these risks and uncertainties. Therefore, today's discussion will include references to various non-GAAP financial metrics. And with that, I'll turn the call over to Paul. Thank you, Dan. And hello, everyone.

New address any additional questions after the call.

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 10-K, 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 on these risks uncertainties.

Today's discussion will include references to various non-GAAP natural metrics definitions of these terms as well as the reconciliation to the most directly comparable natural measure calculated and presented in accordance with GAAP are provided or Investor relations website, and with that I'll turn the call over to fall.

Thank you Dan Hello, everyone. This is the first earnings call for arcade room lithium following the official close with the manager between <unk> on January the fourth of this year. We're excited to begin operating as al Qaeda lithium building on the strengths of too highly complimentary organizations.

Paul W. Graves: This is the first earnings call for Arcadium Lithium following the official close of the merger between Livent and Alchem on January 4th of this year. We're excited to begin operating as Arcadium, building on the strengths of two highly complementary organizations with a focus on continuing to grow as one of the leading global producers of lithium chemicals. While the lithium and energy storage market dynamics have been somewhat volatile since our merger announcement in May of last year, the underlying strategic merits of the transaction remain as strong as ever. As a larger, more diversified, vertically integrated company, we are better positioned than either of the companies alone to meet the growing needs of our customers.

Dan: With a focus on continuing to grow I was one of the leading global producers of lithium chemicals.

Dan: While lithium and energy storage market dynamics have been somewhat volatile since our merger announcement in may of last year, the underlying strategic moments of the transaction remain as strong as ever.

Dan: For the larger more diversified.

Dan: Integrated company better positioned on either of the companies alone to meet the growing needs of our customers and we have even greater flexibility to take advantage of opportunities available to a diversified integrated lithium chemicals producer across all market cycles.

Paul W. Graves: And we have even greater flexibility to take advantage of opportunities available to a diversified, integrated lithium chemicals producer across all market cycles. Arcadium Lithium is growing its volume significantly as a result of multiple years of expansionary investment. And 2024 is highlighted by an expected 40% increase in lithium carbonate and hydroxide volumes compared to 2023 as a combined company. In addition, Arcadium is expecting to realize 60 to 80 million dollars of total synergies and cost savings in 2024.

Dan: Okay, Jim lithium is growing it's volume significantly as a result of multiple years of expansion of investments in 2024 is highlighted by unexpected 40% increase in lithium carbonate and hydroxide volumes compared to 2023 of the combined company.

Dan: In addition, arcade room is expecting to realise $60 million to $80 million total synergies cost savings in 2000 2004.

Paul W. Graves: We will go into further detail on the major components of these cost reductions, but the savings are driven by a combination of positive developments in our initial integration efforts and from accelerating certain actions as a result of the current lithium price environment. These higher volumes and cost savings are reflected in the outlook scenarios we are providing for Arcadium-Lithium's first full year, which we are providing in a different format than that provided historically by either Livent or OrCam. The lower-priced environment is also leading Arcadium to slow the pace of its growth capital spending in 2024 and to extend the timelines for some of its ongoing expansion projects, as we will discuss further. This reduction will not impact our ability to deliver volumes under existing customer commitments. It will provide us with an opportunity to undertake a comprehensive review of the existing expansion plans from Livent and Allchem in order to maximize the capital synergies available from our co-located projects in Argentina and Canada, as well as optimize the operational flexibility of future production. I will now turn the call over to Gilberto. Thank you, Paul. Turn to slide four.

Dan: We'll go into further detail on the major components of these cost reductions for the savings are driven by a combination of positive developments in our initial integration efforts and from accelerating certain actions as a result of the current lithium price environment.

Dan: These higher volumes in cost savings.

Dan: Collected in the outlook scenarios, we are providing for al Qaeda in with his first full year, which we are providing in a different format than that provided historically by he's alive and all.

Dan: The lower price environment is also leading al Qaeda him to slow the pace of its growth capital spending in 2002, four and to extend the timelines for some of its ongoing expansion projects as we will discuss further.

Dan: This reduction will not impact our ability to deliver volumes under existing customer commitments. It will provide us with an opportunity to undertake a comprehensive review of the existing expansion plans from <unk> in order to maximize the capital cities is available.

Dan: Located projects in Argentina, and Canada, as well as optimize the operational flexibility of future production.

Speaker Change: I will now turn the call to <unk>.

unknown: Thank you Paul.

Speaker Change: Slide four.

Gilberto Antoniazzi: Our merger closed earlier this year following votes of approval from both Livent and Alkamp shareholders. Arcadian Lithium Ordinary Shares are trading on the New York Stock Exchange under the ticker ALGM. In our foreign exempt listing, we assess depository instruments or CDIs, which are trading on the ASX under the ticker LTF. Because the merger closed after the end of 2023, the 2023 10K to be released by Arcadium Lithium will all include the historical results of Livent Corporation. At this time, we can share that for the full year 2023, Arcadion had combined revenue of approximately $2 billion and a combined consolidated cash balance of $892 million, with combined cash, net of that, of roughly 297 million, as of December 20.

Speaker Change: Our merger clues earlier this year.

Speaker Change: Approval from both license and all Kemp shareholders.

Speaker Change: Occasionally ordinary shares are trading on the New York stock exchange under the ticker.

Speaker Change: L G M.

Speaker Change: 40% listing fee assess deposit our instruments or cdi's.

Speaker Change: History, the only ASX under the seeker L. G M.

Speaker Change: Because of the merger clues after 120 23.

Speaker Change: 2023, <unk> to be released by Arcadian lithium.

Speaker Change: You only include the historical results of license operations.

Speaker Change: At this time, we can share that for the full year 2023 occasional hat.

Speaker Change: <unk> revenue of approximately $2 billion in a combined consolidate cash.

Speaker Change: Of $892 million with combined cash net of that of roughly 297 meeting.

Speaker Change: As of December 2000 as of December 31st 2023.

Unnamed Speaker: We expect to provide calendar year 2023 performance financials early in the second quarter of 2020, and we'll release combined results for the new company beginning with the first quarter of 2024. For this reason, we will discuss the fourth quarter and full year 2023 performance for both companies on a standalone basis, and in formats consistent with previous disclosures, starting with slide five.

Speaker Change: We expect to provide calendar year 2023 perform a financial early in the second quarter of 24.

Speaker Change: And will release combined results for the new company, beginning with the first quarter of 2024.

Speaker Change: For this reason blue discuss the fourth quarter and full year 2023 performance for both companies on a standalone basis, and a formats consistent with previous quarters.

Speaker Change: Standing on slide five.

Unnamed Speaker: Leibman reported fourth-quarter revenue of $182 million, adjusted EBITDA of $91 million, and adjusted earnings of $0.34 per diluted share. Volume sold was roughly flat, with lower average realized prices across all lithium products, in addition to slightly higher costs. Despite a challenging leasing market environment in the fourth quarter, Livent achieved an adjusted EBITDA margin of 50%. For the full year 2023, LIBOR reported revenue of $883 million, adjusted EBITDA of $503 million, and 1.89 cents of adjusted earnings per diluted share. These were all meaningful improvements versus the prior year and record results for LiveNet. This was a result of high average pricing and lower overall cost. And it's highlighted by full year 2023 net income growth of 21%, an adjusted EBITDA increase of 37%, and an improved adjusted EBITDA margin of over 10% versus 2022. Turn to wall cam on slide six, where 100% ownership is shown.

Speaker Change: Well I want to report that fourth quarter revenue of $182 million adjusted EBITDA of 91 medium.

Speaker Change: Earnings of 34 cents per diluted share.

Speaker Change: Volume souls were roughly flat.

Speaker Change: Lower average realized prices across all the two products in addition to slightly higher costs.

Speaker Change: Despite a challenge Alicia market environment in the fourth quarter alive, and achieve and adjusted EBITDA margin of 50%.

Speaker Change: For the full year 2023 library reported revenue of $883 million adjust.

Speaker Change: Just an emitter of $503 million and 1.894.

Speaker Change: Justin earnings per diluted share.

Speaker Change: These are all meaningful improvement versus the prior year record results for license.

Speaker Change: This was a result of high average pricing and lower overall costs.

Speaker Change: And is highlighted.

Speaker Change: By full year 2023, net income growth of 21% and adjusted EBITDA increase of 37%.

Speaker Change: And improve adjusted EBITDA margins.

Speaker Change: 10% versus 2022.

Speaker Change: Turning to welcome on slide six on 100% ownership basis. They all are off carboni facility achieved calendar year fourth quarter total revenue of $96 million we.

Unnamed Speaker: The Olaros Carbonate Facility achieved calendar year, fourth quarter total revenue of $96 million, with just under 7,000 metric tons of carbonate solids compared to production of just over 4,100 metric tons, at an average realized price of $13,564 per metric ton. For the full year 2023, total revenue was $511 million, with 17,879 metric tons of carbonate sold at an average realized price of $27,788, for Sales and production were broadly aligned for the full year in the Mount Kathleen Spodumene Operation.

Speaker Change: We just under 7000 metric tons of carbon eight so.

Speaker Change: Compared to production of just over 4100.

Speaker Change: Metric tons.

Speaker Change: At an average realized price of $13564 per metric ton.

Speaker Change: For the full year 2023, so the revenue was 511 million with 17879 metric tons of carboni sold at.

Speaker Change: With an average realized price of $27000 $788.

Speaker Change: Metric ton.

Speaker Change: Sales and production were broadly in line for the full year.

Speaker Change: For the mountain Kathleen Spodumene operation.

Unnamed Speaker: Fourth quarter Spodumene revenue was $46 million, with roughly 60,000 dry metric tons sold at a 5.3% average grade, at a 6% Spodumene equivalent price of approximately $850 per dry metric ton. The realized spodumene price decline in the fourth quarter was amplified by two specific factors. A shift to a forward-looking reference price mechanism with customers, consistent with the shifts seen across the industry, and the timing of shipments all occurring in the second half of the quarter, when the market was particularly challenged. From an operations perspective, production grade and recovery rates both improved slightly versus the prior quarter for the full year. In 2023, Spodumene's revenue was $571 million.

Speaker Change: Fourth quarter Spodumene revenue was $46 million with roughly 60000 dry metric tons suit with 5.3% average great.

Speaker Change: At a 6% sportingly equivalent price of approximately $850 for dry metric tons.

Speaker Change: The realizes arguing price decline in the fourth quarter was amplified by two specific factors.

Speaker Change: Shift to forward looking reference price mechanism with customers.

Speaker Change: System with a <unk> seen across the industry.

Speaker Change: And the timing of shipments all occurring in the second half of the quarter when the market was particularly challenge from.

Speaker Change: From an operations perspective production grade and recovery rates, both improved slightly versus the prior court.

Speaker Change: For the full year.

Speaker Change: 2023, spodumene revenue was $571 million, we just over.

Paul W. Graves: We're just over, I'm sorry, with just under 205,000 dry metric tons sold at a 5.3 average grade, at a 6% Spodumene equivalent price of roughly $3,100 per dry metric ton. Full year production was roughly 34,000 dry metric tons, higher than volume sold, which we're carrying into this year and brings our spotting inventory to a more normalized level. The notable decline in fourth-quarter spodumene and lithium carbonate prices was especially notable at Alkane, given its practice of selling volumes largely on a market price reference basis. The resulting swings in profitability reveal the challenges of making significant expansionary capital investments over multi-year periods, especially when it comes to having access to the cash needed to support these investment committees. This will be one of the key focus areas for Arcadium as we look to implement an integrated commercial strategy that provides greater predictability while also allowing the company to take advantage of attractive market opportunities. I will now turn the call back to Paul to provide some market commentary. Thanks, Gilberto.

Speaker Change: I'm, sorry, with just under 205000 dry metric tons, so with $5 three average great at.

Speaker Change: At a 6% spodumene equivalent price of roughly $3100 for dry metric tons.

Speaker Change: Full year production was roughly 34.

Speaker Change: Thousand dry metric tons higher than volume, so which were carrying into this year and brings our inventory to more normalized levels.

Speaker Change: The notable decline in fourth quarter, spodumene, and lithium carbonate prices was especially notable at okay.

Speaker Change: Given its practice of selling volumes largely on a market price reference basis.

Speaker Change: The resulting swings and profitability, we view the challenges of making significant discretionary capital investments will remove your periods.

Speaker Change: Especially when it comes to having access to the cash needed to support these investments commitments.

Speaker Change: This will be.

Speaker Change: The key focus areas orcadian as we look to implement Unintegrated commercial strategy that provides greater predictability, while also along with the company.

Speaker Change: Should take advantage of attractive market opportunities.

Speaker Change: I will now turn the call back to poach provide some market commentary.

Poach: Thanks feel better.

Paul W. Graves: On slide seven, I'd like to provide some perspectives on what we saw in the lifting market in 2023. In hindsight, the year was heavily influenced by inventory buildup in the energy storage supply chain. Some more meaningful inventory increases were seen downstream of lithium, most notably in battery cells. It became clear that many battery cell producers had aggressively increased production in the fourth quarter of 2022, especially in China, in anticipation of elevated demand and prior to expiring subsidies. As a result, both cell and cathode producers reduced production rates as 2023 progressed, and spot lithium purchase activity beyond base volume contracts declined significantly. This drove a sharp decline in lithium market prices, starting in late Q3 and accelerating in the fourth quarter.

Poach: On slide seven I would like to provide some perspective on what we saw in the listing market in 2023.

Poach: In hindsight the year was heavily influenced by inventory build and the energy storage supply chain.

Poach: More meaningful inventory increases was seen downstream of lithium most notably in battery cells.

Poach: Became clear that many battery cell produces it aggressively increase production in fourth quarter of 2022, especially in China and and.

Poach: Anticipation of elevated demand.

Poach: Prior to expired subsidies.

Poach: As a result, both sell and Catholic produces reduced production rates of 2023 progressed spot.

Poach: Spot lithium purchase activity beyond the pace volume contracts declined significantly.

Poach: This drove sharp decline and let the market prices starting in late Q3 are accelerating in the fourth quarter.

Paul W. Graves: Given the price decline, as well as some negative headlines from OEMs who were perhaps overly optimistic with their earlier EV forecasts, especially in the U.S. market, the year ended with a notably bearish sentiment around lithium and energy storage. However, taking a step back, it's important to recognize that underlying end market demand was actually very strong last year. In 2023, global EV sales were up 33% for the year, approaching 14 million units on a roughly 17% penetration rate. China hit an all-time monthly high of around 1 million units in December, which was up 49% year-over-year and 10% month-over-month.

Poach: Given the price decline as well as some negative headlines.

Poach: <unk>, perhaps overly optimistic with that earlier forecast.

Poach: Especially in the U S market.

Poach: Ended with a notably bearish sentiment around lithium advantage storage. However.

Poach: However, taking a step back it's important to recognize that underlying and market demand.

Poach: Actually very strong last year.

Poach: 2023, global EV sales were up 33% a year approaching 14 million units roughly 17% penetration.

Poach: China hit an all time monthly high of around 1 million units in December.

Poach: Which was up 49% year over year, 10% October month.

Paul W. Graves: Additionally, stationary energy storage demand continues to surprise to the upside, and growth in this segment should be stronger in a lower lithium-ion battery cost environment. And while incremental lithium supply did enter the market in 2020, it did not come mainly from lower cost priming spent. The new supply was predominantly higher-cost materials from Swaziland out of Africa and the Pidlite in China.

Poach: Additionally, stationary energy storage demand continues to surprised to the upside and growth in this segment should be stronger and Aloha lithium ion battery cost environment.

Poach: And while incremental lithium supply data into the market in 2023, it did not come mainly from lower cost Brian expansions. The new supply was predominantly customer table spot you mean out of Africa Lepidolite from China.

Paul W. Graves: The development of these assets was incentivized by the high lithium prices seen in the last market run-up, and they're some of the first to be economically challenged in the current lower-price environment. And while it is known that a number of these higher-cost assets are still off-grade, they're doing so in a price environment that is at or even below their cash cost of production, and it remains to be seen how long they can continue to operate in this way. We also see these assets as the most challenged when it comes to expanding output further in the future...

Poach: The development of these assets was incentivised by the high lithium prices seen in the last market run up and then some of the first to be economically challenged in the current lower price environment.

Poach: While it is known that a number of these higher cost assets are still operate that doing so in a price environment that is at or even below that cash customer production.

Poach: It remains to be seen how long they can continue to operate in this way. We also see these assets is the most challenged when it comes to expanding output further in the future.

Paul W. Graves: Moving into the first half of 2024, there are a number of reasons to be optimistic about the direction of our business. However, we, like others in our industry, need to take into account the current environment when making capital allocations. We have to look at the sustainable prices needed to support multi-year investment, and when there are prolonged periods of market prices that are lower than these reinvestment prices, it reduces confidence in whether expansions will, in fact, be economically viable. We believe that prices will move higher in the future, which they need to do in order to incentivize sufficient supply expansion to meet our customers' future needs. However, it is much more challenging to manage these capital-intensive projects in such volatile price environments given the direct impact on our earnings and cash flow. When we have prices for extended periods at the levels we see today, we have to be very cautious in how we use our balance sheet to fund expansion. It is clear that very few lithium expansion projects, including most brownfield expansions in brine, make economic sense at current market prices.

Poach: Moving into the first half of 2024.

Poach: A number of reasons to be optimistic about the direction of our industry.

Poach: However, we like others in our industry need to take into account the current environment, when making capital allocation decisions.

Poach: We have to look at the sustainable prices needed to support multi <unk> investment decisions.

Poach: I wonder a prolonged periods of market prices that are lower than these reinvestment prices.

Poach: It reduces confidence in weather expansion will in fact be economically viable.

Poach: We believe that prices will move higher in the future, which they need to do in order to incentivise sufficient supply expansion to meet customers future needs.

Poach: However, it is much more challenging to manage these capital intensive projects through such volatile price environments, given the direct impact on our earnings and cash flow.

Poach: When we have prices for extended periods at the levels. We see today, we have to be very cautious and how we use our balance sheet confirmed expansions.

Poach: It is clear that very few lithium expansion projects, including most brownfield expansions and Brian make economic sense of current market prices.

Paul W. Graves: And the longer the prices stay near these levels, the greater the impact will be on future supply shortfalls. As we saw in 2022, this will increase the likelihood of a rapid increase in lithium prices at some point in the future, although the complexity of the global battery supply chain makes both the timing and extent of such an increase difficult to predict. We are seeing a response from both existing operators and project developers alike. However, some higher-cost production has started to come out of the market. We expect this trend to continue. Additionally, we have seen more discipline being applied to expansion projects as lower prices challenge the return hurdles on these multi-year investments. Increasing price volatility is reducing the appetite for financing development assets from sources, especially lenders, the many single assets pre-production companies have come to rely on. There is typically a slowdown in demand in the first few months of the year, coming off the seasonally strong fourth quarter.

Poach: The longer the price sustaining of these levels the greater the impact will be on future supply shortfalls.

Poach: As we saw in 2022 this will increase the likelihood of a rapid increase in lifting prices at some point in the future.

Poach: Although the complexity of the global battery supply chain export the timing and extent of such an increase difficult to predict.

Poach: We are seeing a response from both existing operators and project developers are like some highest cost production have started to come out of the market.

Poach: We expect this trend to continue.

Poach: Additionally, we have seen more discipline being applied towards expansion projects of lower prices challenge the return hurdles on these multiyear investments tighter.

Poach: Heightened the price volatility is reducing the appetite for financing development assets from sources, especially lenders. The many single assets pre production companies have come to rely on.

Poach: There is typically a slowdown in demand in the first few months of the year coming up the seasonally strong fourth quarter. This year. Many regional cathode himself produces are expected to use the lunar new year holiday period for extended downtime, which should help to support continued destocking at the battery cell level.

Paul W. Graves: This year, many regional cathode and cell producers are expected to use the Lunar New Year holiday period for extended downtime, which should help to support continued destocking at the battery cell level. As far as 2024 demand is concerned, growth expectations are still strong, and we're seeing a growing number of more affordable EV models entering the market. Bloomberg NEF projects annual global battery demand to reach 1.25 terawatt hours, up 30% versus 2020

Poach: As far as 2000 2004 demand is concerned.

Poach: Expectations are still strong.

Poach: We're seeing a growing number of more affordable EV models and from the market.

Poach: Bloomberg any F projects annual global battery demand to reach 1.25% <unk> Alice.

Poach: 2% versus 2023.

Paul W. Graves: Additionally, longer-term investment commitments continue to be made downstream, with additional support in North America and the U.S. driven by the Inflation Reduction Act. This is highlighted most recently by GM agreeing to a $19 billion deal to secure a cathode-active material supply in Tennessee and Toyota investing $1.3 billion to support its own EV plant in Kentucky, bringing its total investment commitment at the site to $10 billion. It's also important to emphasize that reduced percentage growth rates, which will undoubtedly occur over time, do not necessarily mean reduced volume demand growth, with year-over-year demand for lithium chemicals, in terms of total tons of lithium chemicals, continuing to increase meaningfully. The long-term trajectory for electrification has not fundamentally changed, even if, as we've been saying for a while now, that growth is not necessarily linear and predictable.

Poach: <unk> longer term investment commitments continued to be made downstream with additional support in North America and the U S driven by the inflation reduction Act.

Poach: This is highlighted most recently by <unk> agreeing to a 19 billion dollar deal to secure <unk> active materials supply in Tennessee.

Poach: Toyota investing $1.3 billion sports ODB planet in Kentucky, bringing its total investment commitment at the site to $10 billion.

Poach: It's also important to emphasize that reduce percentage growth rates, which will undoubtedly occur over time do not necessarily mean reduced volume demand.

Poach: With year over year demand for lithium chemicals in terms of total tons of lithium chemicals, continuing continuing to increase meaningfully so.

Poach: The long term trajectory for electrification is not fundamentally changed even F. As we've been saying for awhile now that growth is not necessarily linear and predictable.

Paul W. Graves: As long as China continues to be the predominant source of demand and the location of the bulk of the supply chain for energy storage, there will be volatility and periods of aggressive production followed by de-stock. Turning to slide nine, Arcadium Lithium will be growing its sales volume significantly in 2024 as a result of multiple years of expansionary investment. We are expecting to increase our combined lithium carbonate and hydroxide delivered to customers by roughly 40% in 2024, or to 52,000 metric tons at the midpoint on an LCE basis. With respect to lithium carbonate, this is the result of the ramp-up of expansions of fennec. Thank you very much.

Poach: As long as China continues to be the predominant source of demand and the location of the bulk of the supply chain managers storage there will be volatility periods of aggressive production followed by Destocking.

Poach: Turning to slide nine al Qaeda lithium will be growing sales volumes significantly in 2024 as a result of multiple years of expansion investments.

Poach: We are expecting to increase our combined lithium carbonate hydroxide delivered to customers by roughly 40% in 2000.

Poach: Four four to 52000 metric tons of the midpoint on analysis basis.

Poach: With respect to lithium carbonate. This as a result of the ramp up of expense expansions of panics because our existing operation of the sell out the lumbering letter at all of those both in a container of <unk>.

Poach: <unk> for 10000 metric tons phase one expansion is complete.

Paul W. Graves: We expect to achieve production of up to 7,500 metric tons in 2024 from this expansion and to finish the year at run rate operating volume. This means we will have a total nameplate capacity of 28,000 metric tons per year at Penic. I will address the status of the Phase 1b additional 10,000 metric ton expansion shortly. For Oloros, we are in the process of ramping up the 25,000 metric ton stage two expansion, which will be completed in late 2023. But the conventional PON-based process, this ramp-up will take longer than FANXE's DLE-based production. We expect to produce up to 40% of capacity or 10,000 metric tons of carbonate from stage two and expect to reach run rate production by the end of 2025. This will bring the total stated capacity at Oloros to over 40,000 metric tons.

Poach: Production ramp up process is well underway.

Poach: We expect to achieve production of up to 7500 metric tons in 2024 come this expansion and to punish.

Poach: Punishment finish the year run right operating volumes.

Poach: This means we will have total nameplate capacity of 28000 metric tons per year headaches.

Poach: I will address the status of the phase one be additional 10000 metric ton expansion shortly.

Poach: But <unk> we are in the process of ramping up to 25000 metric ton stage two expansion. What construction was completed in late 2023 is.

Poach: The conventional pawn based process this ramp up will take longer than <unk> based production.

Poach: We expect to produce up to 40% of capacity or 10000 metric tons of carbonate from stage to and expect to reach run rate production by the end of 2025. This will bring total stated capacity at all rose to over 40000 metric tons.

Paul W. Graves: Arcadium will also benefit from the completion of multiple hydroxide production lines that use carbonate from Argentino's feedstock. We expect to deliver commercial volumes in 2024 from a 5,000 metric ton expansion at our U.S.-based operation in Bessemer City, North Carolina, bringing our total U.S. hydroxide capacity to 15,000 metric tons. Additionally, at the end of 2023, we completed a 50,000 metric ton unit at a new location in the province of Zhejiang in China, which will go through qualification and ramp up in 2024. This brings our total hydroxide capacity in China to 30,000 metric tons.

Poach: A cage and will also benefit from the completion of multiple hydroxide production lines, which was carbonate from Argentina Street stock.

Poach: We expect to deliver commercial volumes in 2024 from a 5000 metric ton expansion at a U S based operations in Bessemer City, North Carolina, bringing total U S hydroxide capacity to 15000 metric tons.

Poach: Additionally, at the end of 2023, we completed a 50000 metric tonne unit at a new location in the province of Zhang in China, which will go through qualification and ramp up in 2024. This brings our total hydroxide capacity in China.

Poach: 2000 metric tons.

Gilberto Antoniazzi: Turning to our spodumene operations in Mount Catlin in Western Australia, we are expecting 2024 production to be lower versus calendar year 2023. This is the result of pursuing a reduced mining and production plan as part of cost optimization efforts in light of the current low price environment for spodumene. I will now turn the call back to Gilberto to discuss our full year 2024 outline. Thanks, Paul.

Poach: Turning to our spodumene operations amount Catlin in Western Australia, we are expecting 2024 production to be lower versus calendar year 2023. This as a result of consuming a reduced mining and production plan.

Poach: Cost optimization efforts in light of the current low price environment spot to me.

Speaker Change: I will now turn the call back to <unk> better to discuss our full year 2024 hours.

Paul: Thanks, Paul.

Gilberto Antoniazzi: On slide 10, you can see our volume growth in 2024 translating to sales volume expectations by major products. Combining hydroxide and carbonate saves, we expect to increase our volume source by a range of 12,000 to 17,000 metric tons, or around 40% higher than 2023 on a LCE basis at the midpoint. Most of the incremental carbonate sales are expected to come from Olaros stage 2 production, while the additional hydroxide sales will be fed from the Phoenix expansion. For lithium hydroxide, we have opted to enter into multi-year agreements with a select group of core customers on roughly two-thirds of our total product volume. These agreements have firm volume commitments and a variety of pricing mechanisms, including some fixed prices for 2024 only as well as floors and ceilings over the life of the agreement. The subset of our volumes will help to reduce overall volatility by limiting potential downsides or upsides on our total revenue.

unknown: <unk> you can see how we're volume grew 2024 translate into sales volume expectations by major products, combining hydroxide and <unk>, we expect to increase our volume Soc by a range of 12002 17000 metric tons.

unknown: 40% higher in 2023.

Speaker Change: LC basis.

Better: Most of the incremental carboni sales are expected to come from all our off stage to production.

Better: Additional hydroxides sales will be fine.

Better: Expansion.

Better: We didn't lithium hydroxide, we have opted to enter into multiyear agreements with a select group.

Better: Customers.

unknown: Two thirds preferred to product volume.

unknown: These agreements a firm volume commitments.

unknown: Pricing mechanisms.

unknown: Including some fixed prices for 2024, only as well with scores and silly over the life of the agreements.

unknown: This upset volumes will help to reduce overall volatility.

unknown: Limiting potential downsides or upside one of our total revenue.

Gilberto Antoniazzi: As of today, the remaining portion of hydroxide volumes, as well as our lithium carbonate sales, are expected to be under a shorter-term pricing structure, typically set on a monthly basis, that moves with every market reference. You're expecting flat volumes in all the specialty business, which is comprised mainly of butyllithium and hyperion lithium metal. Pricing is based on customer relationships, typically spanning many years, and is negotiated monthly or quarterly, taking into account movements in the broader lead to market. Lastly, our Spodumene concentrate sales out of Mount Kathleen today are largely being sold directly to China at prevailing market prices.

Speaker Change: As of today.

Speaker Change: Many portion of hydroxide volumes as well as our lithium carbonate sales are expected to be on there for.

unknown: Pricing structures typically set on a monthly basis.

unknown: The move would have re market.

unknown: References.

unknown: You're expecting flip volumes and other specialty business, which is comprised mainly of Utah.

unknown: <unk> <unk> <unk> <unk>.

unknown: Pricing is based on customer relationships.

unknown: Typically spending many years and has negotiated monthly or quarterly take into account movements the broader reach market.

unknown: Lastly, Ah respondent concentrate sales Kathleen.

unknown: Kathleen today are largely be so directly to China prevailing market prices.

Gilberto Antoniazzi: Because of the lack of longer-term commitments, particularly given the limited remaining mine life today, we can be more flexible with respect to production plans, as demonstrated this week. On slide 11, we have provided some other modeling considerations. We will address SG&A and capital spending shortly. Depreciation amortization is expected to be higher than what has been seen historically.

unknown: Because of the lack of a longer term commitments, particularly given the limited remaining mine life today.

unknown: Can be more flexible with respect to production plans as demonstrated this year.

unknown: On July 11th we have provided some other modelling considerations.

unknown: We will address S journey and capital spending shortly.

unknown: Depreciation amortization is expected to be higher than what has been seen historically.

Gilberto Antoniazzi: This is a result of 2024 being the first year of production for the multiple expansion, and therefore, when capitalized spending will begin to depreciate. The adjusted tax rate for 2024 is expected to be between the historical levels of the two stand-alone businesses and will be an important point of focus as we further integrate our operating model as a global business model. The provided range is wider than we would expect moving forward in order to reflect the earlier stage of this. Lastly, our higher estimated fully diluted shares outstanding of $1.15 billion is a function of the merger exchange ratio and is inclusive of 67.7 million of assumed dilution from the company's convertible notes outstanding.

unknown: As a result of 2024 being the first year of production for multiple expansion assets and therefore.

unknown: Capitalized sandy will begin to depreciate.

unknown: They're just a tax rate or 2024 is expected to be between the story cool levels of the two standalone businesses and.

unknown: And will be an important point is referred to integrate Aubrey model is a global business.

unknown: The provider range is wider than we would expect moving forward in order to reflect the earlier stage. This work.

unknown: Lastly, our higher estimated fully diluted shares outstanding.

unknown: 1.15 billion is a function of the merger exchange ratios.

unknown: And as inclusive of 67 70 million.

unknown: Assume the illusion.

unknown: Companies convertible notes outstanding.

Gilberto Antoniazzi: On slide 12, we provide enough data on the expected synergies and cost reductions for Arcadian Leads. In 2024, the company is expecting to realize a combined $60 to $80 million total cost savings. These benefits will be driven by a combination of lower G&A expenses and reduced cost of production. Within SG&A, savings will come predominantly from headcount reduction.

unknown: On July 12th.

unknown: And updated on the expected synergy and cost reduction or a <unk>.

unknown: 2024, the company's expecting to realize a combined $60 million to $80 million total cost savings.

unknown: His benefits will be driven by a combination of SG&A expenses.

unknown: And reduce costs of production.

unknown: Within SG&A.

unknown: Within SG&A savings will come predominantly from headcount reduction billing.

Gilberto Antoniazzi: The Elimination of Overlapping Services, and Wilbert T. and E. and third-party consultants. For cost of sales, we have identified a number of ways to drive efficiency, from immediate to longer term across all major aspects of production for all multiple production assets globally. This includes lower input costs on key procurement items, streamlining our manufacturing footprint, particularly at closely located operating sites, and improving our global supply chain network. We expect to continue to drive efficiency for a number of years going forward. Our expectations for 2024 cost savings are higher than they were at the time of murder now.

unknown: The elimination of overlap the services and lower T&D in third party consultants.

unknown: Cost of sales, we have identify a number of ways to drive efficiencies from.

unknown: From immediate to longer term across all major aspects of production for all.

unknown: Multiple facets globally.

unknown: This includes lower input costs and keep recruit on items.

unknown: Streamlining our manufacturing footprint.

unknown: Particularly at closely located breeding sites.

unknown: And improving our global supply chain network.

unknown: We expect to continue to drive efficiency for a number of years going forward.

unknown: Our expectations for 2024 cost savings are higher.

unknown: Then they were at this time a merger announced.

Paul W. Graves: Some of this has been brought forward by the changing conditions in our market. But we also see more opportunities from our initial integration work than we expected at the time of the merger announcement, and there are a number of immediate cost reductions available. Longer term, we remain confident in the scope of synergies previously outlined, and we will look to accelerate and grow them wherever possible. I will now pass the call back to Paul to discuss the outlook. Thank you, Gilberto.

unknown: Some of this has been brought forward.

unknown: The changing conditions in our markets, where we are.

unknown: Also see more opportunities for more Indonesia integration work.

unknown: We expect it at this time of the merger announced.

unknown: And there are a number of immediate cost reductions available.

unknown: Longer term.

unknown: Mean confident in the school of Cinergy previously offline and we will look to accelerate grew them whenever possible.

Speaker Change: I will now ask the call back.

Speaker Change: Plus the outlook Sars.

Speaker Change: Thank you feel better.

Paul W. Graves: On Flight 13, we are providing a framework to understand how changes in market prices may impact the financial performance of Arcadium-Lithium in 2024. Arcadium-Lithium's current business mix makes it extremely difficult for us to give earnings guidance in the way Livent traditionally did since so much of the outcome is now dependent on where market prices go during the year. We also recognize that simply multiplying volumes by market price does not work for Arcadium Lithium, given the nature of our multi-year contracts and the impact our other specialties business has on our performance. For this reason, we have shown two scenarios using lithium market price assumptions that are consistent with how our peers have presented research, namely $15 per kilo and $25 per kilo on an LCE basis.

Speaker Change: On slide 13, we are providing a framework to understand how changes in market prices may impact the financial performance of al Qaeda lithium in 2024.

Speaker Change: Okay D. Millenniums current business mix makes it extremely difficult for us to give earnings guidance and do I live in tradition with it since so much of the outcome is now dependent on where market prices go during the year.

unknown: We also recognize that simply multiplying volumes by market price does not work for al Qaeda and lithium given the nature of a multiyear contracts and the impact our other specialties business has on our performance.

unknown: For this reason we've shown two scenarios using lithium market price assumptions that are consistent with how our P. As a preservative recently, namely $15, a kilo of $25 per kilo.

unknown: C E basis.

Paul W. Graves: We keep constant the midpoints of expected sales volumes, synergies, and cost savings in SG&A for 2024, while overlaying existing commercial agreements as applicable. These scenarios should not be interpreted as a forecast by Arcadium Lithium after the likely range of 2024 lithium prices, which they absolutely are not. They were selected solely to allow investors to assess our potential earnings at a range of prices.

unknown: We keep constant the midpoint of expected sales volumes synergy and cost savings and SG&A of 2024, while overlaying existing commercial agreements as applicable.

unknown: These scenarios should not be interpreted as a forecast by arcadian lithium asked what the likely range of 2024 lithium prices, which they absolutely are now they were selected solely to allow investors to assess our potential earnings at a range of prices.

Paul W. Graves: With that said, you will see that even in a lower case, where Arcadium Lithium achieves a $15 a kilo average price for LTE on its market-based volumes, Arcadium Lithium's business remains highly resilient, supported by our quality and low-cost production assets, while offering significant upside should a price rebound in fact take place. Moving to slide 14, Arcadium Lithium expects to spend $450 to $625 million in growth capital spending in 2024, with an additional $100 to $125 million of maintenance capital spending. The growth spending is lower than what Livent and Dorcan had separately projected last year. We are still investing with conviction in the superior quality of our asset portfolio and believe we have a pipeline of attractive growth projects that is unmatched in our industry.

unknown: With that said you will see that even in the lower case.

unknown: Katie I'm lithium achieves a $15 a kilo.

unknown: Average price per LTE on its market based volumes arcade room lithium business remains highly resilient.

unknown: Posted by our quality and low cost production assets, while offering significant upside shut a price rebound in fact take place.

unknown: Moving to slide 14, al Qaeda lithium expects to spend $450 million to $625 million and growth capital spending in 2024, with an additional $100 million to $125 million maintenance capital spending.

unknown: Growth spending this is lower than what livened dull cannot separately projected last year [noise].

unknown: We are still investing with conviction and the <unk> and the superior quality about asset portfolio and believe we have a pipeline of attractive growth project that is unmatched in our industry.

Paul W. Graves: However, in this lower lithium price environment, our cash flow generation and returns on capital investment are quite different, and we must adjust our pace of spending accordingly in order to maintain financial discipline. While we do not believe today's price environment is representative of long-term prices, we have to run the business based on the conditions we are in today, and that means being far more cautious with our spending while this environment persists. As we previously discussed, one of the major benefits of the merger between Liban and Orkan is the opportunity to both optimize and de-risk projects that have natural overlaps. And by slowing capital spending, we believe we will be better off in the longer term.

unknown: However, in this lower lithium pricing environment or cash flow generation and returns on capital investment are quite different and we must suggest that pace of spending accordingly in order to maintain financial discipline.

unknown: While we do not believe today's price environment is representative of long term prices behalf to run the business based on the conditions, we haven't today and that means being far more cautious without spending while this environment persists persists.

unknown: As we previously discussed one of the major benefits manager between <unk> and <unk> is the opportunity to optimize and derisk projects that have natural overlaps by slowing capital spending we believe we will be better off longer term.

Paul W. Graves: Over the next few quarters, we will focus on accelerating the work needed to drive capital efficiencies and ultimately lower our overall capital spending across the expansions in both Argentina and Quebec. Additionally, we expect to improve the future operating flexibility of these closely located assets, supporting our focus on strengthening a globally integrated production network. The expansion projects in our portfolio in closest proximity to each other are the Fenex and Saldavida projects at the same Salado del Amboimuerto in Argentina, located within 10 kilometers of each other, and the James Bay and Namaska lithium projects in Quebec, Canada, with the Wabuchi mine located roughly 100 kilometers from James Bay. We expect to deploy $225 to $325 million of growth capital into Argentina in 2024.

unknown: Over the next few quarters, we will focus on accelerating the work needed to drive capital efficiencies Ultra.

unknown: Ultimately lower our overall capital spending across the expansions in both Argentina, Quebec.

unknown: Additionally, we expect to improve the future operating flexibility at these closer to locate that assets supporting our focus on strengthening a globally integrated production network.

unknown: The expansion projects in our portfolio and closest proximity to each of the of the Phoenix and saw the beta projects at the same serological Amboy, El Hombre West Tele in Argentina.

unknown: Casey within 10 kilometers of each other.

unknown: James Bay, and the mask of lithium projects in Quebec, Canada with the Ragucci mind, located roughly 100 kilometers from James Bay.

unknown: We expect to be 225% to $325 million of growth capital and to Argentina. In 2024. This is lower than what would have been spent to bring the phase one be 10000 metric tons of carbon expansion of panics online by the second half of 2024 and to achieve <unk>.

Paul W. Graves: This is lower than what would have been spent to bring the phase 1b 10,000 metric ton carbonate expansion of Penex online by the second half of 2024 and to achieve first production of Saldivar in 2025. Based on what we know today, we expect this to delay production from these projects by up to nine months. We expect to deploy $225 to $300 million of capital in Canada in 2024, which will primarily go towards construction of the Namaska lithium hydroxide facility being developed at Beckenpore. James Bay permit approvals have been received, and the resource definition and engineering have been well-progressed.

unknown: <unk> style Davita in 2025.

unknown: Based on what we know today, we expect this to delay production from these projects by up to nine months.

unknown: We expect to deploy $225 million to $300 million of capital in Canada in 2024, which will primarily be going towards the construction of the mask of lithium hydroxide facility being developed Beck and call.

unknown: James Bay permit approvals have been received and the resource definition and engineering has been well progressed. However, we want to take the time to explore potential development deficiencies and future operational flexibility with mabuchi, given our expectations for both to be vertically integrated with downstream lithium.

Paul W. Graves: However, we want to take the time to explore potential development efficiencies and future operational flexibility with Wabuchi, given our expectations for both to be vertically integrated with downstream lithium chemical production over time. However, any potential delay at Wabuchi should not impact the expected timeline for beck and core hydroxide production, which was not expected to require feedstock until 2026. With that said, it means we would like to sell minimum merchant spodumene volumes compared to our prior expectations. We are focused on the optimization and re-phasing of our expansions over the next few months and intend to provide to investors a comprehensive plan for Arcadium Lithium later this year. Additionally, we will look to introduce new sustainability targets for the business, building on the strong profiles of the two legacy companies and our shared commitment to responsible growth.

unknown: Michael production overtime.

unknown: Any potential delay it will gucci should not impact the expected timeline, Quebec and core hydroxide production, which was not expected to require feedstock until 2026.

unknown: With that said it means we would like to sell minimal mentioned spodumene volumes compared to our prior expectations.

unknown: We are focused on the optimization and rephasing of our expansions over the next few months and intend to provide to investors a comprehensive plan.

unknown: <unk> later this year.

unknown: Additionally, we will look to introduce new sustainability targets for the business building on the strong profiles of the two legacy companies and our shared commitment to responsible growth.

Paul W. Graves: While this is a difficult and unpredictable period in which to go through the integration process, the long-term strategic merits of the transaction have not changed, and we believe they will ultimately be proven out over time and through whatever future market cycles we go through. I'll now turn the call back to Dan for questions. Great. Thanks, Paul. John, you may now begin the Q&A session. If you would like to ask a question at this time, please press the bar, then the number one on your telephone.

unknown: While this is a difficult and unpredictable period in which to go through the integration process. The long term strategic minutes of the transaction I have not changed and we believe will ultimately be proven Iowa overtime and do whatever future market cycles. We go through.

Speaker Change: I will now turn the call back to my questions Great. Thanks, Paul John You May now begin the Q&A session.

Speaker Change: If you would like to ask a question at this time, the sprints or can the number one on your telephone keypad.

Daniel Rosen: Please limit yourself to one question and one follow-up. If you have additional questions, you can jump back in the queue. To withdraw your question, please press the pound key.

John: Make yourself to one question and one follow up.

Speaker Change: If you have a detailed questions can jump back in the queue.

Speaker Change: Withdraw your question. Please press the pound key will pass for a few moments to compile the Q and a roster. Thank you.

Unnamed Speaker: We'll pause for a few moments to compile the Q&A roster. Your first question comes from Steve Richardson from Evercar ISI. Please go ahead. David Deckelbaum, Robert Koort, Kevin McCarthy, Pavel Molchanov, Robert Koort, Christopher, So Steve, we missed the first 10 seconds. I think you're talking about Catlin.

John: Your first question comes from the line of Steve Richardson from Evercore ISI. Please go ahead.

Steve Richardson: She did in the script in terms of going to 130 relative to 205 last year and you mentioned kind of optimization of cost Uhm obviously.

Paul W. Graves: So I think I've got, I think I've got the gist of what you're asking. Yeah, look, you know, mine Catlin's an interesting mine, right? I mean, it's very much towards the end of its mine life. It's in a phase today that is, frankly, hugely benefiting from historical investment in the mine plan. Essentially, people go back and look at the data; it went through a period of very low production as it was in a very unproductive scene. And today, it's in a very productive scene. In fact, while the remaining life of mine, the average cost of production is reasonably high on any cost curve, today, that's not the case. I'm actually able to produce a pretty low marginal cost of production.

Steve Richardson: High fixed cost mining assets could you just talk about that evaluation and why.

Speaker Change: And even the lower number wasn't the right answer considering the remaining mine life and the nature of the assets.

Speaker Change: Sure. We missed the first 10 seconds I think you're talking about calling so I think I got I think I got it.

Speaker Change: Yeah, what you ask.

Speaker Change: Yeah, Let me remind cartland, an interesting mind right.

Speaker Change: It it's it's very much towards the end of its my life. It's in a phase today that is frankly hugely benefiting from historical investment in mind plan essentially you'll go back and look at the day treatment for a period of very low production as it was Anna.

Paul W. Graves: Now, it's not sustainable for everyone. At some point, a decision will have to be made as to whether to reinvest in that mine, essentially stripping to get to the next phase of a low cost, highly productive ore body. Frankly, we slowed it down in order to give ourselves time to see how the market develops. And I think we all know that this is a mine that if a decision is ever made to stop it before its futures end of mine of life, it's unlikely to restart again. And so we're very sensitive to that. I mean, we're not in, we're not in the business of running assets at a negative operating margin. We don't expect that to be the case this year.

Speaker Change: Unproductive scene in today and have a productive and in fact.

Speaker Change: While the remaining life of mine average cost of production is reasonably high on any cost curve today, that's not the case actually able to produce a pretty low marginal cost of production now it's not sustainable prevalent at some point that decision will have to be made as to whether to reinvest in that might essentially.

Speaker Change: Stripping to get to the next phase of.

Speaker Change: Low cost highly productive or body.

Speaker Change: Frankly, we slowed it down in order to give ourselves time to see how the market develops.

Paul W. Graves: There is an optimal production level, and we've taken production down. We could, of course, take it much lower, but it does become much less efficient once we get below a certain point. So today, at least, that's what we've optimized for. We reserve the right to revisit it, either to ramp back up production if prices recover, or if prices do fall further and look like they're not going to recover any further, then we'll revisit what the right plan is for Mount Carlin. Helpful. Thank you.

Speaker Change: I think we all know that this is a mind that if a decision is ever made stock.

Speaker Change: Speeches and a bite of life, it's unlikely to restart again.

Speaker Change: So we're very sensitive to that.

Speaker Change: Not in the business of funding assets at a at a negative operating margin, we don't expect that to be the case this year.

Speaker Change: There is an optimal production level.

Speaker Change: We could of course taken much follow up with but it does cover much less efficient once we get along with them fine. So today at least that's what we have optimized for we reserve the right to revisit <unk> backup production of prices recover if prices do for further and look at the <unk>.

Paul W. Graves: I wonder if, just as a follow-up, we could talk a little bit about, you know, this optimization around sales volume. Slide 10 is really helpful in terms of breaking out the nature of your contracts and your expected volume. One from a contracting philosophy standpoint, do you envision moving, for example, more of those new carbonate volumes towards the type of multi-year agreements that you have in the hydroxide business, more of which you had legacy live in over time, and is that a function of, And is that something that needs to wait for a better market environment to happen, or is that something that you're actively working with your customers? And then just if I could sneak in one more, if you could just talk about your confidence in your floors and exercising those floors in your contracts with your customers, because it's one question we do get from investors sometimes. Yeah, look, I think there's always going to be a confidence in the floors question. I have very, very high confidence in those floors for a whole bunch of reasons.

Speaker Change: Recover any further then we'll revisit again, what the right plan is to my account.

Speaker Change: Helpful. Thank.

Speaker Change: Thank you I wonder if just as a follow up we could talk a little bit about this optimization.

Speaker Change: Around sales volumes slide 10 is really helpful in terms of breaking out.

Speaker Change: The nature of your contracts and you're expected volumes one.

Speaker Change: One from a contract to philosophy do you envision moving for example, more of those new carbonate volumes.

Speaker Change: Towards the type of multiyear agreements that you have and the hydroxide business and and more of what you had legacy liven over time and is that a function of.

Speaker Change: Is that a.

Speaker Change: Is that something that needs to wait for a better market environment to happen or is that something that you are actively working with your customers and just if I could sneak in one more if you could just talk about your confidence on your on your floors and exercising those floors and your contracts with your customers because it's one question, we do get from from investors.

Paul W. Graves: And I'm seeing no sign at all of the floors being under-pressed in today's market environment. In terms of where we go going forward, look, I think it's an interesting question. You know, what we're seeing is actually quite an expected evolution of contracting structures. And I think for two years at least now, what we've seen within Liban is a desire on the part of customers who are contracting for hydroxide to have more product flexibility. And what we expect to happen, and what we do see happening today, are hydroxide-based contracts that also allow customers to have similar terms around carbonate. But my own view has been for a while that I don't think lithium carbonate lends itself on its own to the same contract structures for a bunch of reasons.

Speaker Change: Time yeah.

Speaker Change: Yeah like I I I think it's always going to be a confidence and last question I have.

Speaker Change: We've been very high confidence.

Speaker Change: A whole bunch of reasons.

Speaker Change: Seeing no sign at all of the policy.

Speaker Change: Today's market environment in terms of where we go going forward like I I think it's an interesting question.

Speaker Change: Seeing is actually quite a.

Speaker Change: Unexpected evolution of contract construction.

Speaker Change: Two years at least know what we've seen within live in is a desire on the part of our customers who are contracting hydroxide to have more product flexibility and.

Speaker Change: What we expect to happen and what we do see happening today.

Speaker Change: Hydroxide based contracts that also allow customers to have similar terms around carbonate my.

Speaker Change: My own view has been for awhile, but I don't lithium carbonate lends itself on its own to the same contract structures are a bunch of reasons.

Paul W. Graves: But when done in conjunction with a long-term, you know, a higher-size lithium hydroxide contract, it does make sense. And so what we would expect to do is to see more of the carbonate that we produce from Phoenix, today at least, go into the hydroxide network, just as it would have done before. And then to have that supported by contracts that allow a portion, at least, of that contract to be met in lithium carbonate terms. So there's a lot of conversations as to why customers are moving there. And clearly, part of this is the battery technology is greater mid-nickel and LFP adoption by automotive customers.

Speaker Change: When done in conjunction with a long term, Ohio, ISI lithium hydroxide contract. It does make sense. So what we would expect to do.

Speaker Change: To see more of the carbonate that we could choose from Phoenix today at least go into the hydroxide network just as it would've done before and then to have that supported by contracts that allow a decrease a portion of <unk> contracts to be Matt and lithium carbonate terms. So does alumna conversation as to why customers are moving.

Speaker Change: Really proud of this is the battery technologies, greater Midinette column, and I left P adoption by the automotive customers.

Paul W. Graves: The desire to contract in that way, with sensible floors and ceilings, is probably just as strong, if not stronger today, than it was a year or two ago, and frankly, the conversations that are happening are not taking place on different floors and ceilings today than they were a year or two ago. I think one thing that we've found is that most of the customers that we've engaged with, and maybe we're self-selecting a little here, tend to have a longer-term view of the market, so they are more comfortable making longer-term commitments based on what they consider to be the fundamentals over the cycles of lithium pricing, and just as nobody thought $60 was the right price, nobody thinks $10 was the right price. Really helpful, thank you. Your next question comes from the line, Glenn, from Byron Joe. Paul, good afternoon to you.

Speaker Change: Desire to contract in that way sensible flaws ceiling, probably just as strong if not stronger today than it was a year or two ago and frankly, the conversation that are happening a lot of different poles and savings today than they were were you or two ago. I think one thing that we found is that most of the customers that we've engaged with them maybe self sir.

Speaker Change: And a little here tend to have a longer term view of the market.

Speaker Change: So they are more comfortable making longer term commitments based on what they consider to be the fundamentals over the cycles of lithium pricing.

Speaker Change: Just as nobody saw $60 for the right price nobody can $10 per night price either.

Speaker Change: Really helpful. Thank you.

Paul W. Graves: Paul, could I just ask a little bit about if you could put some more color around what you're thinking with Canada and the two Spodumene operations. Are you thinking from a physical perspective that you could maybe combine them more physically, or is it just how you're thinking about that thing? Good morning. Good morning, Glenn.

Speaker Change: Your next question comes from the line of pain from Barricelli.

Pain: Good afternoon tea mm.

Speaker Change: Just ask a little bit.

Pain: At about if you could put some more color around what you're thinking with Canada and the two spots remain operations are you talking from a physical perspective, you could maybe combined nimble physically or is it just.

Paul W. Graves: But multiple, multiple areas, I think, as you know, the masculine team is not 100% owned by Arcadian, so we have a partner to take into account. But we both agree that it makes as much sense as possible to optimize how we develop an integrated model. And so, you know, there's a longer-term question of what are the benefits of having two feeds into a single hydroxide plant, the consistency of feed, the reliability of feed. And so we're certainly looking in the longer term at what we can do with both the Wabuchi mine and the James Bay mine, such that we're taking concentrate from both of those and feeding them in the most efficient manner possible into the ultimate downstream hydroxide That's a longer-term engineering challenge and question for us. I think in the short term, there's some relatively basic stuff, to be honest. I mean, I don't think there's going to be attempts to physically integrate two mines that are that far apart.

Barricelli: You're thinking about that thanks.

Pain: Every morning.

Pain: Uhm.

Speaker Change: Multiple multiple areas I think cause you know the mask with them is not 100% owned by Arcadian. So we have a partner to take into account, but but we both agree that it makes as much sense as possible.

Pain: Optimize how we develop an integrated model and so it's.

Pain: This is a longer term question of what are the benefits of.

Pain: Having two feeds into a single hydroxide plan <unk>.

Pain: Consistency of fee for reliability of fees.

Pain: So we certainly looking in the longer term about what can we do with both the <unk> and the James Bay mind, such that we're taking concentrate on both of those M and feeding them in the most efficient manner possible and to the ultimate time stream.

Pain: Hydroxide footprint, that's a longer term engineering challenging question for us.

Paul W. Graves: But I think it is important that we standardize where we can the way that we think about mining, something as simple as the fleet, as a mining fleet, you know, making sure that we're not being inefficient with who we contact, and how we think about optimizing staff. I mean, it's a pretty remote part of the world. So how we think about support services as well? I'm not suggesting for one moment that the synergies of the savings there are of the same magnitude that they're likely to be in Argentina with Fenix and Saldavida. But he's really thoughtful and efficient with where we go. I mean, we're in a sort of an unusual place in that I think it's probably fair to say that Gucci is, better permitted, further advanced in some areas, but not as well engineered. James Bay is very well engineered. It's absolutely ready to go.

Pain: In the short term to some relatively basic stuff to be honest I mean.

Pain: I don't think there's going to be fifth attempt physically integrate two mindset.

Pain: But I think it is important that we standardize way we can.

Pain: Way that we think about mining something as simple as the fleet.

Pain: <unk>.

Pain: Making sure that we're not being inefficient with who we contract with.

Pain: How we think about optimizing staff I mean, it's pretty remote part of the world. So how we think about support services as well I'm not suggesting for one moment.

Pain: <unk> of the savings that are on the same magnitude that they are likely to be in Argentina with Fedex in South Dakota.

Pain: Oh and efficient with.

Pain: Where we go I mean, when a sort of an unusual ice and I think it's probably.

Pain: Gutierrez.

Pain: Better permitted.

Pain: Further advanced in some areas, but not as well engineered James bays, very well engineered is absolutely ready to go.

Paul W. Graves: We don't have all the permits there yet, so we have two different resources at different stages of development. And so it's just a fantastic opportunity to sit down and try and optimize what the development plans are for both of those platforms. Okay, thanks. And then just as a follow-up, just to the last question, when you talked about contracting, etc., but when I look at the guidance for volume for 24, you talked about scaling back Mount Catalan, but what about the carbonate hydroxide business? I mean, you've got Oloroz, which should be, I would have thought, ramping up faster.

Pain: We don't have all the payments there yet so we have two different resources at different stages of development and so it's just a fantastic opportunity to sit down and trying to optimize the development plans offer both of those plans.

Speaker Change: Okay. Thanks, and then just.

Speaker Change: Just to the last question when you talked about contracting et cetera, but just wanted to look at the gardens food volume 24, you talked about scaling back ma'am Catlin.

Speaker Change: What about the Carbonite hydroxide business I mean, you've got Colorado's, which should be I would've thought ramping up faster resistance flicks in those numbers that you've given us for 24 of process recover or is that the maximum you think you can achieve this year.

Paul W. Graves: Is there some flex in those numbers that you've given us for 24 if prices recover, or is that the maximum you think you can achieve this year? No, we're absolutely not throttling back on the chemical side. You know, look, I think it's going to be a learning process for everybody, particularly at Alarosa. Plant-based systems are not as easy and quick to ramp up as I think many people think. All of those itself has a bunch of process changes it needs to make, or at least on maintenance issues, a change that it needs to make in order to continue to manage output, historical output.

Pain: Startled back anything on the chemical side.

Speaker Change: Absolutely not throttling back on mechanical side look I think I think it's going to be a learning process for everybody.

Pain: Particularly at our Rosa and upon by systems are not as easy and quick to ramp up for.

Pain: I think many people seem to pay off.

Pain: All of those itself has.

Pain: Sure.

Pain: Process.

Pain: Changes it needs to make at least some pond maintenance issues or changes he needs to make in order to continue to manage our historic cloud.

Paul W. Graves: I think it's also important to understand that the output from Olarose in 2023 was absolutely not representative of what Olarose is likely to be able to do in the future. Two important reasons for that, one of which is that it chose, and quite rightly so, to maximize technical-grade production. The market in 2023, from a pricing perspective, didn't really differentiate between the two. By doing that, the volume of the capabilities went up meaningfully. Transcribed by https://otter.ai, I think a second factor that benefited them last year, you know, one of the benefits as well, you're constructing, constructing all of those two, they were able to take some of the brine concentrated from the phase two ponds and feed it into the phase one operation. So again, they had a richer yield, and they had better output. Again, you can't do that when you bring all of those two together online.

Pain: I think it's also important to understand that the out of all of those in 2023 was absolutely not representitive likely of what all the world's you're able to do in the future two important reasons for that one of which shows and quite rightly. So.

Pain: <unk> technical great production the market in 2023 for about pricing. Despite it didn't really differentiate between the two.

Pain: By doing that as a volume that the capabilities Gallup, meaning like looking.

Pain: Today, when you do the same mask premium the batch of great carbonate will get or is getting over that technical very product doesn't justify that decision. So there'll be absolutely running a purification circuits or to get more back in grade material, but the rest of the planet.

Pain: Consequences.

Pain: Process flow sheets I.

Pain: I think a second factor the benefits of them last year, one of the benefits as well yeah construction construct and all of those two they were able to take some.

Pain: Some of the briny concentrated from the face.

Pain: It's two ponds and feed it into the phase one operations. So again, they had to which a yield they had better output again that you can't do that when you bring all of those two online. So the best estimates. We have today is that we will get about 40% of all of those too.

Paul W. Graves: So the best estimates we have today is that we'll get about 40% of all of those two expansion volumes productive in the calendar year. We'll obviously be offering at a higher rate than that by the end of the year, but we're still very much in that early ramp-up phase. Now, there's been no thrusting back happened with regard to carbonate production down there. All right, thanks for the call. The next question comes from the line of Joel Jackson from BMO. Please go ahead. Good night.

Pain: Volumes productive in the calendar year will obviously be operating at a higher rate than that by the end of the year, but it's still very much in my daily by a couple of days now does know swapping back happened with regards to carbonate.

Paul W. Graves: Let me ask a couple questions one by one. First, this is a short-term question. So you've given some sensitivity to earnings, like you said around if the price was this much per kilo, that much per kilo across the year. Um, can you give us a sense of, obviously, you've already locked in product for several months. How much visibility do you have in your order book right now? So how much have you priced through March, through April, maybe give us a sense of how much you've already locked in. So, I mean, it really depends on where we're looking. I think the majority, certainly all the multi-year agreement hydroxide is done for the full year. These are take or pay.

Pain: Yeah.

Speaker Change: Alright, thanks for the talent pool.

BMO: Next question comes from the line of <unk> from BMO. Please go ahead.

BMO: Let me ask a couple of questions one by one.

BMO: It is a short term question first so you've given some sensitivity to earnings like you said around you'll get the price.

BMO: Was this much for to allow us to Cuba across the year can you give us a sense of obviously you've already walking product.

BMO: Seven months, how much visibility to have an order book right now so how much of your price through March or April maybe give a sense of how much Saturday Lawton.

Speaker Change: So I mean, it really depends on where we are looking I think the majority 70 orbit multiyear agreement hydroxides.

Speaker Change: These are take a pay a very clear well scheduled plan volumes to all of that we are very good visibility up on the timing of it but I don't know what the price on some of it is just because some of it install some variability to Arab frozen ceiling. So that there certainly opportunities for upside on some of that volume.

Paul W. Graves: They're very clear, well-scheduled, well-planned volumes. So all of that, we have very good visibility on the timing of it. And clearly, I don't know what the price on some of it is because some of it still has some variability to it around floors and ceilings. So there's certainly opportunities for upside on some of that volume. On the uncommitted volumes, again, you know, reasonable visibility. We're going through the qualification process.

Speaker Change: The uncommitted volumes again reasonable visibility we've done to the qualification process. When we do that we tend to have a pretty good compensation with the company would qualify as to what the demand plans are so again, we are pretty good visibility on on that volumes, but.

Paul W. Graves: When we do that, we tend to have a pretty good conversation with the company. We're qualifying as to what their demand plans are, so again, we have pretty good visibility on that volume. Lithium carbonate is a little bit more complicated.

Speaker Change: Lithium carbonate and that's a little bit a little bit more complicated diminished business that is largely a consult on a month by month basis.

Paul W. Graves: It's a business that has largely been sold on a month-to-month basis. I have no doubt that the demand is there. It is primarily a technical-grade product. It is not typically going into, or not directly into, battery-grade applications.

BMO: I have no doubt that the demand.

BMO: And is there it is primarily technical great product page, not typically going into or not directly into actually made applications. So the technical grade market in a pure sense is small and growing slower than the.

Paul W. Graves: The technical-grade market, in a pure sense, is smaller and growing slower, and the customers out there that are able to take that material and upgrade it are also relatively small, but we do have some pretty good commitments from some of those customers. OrCam has quite long relationships with customers in that space, and so we have some visibility. Again, market pricing is the big question. It's less about whether the volume gets placed.

BMO: The customers out there that are able to take that material and upgraded I'll also relatively small, but we do have some pretty good commitments from some of those customers all came as quite long relationships with customers and that space and so we have some visibility again market pricing is the big question is less about whether the volume gifts place.

Paul W. Graves: It's much more about the pricing. On the other specialties, I'm sure you know that they're largely plants that we totally sold out of. We know that material is going out the door. We know who it's going to.

BMO: Much more about the the pricing and the other specialties I mean I'm sure you know.

BMO: Largely plan.

Speaker Change: Alright so.

BMO: We know that material is going out the door, we know it's going to the pricing in that industry tends to.

Paul W. Graves: And the pricing in that industry tends to, as I said, it's bilaterally negotiated, but largely negotiated off the pricing of lithium metal, which is part of the feedstock, which itself tends to be driven by the price of lithium carbonate. So again, volumes, we have a lot of visibility into, but the pricing, and by the way, in that there are margins too because of the way we price it, but we have a little less clarity as to what the price is. Okay, then my second question is gonna be also on visibility, but different, still open questions. So can you comment, you know? One, it seems like there's a lot of blurriness right now in China.

BMO: I as I said, it bilaterally negotiated largely negotiate awful.

BMO: <unk>, which is preached which itself tends to be driven by lithium carbonate pricing. So again volumes, we have a lot of visibility too.

BMO: The pricing and by the way Inapposite margins too because.

BMO: But we have a little less clarity as to what the price.

BMO: Okay. Then my second question is gonna be also invisibility bit difference will open question. So can you comment one it seems like a lot of Blurriness right now in China people are all rely industry relying on <unk>.

Paul W. Graves: People are all relying, industries are relying on maybe one or two suppliers of inventory data, and other data. Everyone's making decisions and plans and thoughts on what seems to be a blurriness of data. So that's coming from that.

BMO: One or two suppliers of inventory data other data everyone's making decisions and plans and thoughts on what seems to be a blueness of data. So that's coming in that and then how 'bout. All these different pricing and disease that we're seeing our contracts based on death and disease.

Paul W. Graves: And then, how about all these different pricing? that we're seeing now contracts based on dip indices, fragmenting these indices; there's not a lot of liquidity on these indices, futures exchange. How do we navigate that? Yeah, look, I think it's the most opaque I've ever seen it in the decade or more that I've been in this industry in various forms. I think there are a bunch of reasons for that.

BMO: It's fragmenting indices. There is now on liquidity on these indices futures exchange, how do we navigate back thanks.

Speaker Change: Yeah, I think it's the muscle ache I've ever seen.

BMO: A decade or more.

BMO: In this industry in various forms.

Paul W. Graves: There's a bunch of reasons for that I think I think some of it is the supply chains have got much more complicated than some of the biggest customers that we have the the shift in between different battery technologies.

Paul W. Graves: I think some of it is that supply chains have become much more complicated, and some of the bigger customers that we have are shifting between different battery technologies. They're thinking differently about, particularly with the IRA, about manufacturing locations. We see this.

BMO: Currently about particularly with the Iowa about manufacturing locations. They then we see this week would typically with a major customer with qualified into multiple cathode produces we see movement we see.

Paul W. Graves: We're typically with a major customer, we're qualified into multiple capital producers, and we see movement. We see, you know, the OEMs directing us into different places, different directions as their supplies change. I think the Lapidolite and the African DSO type product or semi-DSO has not made it any easier either because I think a lot of that material is going into a somewhat more captive supply chain, and so visibility as to where it goes, you know, who's using it, whether it's even operating and on what operating rates is incredibly difficult today, and we'll see very definitive statements or observations come out from one very credible observer and We've got two types of indices. We have the price reporting agencies, and then we have these attempts to build some kind of exchange-traded or derivative-based contract. And I think the latter are incredibly immature.

BMO: Directing is into different places different directions as their supplies.

BMO: James.

Paul W. Graves: Change I think the the lipid lie on the African VSO type product semi DSL does.

BMO: Does not make it any easier either because I think a lot of that material is going into a somewhat more captive supply chain them, so visibility as to where it goes.

BMO: Using it.

Speaker Change: Sure, it's even operating operating rates is incredibly difficult today and we'll see.

Speaker Change: Very definitive statements or observations come out from one very credible observer and maybe 12 hours later very critical of the accounts of that with the opposite view, it's incredibly incredibly opaque and I think the indices reflect that the industries uhm.

Speaker Change: We've got two types of indices like we've got the price reporting agencies and then we have these attempts to build some kind of exchange traded all all derivative based contract and I think the last two are incredibly immature we've certainly not seen a very successful physical delivery, even though it's small volumes on those contracts because of product, particularly.

Paul W. Graves: We've certainly not seen a very successful physical delivery, even though it's in small volumes, on those contracts because of poor product quality. I think the material that's been sitting there under those contracts has been the lower-grade material that people struggle to use. And so I think that's caused them some issues with those derivatives. And it's still an incredibly small, incredibly thin market. I have sympathy for you all because it's tough enough for us to see what's going on out there. And I promise you, I'm not hiding from you a whole bunch of sensitive information that I have.

Paul W. Graves: Qualitative and the material that's been sat there under those contracts has been the lower grade material that people struggled to use and so I think that's caused some some issues in those derivatives.

Paul W. Graves: And it's still an incredibly small incredibly said market.

Paul W. Graves: Sympathy you all because it's tough enough for us to see what's going on out there I promise you I'm not hiding from you a whole bunch of sensitive information that I have it's just hard to get information out of China right now.

Paul W. Graves: It's just hard to get information out of China right now. Thank you. Your next question comes from the line of Kate McCutcheon from Citi. Hi, good evening, Paul.

Speaker Change: Okay.

Kate Mccutcheon: Your next question comes from the line of keeping the cartoon from city. Please go ahead.

Speaker Change: Hi, good evening.

Unnamed Speaker: Realized pricing for December seems to be much lower than peers have reported. And I realize Catlin's not a big part of your business, but $8.50 a ton on an SC6 basis, PISA reporting 1300.

Speaker Change: Mmk pricing <unk>, hi, <unk> seem to be much lower than can't have reported and I realised hotline is not a big part of your business at 815, a ton on it <unk> <unk>.

Speaker Change: <unk> and if I look at <unk> about <unk> I'm looking at is S. T. G data with diet contracts or is it down to timing shipments cause I guess typically out <unk>. The top spot you mean, passing that is P. As for example in better than spot.

Unnamed Speaker: And if I look at OLRAS realized prices for December, about 3K below the XFAT indices that I'm looking at, is there scope to do better with those contracts? Or is it down to timing of shipments? Because I guess typically Alkab wouldn't realize the top end of spot, you mean pricing versus peers, for example, and better than spot at Bollorad. So interested in sort of what's changed. Yeah, look, as you know, that was a pre-close. That was All Chem.

Speaker Change: Alright, so interested in for your voice changed now.

Speaker Change: No that was that was a pre clothes that was all Kim.

Paul W. Graves: So I have to go back and figure it out. Well, I have had to go back and figure that out myself. But you're absolutely right.

Unnamed Speaker: So I have to go back and figure it out while I have to go back and figure that out myself.

Speaker Change: But you're absolutely right you know compared to all comes historical performance I think it's fair to say cancel wasn't necessarily the strongest performance in either of those two areas I think in the in the in the spot concentrate okay. So relatively small shipment volume.

Paul W. Graves: You know, compared to All Chem's historical performance, I think it's fair to say Q4 wasn't necessarily the strongest performance in either of those two areas. I think in the spot concentrate, it's a relatively small shift in volume. And I think for a whole bunch of reasons, it went out really late in the quarter and really late in the month. And, you know, particularly as they also shifted maybe from earlier in the year where they were shipping on an immediate pricing basis or even a lagging pricing basis to an N plus one pricing basis. I think that also accentuated it in a falling price environment, as it will do. I think on Olaros. I think that the challenge with Olaros, first of all, was just a significant increase in volumes that they were trying to ship. I mean, you'll notice that they sold significantly more in that quarter than in any others. Why they made the decision to do that is, again, valid at the time, but history can be a harsh judge.

Paul W. Graves: And I think for a whole bunch of reasons. It went out really late in the ultra mutilated and and the <unk>.

Paul W. Graves: Particularly as they also shifted maybe from earlier in the year, where they were shipping on.

Paul W. Graves: Ah Ah Ah Ah, an immediate pricing basis, or even a lagging pricing basis too and.

Speaker Change: And then plus one pricing basis, I think that also like centroid today in a falling price environment is your budget will do.

Speaker Change: I think on all of those I think that the challenge with all alone Festival was this a significant increase in volume somebody will try to ship I mean, you'll notice so significantly more in that quarter than any others again.

Paul W. Graves: Why Oh why they made the decision to do that again violate at the time, but history can be a harsh judge holding volumes back just into a falling price environment doesn't look great in hindsight and I think there's also this question of technical great I think because the market weakens and we've seen this before.

Paul W. Graves: Holding volumes back just into a falling-price environment doesn't look great in hindsight, and I think there's also this question of technical grade. I think as the market weakens, and we've seen this before... you know, technical grade product is less in demand. You know, in a tight environment, customers will take any carbonate, and they'll just live with the lower quality. But in a market where there's less demand, more supply, whichever, then the discount, the technical grade track just goes up and goes up quite significantly and can create some pretty meaningful short-term disconnect. So I think that was also part of the challenge that happened in Q4 as well.

Speaker Change: Technical great product is lessened demand and a tie environment customers will take any company and they'll just to live with the lower quality, but in a in a market whether the less demand multiply whichever with another described the technical grade.

Paul W. Graves: Attracts just goes up and goes up quite significantly in and can create meaningful short term disconnect. So I think that was also part of the challenge that happened in queue for as well.

Speaker Change: Yeah, Okay. Thanks for the call back and then in Argentina, you called average using some of that Capex stand and pace and you said the nine months.

Paul W. Graves: Yeah. Okay. Thanks for the call.

Paul W. Graves: And then in Argentina, you called out reducing some of that CapEx spend and pace, and you started a nine-month delay there. So should we think about Saldavida pushing back there? And what are the drivers?

Speaker Change: So should we think about south of data pushing back that and what what are the drive it does it just maintaining <unk>.

Paul W. Graves: Is it just maintaining cash, or are there some more issues that projects have delay after delay and CapEx spend revisions time and time again? So just wanting to understand that and how we think about the timing. It's not a project-related decision so much. I think it is two things.

Paul W. Graves: Issues that I have to delay in capex spending.

Time, and time again, just wanting to understand that and how we can come out and timing.

Paul W. Graves: It's not it's not a project related decision. So much I think it is two things I think one of them is clearly okay. This pricing level, what the market is today.

Paul W. Graves: I think one of them is clearly, at this price level where the market is today, we're not going to leverage ourselves and put the balance sheet at risk. And so all projects, you'll notice, have had to take a step back and say, is there a different way to deliver the conserved spending without negatively impacting the success of the project or creating a capital increase that's not acceptable to us in this environment? So Southern Reader is no different to Phase 1B at MDA or the two Canadian projects in that regard. But it also creates an opportunity for us. I mean, Southern Reader and Phoenix really are close to each other.

Paul W. Graves: When we're not gonna Lepage ourselves a balance sheet risks. So all projects, you'll notice a path to take a step back and say instead of a different way to deliver the.

Paul W. Graves: Instead of spending without negatively impacting the success of a project or creating a capital increase that's not acceptable to us and that should arrive at this other readers know different.

Paul W. Graves: This won't be NMDA, all Canadian projects in that regard. It also creates an opportunity for some in southern <unk> Phoenix really close to each other.

Paul W. Graves: And we do share, we practically, we do even compete for above ground infrastructure and above ground resources, whether that's contractors, people, energy, water, you name it. There's an opportunity there to optimize across those two to improve the way in which we deliver those projects. Our first glance suggests to us that we may even be able to reduce the total capital costs across those two projects by taking this moment to take a look at where those efficiencies possibly could be. And it certainly helps that we can optimize labor. Labour is a big resource constraint there.

Paul W. Graves: We do share we actually we do even compete or above ground infrastructure and above grab resources, whether that's contractors people.

Paul W. Graves: Energy water you name it is.

Paul W. Graves: There is an opportunity to optimize across those two to improve the way in which we deliver those projects.

Paul W. Graves: First glance suggest towards the actually we may even be able to reduce the total capital cost across those two projects by taking this moment to take a look of where those efficiencies possibly could be.

Paul W. Graves: It certainly helps that we can optimize labor labor is a big resource constrained saw suppliers and contractors, so optimizing across those two quite likely to lead to some cost savings.

Paul W. Graves: So are suppliers and contractors. So optimizing across those two is quite likely to lead to some cost savings. But yeah, it'll lead to, you know, six to nine month delays across those two projects. Okay. Your next questions come from the line of Chris Kapsch from Loop Capital Markets. Please go ahead.

Chris Kapsch: But yet it'll lead to six to nine months delays across those two projects.

Chris Kapsch: Okay got it thank you.

Chris Kapsch: Your next questions come from the line of Greece tap from the capital market. Please go ahead.

Paul W. Graves: Yeah, good evening. So my first question is a follow-up really to the opaqueness, because also what's been opaque has just been the sort of the nature and the magnitude of the de-stocking activity in China, and I'm just wondering about the visibility you have around that. I'm asking because it seems like the, you know, the gigafactories, for example, are operating at very low rates in China overall. And that's probably one of the dynamics that's dragging on prices, that, you know, the underutilized data factories, perhaps factories that shouldn't have been capitalized, thought they were going to supply EV companies that maybe shouldn't have been capitalized. So I'm just wondering, is that feeding into your commercial discussions, and what visibility you have into that destocking working its way through?

Chris Kapsch: Yeah, good evening so.

Paul W. Graves: My first question is a follow up really to the opaque Miss discussion.

Paul W. Graves: Also what's been opaque has just been sort of the.

Paul W. Graves: The nature and the magnitude of the Destocking activity in China, and I'm, just wondering about visibility you have around that.

Paul W. Graves: Asking because.

Paul W. Graves: It's kind of it seems like that.

Paul W. Graves: That the Giga factories for example, or operate in a very low rates in China overall, and and that's probably one of the dynamics that's dragging on pricing.

Paul W. Graves: The underutilized gigafactory, perhaps factories that should've been capitalized and thought they were going to supply E. V companies that maybe shouldn't have been capitalized. So I'm. Just wondering is that feeding into your commercial discussions and what's the visibility have into that destocking working its course.

Paul W. Graves: Yeah, we don't have a huge amount of visibility. I mean, I frankly would have expected to see some more announcements of Tier 2 or Tier 3 battery cell manufacturers closing down rather than, not even just going on hiatus, but actually closing down. And we haven't seen a lot of that yet. Now, it's probably a little early still. We see this every time at this time of year because of the Lunar New Year impact and effect.

Paul W. Graves: Yeah, we we don't have a huge amount of visibility I mean, I I think you would have expected to see small announcements to our tier three battery cell manufacturers closing down rather than not even just just going on hiatus, but actually closing down and we haven't seen a lot of that yet now.

Paul W. Graves: It's probably a little early still we see this every time at this time of year because of the lunar new year.

Paul W. Graves: Packed and in fact, so we'll be looking out over the next month or two to see whether we do start to see some buildup I know I know.

Paul W. Graves: So we'll be looking out over the next month or two to see whether we do start to see some buildup. I know there was some commentary from some Australian Spodumene guys about maybe enquiry levels are going up. And so maybe we're going to start seeing a pickup again in demand. We don't see it today.

Paul W. Graves: I know there was some commentary equipment. Some Australian sportsman guys about maybe inquire levels are going up so maybe maybe we can start seeing a pre come again and demand we don't see it today.

Paul W. Graves: Now, I would say when it comes to contract discussions, it's less of an impact on us because we're not really supplying into that chain. I mean, that piece of the market absolutely impacts the market price that we're all exposed to. But it's not really where Arcadian has been spending its time thinking about customer contracts and embedding ourselves into those supply chains. And that may be another reason why it's just not quite as visible to us as we would like. That's helpful.

Paul W. Graves: When it comes to contract discussions is less of an impact us we're not really supplying into that chain I mean, that's that's.

Paul W. Graves: A piece of the market absolutely impacts market price that will all exposed to but it's not really where al Qaeda has been spending time thinking about customer contract.

Paul W. Graves: And embedding ourselves into those supply chain and that may be another reason why it's just not visible to us as we would like it to me.

Speaker Change: That's helpful and then the follow up on the discussion around the evolution of your commercial strategy Uhm I'm, just curious about what tenants.

Paul W. Graves: And then the follow-up was the discussion around the evolution of your commercial strategy. I'm just curious about what tenants, as you evolve your strategy, are important to you. And you also said, you know, customers were showing a preference for flexibility around hydroxyversicarbonate. I'm wondering if that should be interpreted as momentum around LFP, you know, more globally, or is that too much of an extrapolation? Thanks. So look, I think there's a couple of things going on today. I think one of the obvious things that we see more and more is an IRA focus.

Paul W. Graves: You evolve this strategy what times are important to you and and you also had said you know the.

Paul W. Graves: Customers are showing a preference for flexibility around hydropsy versus carbonate I'm I'm wondering if that should be interpreted as momentum around LLP.

Paul W. Graves: More globally or is that too much of an extrapolation. Thanks.

Paul W. Graves: It was a couple of things going on today I think one of the obvious things that we see more is an I R. A focus and where do we supply and suicide or a qualified material, whether that's carbonate or.

Paul W. Graves: And where do we supply and source IRA qualified material, whether that's carbonate or hydroxide? And as I'm sure you know, on hydroxide, we're reasonably well placed there. On carbonate, you know, Argentina today is not technically IRA qualified carbonate, upgraded into hydroxide.

Paul W. Graves: Hydroxide them as I'm sure you know on hydroxide, we're reasonably well placed on carbonate Argentina today is.

Paul W. Graves: K R E I R. A qualified carbonate.

Paul W. Graves: Upgraded into into hydroxide.

Paul W. Graves: So I think, you know, much of the commercial strategy remains taking our asset portfolio and lining it up most closely or as closely as we can with the customers that make the most sense to us. I missed the first part of what you said, Chris. What are you asking me? Well, you talked in your formal comments about evolving your commercial strategy and coming up with an integrated one for the combined company. I'm just wondering what you perceive as important in terms of the tenants and also, I guess, what you think your customers are going to perceive as important as you partner with them. Thanks.

Paul W. Graves: So I think.

Speaker Change: Much of the of the of the commercials.

Chris: Commercial strategy remains.

Chris: Taking a asset portfolio and lining it up most closely closely as we can with the customers to make.

Speaker Change: <unk> was.

Speaker Change: I missed the first part of what you said, Chris you're asking about.

Chris: Well you well in your formal comments you talked about.

Paul W. Graves: Uhm.

Speaker Change: Evolving your commercial strategy and coming up with an integrated one for the company and I'm just wondering what you perceive as important in terms of the tenants and also I guess, what do you think your customers are going to perceive as important as you partner with them. Thanks, Yeah look at while I think I think for us at least it it's finding the customers.

Paul W. Graves: Yeah. Well, I think for us, at least, it's finding the customers that value what we do, making sure we can produce the quality of materials they demand, right? And that's a really important question.

Paul W. Graves: <unk>, what we do making sure we can produce quality material by demand and that's really important question. You know one thing that I don't think it's going to be an option. If you pursue a commercial specialty the way we do has to be indifferent.

Paul W. Graves: One thing that I don't think is going to be an option if you pursue a commercial strategy the way we do is to be indifferent to the quality of the material that you make. So we have to produce usable, qualified material, and that's less of a challenge in hydroxide, but it's probably going to take a bit more time and effort in the carbonate space. And I think the second piece of what that does is, you know, I think you've always heard historically from a live-in perspective, we've always wanted to be closest to the customers that are leading the charge and have the best insights. And that remains the case because the shift between technologies, between high nickel and mid-nickel, hydroxide and carbonate, is pretty significant.

Paul W. Graves: Indifferent as to the quality of the materials that you make so we have to produce useable qualified material in at less of a challenge in hydroxide.

Paul W. Graves: Probably kind of take a bit more time and effort and the carbonate space and.

Paul W. Graves: And I think the second piece of what that does it you know I think you've always heard historically I'm alive. Despite we've always wanted to be closer to the customers that are leading the charge and have the best and sites and that remains the case because the shift between technology is between hi, Nicole and midnight hydroxide on carbonate.

Paul W. Graves: Pretty significantly suddenly see a lot more LFC adoption for sure.

Paul W. Graves: We certainly see a lot more LFP adoption, for sure. And I think while LFP adoption is limited, there's no doubt that the cost of an LFP battery pack has fallen below $100 a kilo, and that's a bit of a holy grail, frankly, for the OEMs that are trying to drive low-cost vehicles, you know, bring the price down.

Paul W. Graves: I think.

Paul W. Graves: P adoption is limited so there's.

Paul W. Graves: There is no doubt that the LSP the cost of an LSP battery pack is folan below $100, a kilo on us a bit of a holy Grail frankly for the Lam's at a ton of dry low cost vehicles.

Paul W. Graves: Bring the price of ETB down and if you're going to work with your customers. They are going to need carbonate to service that market. So our strategy continues to evolve no doubt it's more complicated it's no doubt that having the right partners that are willing to really sit down with you and share. The road maps is even more important, particularly if we're going to invest in improving the quality of the material.

Paul W. Graves: And if you're going to work with your customers, they're going to need carbonate to service that market. So our strategy continues to evolve. There's no doubt it's more complicated.

Paul W. Graves: There's no doubt that having the right partners that are willing to really sit down with you and share their roadmaps is even more important, particularly if we're going to invest in improving the quality of the material. It's not going to be a strategy that's going to be quick to evolve or quick to change, though. It takes time to do this as a combined company. We appreciate the color.

Paul W. Graves: It's not going to be a strategy, that's going to be quick to evolve to change, though it takes time.

Paul W. Graves: To do this as a combined company.

Speaker Change: I appreciate the teller.

Paul W. Graves: Your next question comes from the line of Rob Steen, from Aquarius. Please go ahead. Hi, thanks for the opportunity. Just two quick ones from me.

Paul W. Graves: Your next question comes from the line of Grubstein.

Rob Steen: From acquiring.

Rob Steen: Please go ahead.

Rob Steen: Oh, thanks for the opportunity just two quick ones for May the roughly.

Unnamed Speaker: The roughly 10 kt cut of spod from, from Newcastle, just on that one, would it not be better to sell that asset or to explore sales of that asset to existing Australians? Spodumene Producers that may see value upside into the future, given that's obviously a key lever you're pulling to manage supply. And then secondly, just on the EBITDA sensitivities that you've provided. You know, my rough math has prices of about $10,000, dollars a ton of LCO that that being you kind of eat the dark break even is that sort of roughly aligned with your thinking um just trying to get some bookends on the uh the numbers that you've provided for guidance thank you for Outlook Scenarios, not guidance, but when you say $10, are you saying that your projection for the year is $10 a ton or you're asking me if today's market is $10 a kilo?

Rob Steen: Roughly Kane K K hot spot from.

Unnamed Speaker: From my account.

Unnamed Speaker: On that one.

Unnamed Speaker: We will not be better to sell that asset or to explore styles of that asset to existing Australian.

Unnamed Speaker: <unk> main produces nice a value upsided for future given that's obviously, a K Lady you're pulling so to manage supply and then secondly.

Unnamed Speaker: Just on the <unk> that you provided.

Unnamed Speaker:

Unnamed Speaker: Yeah, My Ralph math has <unk>.

Unnamed Speaker: Process of about 10000.

Unnamed Speaker: Those outside of <unk> that that thing called EBITDA breakeven is that sort of roughly along with your thinking.

Speaker Change: Just trying to get some games.

Unnamed Speaker: Games on the the numbers that you've provided for <unk>. Thank you.

Unnamed Speaker: That.

Unnamed Speaker: The outlook scenarios guidance, but when.

Unnamed Speaker: When you say $10.

Unnamed Speaker: Saying that your projection for the year is $10 a tunnel you're asking me today's market is $10.

Unnamed Speaker: No, basically, what I'm asking is, if I use your guidance and I linearly extrapolate at about $10,000, I break even. And I just want to understand from a bookend point of view whether that's right. Yeah, look, it's a difficult one to answer because our portfolio is not linear, which is why we did this. I think if it was linear, we wouldn't have to do this.

Speaker Change: No no no.

Unnamed Speaker: Basically what I'm asking is if I use your guidance and Eileen you'll extrapolate at about 10000, I striking an AD on the stand.

Unnamed Speaker: From a bookcase point of view whether that Fry.

Speaker Change: Yeah, it's a difficult one to answer because.

Unnamed Speaker: A portfolio is not linear which is why we did this I think if it with linear we wouldn't have to do it but what will happen is that.

Paul W. Graves: But what will happen is that a big chunk of our volume has flaws in it. So once you get to when the market price falls to 10, a big chunk of our revenue doesn't move. The second piece of it is how it flows through to the specialties business, which, as I'm sure you know, is a much, much higher price per LCE than the rest of the business. It's a little bit harder to predict as well, so it will flow through, but again, not on a linear basis.

Paul W. Graves: A big chunk of our volume as close to it. So once you get on the market price falls to obtain a big chunk of our revenue to move because.

Paul W. Graves: Above tech.

Paul W. Graves: The second piece of it is how it flows through to a specialties business, which is I'm sure you know as much much higher price per L. C E.

Paul W. Graves: And the rest of the business is a little bit harder to predict as well so.

Paul W. Graves: It will slow so, but again I'm not a linear basis that is the hardest question to answer is in a price environmentally price goes that low I don't know how big the discount technical great carbonate lovely I just don't know.

Paul W. Graves: That is the hardest question to answer, because in a price environment where prices go that low, I don't know how big the discount for technical-grade carbonate will be. I just don't know. So that's the variable there.

Paul W. Graves: So that's the variable in there there's no doubt at $10 a kilo at the market at $10 a kilo for a long period of time clearly.

Paul W. Graves: There's no doubt that $10 a kilo, if the market sits at $10 a kilo for a long period of time, clearly, you know, all bets are off as to what we do with regard to capital projects, et cetera, because that kind of pricing affects the EBITDA of the business and the cash flow generation of the business. Thank you. And then, sorry, just to follow up On the Spodumene.

Paul W. Graves: All bets are off as to what we do with regard to capital projects et cetera.

Paul W. Graves: Those kind of pricing you know the EBITDA for business and the cash flow generation businesses severely impaired relative to the number's been put in there so.

Speaker Change: It doesn't really matter to me at least for that.

Paul W. Graves: It is $8 and $11 when you into that kind of sustained price environment, it's a completely different strategy.

Paul W. Graves: Yeah, if you're asking, should we sell Mount Catlin, Mount Catlin's got, I don't know, a year's life left if we run it flat out, three years if you kind of are willing to invest a decent amount of money in stripping further, maybe further if you're willing to take the risk of going underground. I don't know how attractive an asset that is to a potential buyer We've been merged for less than two months, so as you can imagine, that's not been a particularly high priority for us. I don't know whether that buyer exists, frankly. Mount Catlin, again, with only two or three years of life left, is never going to be a core part of Arcadian Lithium's long-term strategy.

Paul W. Graves: Thank you and then sorry, just to follow up on on the spot.

Paul W. Graves: This fundamental.

Paul W. Graves: Yeah, if you're asking should we sell <unk> I dunno years life left if we run a flat out three years if you.

Paul W. Graves: Are willing to invest a decent amount of money on stripping maybe further if you're willing to take the risk of going underground.

Paul W. Graves: How attractive an asset that is to a potential buyer we've been we've been merged.

Paul W. Graves: Two months so as you can imagine that's not been a particularly high focus for us but.

Paul W. Graves: I don't know whether the pilot existed frankly.

Paul W. Graves: <unk> again with only two or three years life life is never going to be a co part of the long term strategy of al Qaeda.

Paul W. Graves: But that doesn't mean that it isn't an important asset for the next two or three years. Okay, thank you. Your last question comes from the line of Aleksey Yefremov from Key Bank Capital. Please go ahead. Thanks. This is Ryan on.

Paul W. Graves: That doesn't mean that it is an important asset for the next two or three years.

Ryan: Okay. Thank you.

Ryan: Your your last question comes from the ninth <unk>, some feedback capital markets.

Ryan: Please go ahead.

Paul W. Graves: This is Ryan on for Alexi, just two quick ones from me.

Unnamed Speaker: Just two quick ones from me. I wanted to ask you, there's some recent reports of some operations in China seeing some environmental inspections, which may cause them to shut down. So I'm not sure if you've seen or heard of those reports and what your opinions on that would be. And then, secondly, if you could just run us through the ramp for the new 15KT hydroxide.

Unnamed Speaker: I wanted to ask you. There's some recent reports of some operations in China.

Unnamed Speaker: Seeing some environmental.

Unnamed Speaker: Inspections, which may cause shutdowns are not sure.

Unnamed Speaker: Seen or heard of those reports and what are your opinions on that would be and then secondly.

Unnamed Speaker: If you could just run us through with a ramp up the new 15 kg Eyedrops episode in China would look like and and when that might reach full run rate.

Paul W. Graves: Thanks. Sure. Look, I think the environmental, I mean, it's sort of an annual event now or maybe more frequent than annual events, but there are some locations that are subject to environmental inspections that don't go so well, and they're shut down for a period of time. I've heard the same reports. I've also heard the complete opposite. This is one of my comments earlier about, you know, 12 hours later, somebody equally credible comes out and says the opposite. So I don't know. Time will tell. I have heard and I have seen some very credible reports and commentary and news that there are certainly some converters that are going to be closed down for longer periods of time than normal, three, four, five months, not necessarily for environmental purposes, though, simply because of the economics that they face, particularly if they're not integrated.

Paul W. Graves: But I think the environmental.

Paul W. Graves: Sort of an annual event now or maybe more frequent that annual events.

Paul W. Graves: Awesome locations that are subject to environmental inspections and on goes so well with my shut down for a period of time I've heard the same reports.

Paul W. Graves: I also have the complete opposite this is one of my comments earlier about 12 hours later somebody equally credible comes out and says the opposite so.

Paul W. Graves: Time will tell I have heard some I have seen some very credible.

Paul W. Graves: Reports from commentary and news that there are certainly some converters that are gonna be chosen down for longer periods of time, the normal 345 months not necessarily for environmental purposes, though simply because of the economics that they face.

Paul W. Graves: They're not integrated.

Paul W. Graves: I think in terms of our new facility ramping up. The question is qualification; it's not the plant itself.

Paul W. Graves: Mmm I think in terms of our new facility ramping up.

Paul W. Graves: So does it.

Paul W. Graves: Question is qualification, it's not the plant itself the plan.

Paul W. Graves: The plant has already demonstrated that it can run and produce at full rate and produce material that we are highly confident will get qualified. The qualification process, though, can still take anywhere from three to nine months. And so it really depends upon how quickly our customers and their supply chain work their way through that qualification process.

Paul W. Graves: Already demonstrated that he can run and produce so late unproduced material that we are highly comfortable will get qualified.

Paul W. Graves: The qualification process, though can still take anywhere from three to nine months. So it really depends on how quickly our customers in their supply chain works its way through qualification process.

Daniel Rosen: This concludes our Q&A. I will now turn the call over to Mr. Daniel Rosen for closing remarks. That's all the time we have for the call today, but we will be available following the call to address any additional questions that you may have. Thanks, everyone. This concludes the Arcadia Militiam Fourth Quarter 20th Century Earnings Release Conference Call. You may now disconnect. Thank you.

Daniel Rosen: <unk> I will now turn the call back to Mister Daniels Wilson for closing remarks.

Daniel Rosen: That's all the time, we after the call today, but we will be available following the call to address any additional questions that you may have thanks, everyone.

Speaker Change: Difficulties are the arcadian lithium fourth quarter, 20th century earnings release Conference call. You May now disconnect. Thank you.

Daniel Rosen: [noise].