Q1 2026 IGO Ltd Earnings Call
Speaker #1: Thank you for standing by, and welcome to the IGO Limited First Quarter FY 26 results call. All participants are in a listen-only mode.
Speaker #1: There will be a presentation followed by a question and answer session . If you wish to ask a question , you will need to press the star key followed by the number one on your telephone keypad .
Speaker #1: I would now like to hand the conference over to Mr. Ivan Vella, Managing Director and CEO. Please go ahead.
Speaker #2: Thanks, Darcy. Good morning, everyone. Thanks for joining, and thank you to those accommodating our time change. We just want to avoid a clash.
Speaker #2: I'm sure you've all got a busy morning of calls lined up with me again this morning. Our CFO, she’ll cover some of the financials.
Speaker #2: I'll jump in and run through a bit of a summary , and then we can get into some Q&A . First of all , on safety , look , we signposted last quarter that the the results of the the hard work we did through 2024 are starting to flow through .
Speaker #2: And we saw that again through the last quarter. We're delighted to see a period of over 90 days without an injury. And that, for Aygo, is a record as far as I can see.
Speaker #2: Back in history, you know, there is an indication of that steady improvement in the way that we're managing safety and the maturity of our operation.
Speaker #2: The Triffids started to trend down, which we'd expect. And that should continue as we keep the focus up. Still lots to do.
Speaker #2: There's no question you don't turn safety around and build a strong , mature set of systems and culture overnight . But I am pleased to see that steady progress in terms of the operations , I'll start on greenbushes and you know what's very clear , obviously , is the production was was well down from prior quarters , and that was a function predominantly of grade .
Speaker #2: And you'll see that in the in the fine details in the quarterly report . There was quite a step down from , from previous quarters .
Speaker #2: And that's a function of where we are in the mine plan. I'll come back and talk more to that in a minute.
Speaker #2: But there was a big impact from that. Of course, that was then compounded by weather. Many of you will know that South Australia had one of its wettest years in a very long time, particularly down in the south west.
Speaker #2: That's very impactful . Both in terms of impacting all movement or material movement . But also covering , you know , standing water , covering parts of the ore body and the the ability for us to access that was limited .
Speaker #2: So that flowed through into sales . Obviously into unit costs . Still great to see through the cycle . You know , right at the bottom here we're generating nearly 60% EBITDA margins despite some of those challenges on Nova .
Speaker #2: Look, we are tracking to plan. Really, it's, you know, getting to the end of the ore body, with signposts at that. And that said, we've got a tight plan.
Speaker #2: And I think we had a couple of strong quarters to finish late last financial year. This first quarter, I'll talk to the misfire in a minute.
Speaker #2: But aside from that, it actually tracked really well. The team's doing a good job managing the challenges. It is complex and more difficult as they have fewer options, and obviously, the ability for them to flex their schedules is much more limited.
Speaker #2: But they've managed through that well, and Nova's continuing to perform as expected. On Kwinana, look, you know there’s been a lift in performance there, and it's been a long time coming.
Speaker #2: That step from what was done in the shutdown late last year . Naturally that flows through into conversion costs and other factors . And for us , you know , every bit of improvement is a is a real positive and something that does reduce the cash burn .
Speaker #2: So that's I guess , how I look at it , that the good work the team's doing and I've been nothing but supportive and given them credit .
Speaker #2: They try extremely hard to work on the asset to try and get it stable, to try and get it to perform. And that does reduce the cash impact.
Speaker #2: Ultimately , it doesn't change the long term economics . In our view , but it is nice to see those improvements . There are also being , you know , very frugal with with costs and CapEx and so on .
Speaker #2: There's certainly no waste there . It's just a very challenged asset with a very difficult pathway to to full production more broadly . Look , I won't get into the financials .
Speaker #2: Cath will cover those, but I mean other key highlights to take away. I think the forest transaction is progressing, and we expect that will close as sort of signposted later this year.
Speaker #2: And cosmos , you know , a big milestone which is a sad moment . But we took the decision to stop De-watering the Odysseus mine , the underground nickel .
Speaker #2: Thereafter, after a pretty extensive technical economic assessment, it’s a hard call. But, you know, that’s a function of where the nickel market’s at and the challenges of extracting that ore economically.
Speaker #2: So those are some of the highlights. Let me just dig into Greenbushes in a bit more depth and cover a few things.
Speaker #2: There . I mentioned the the grade being , you know , obviously a primary driver of performance there . And there is a big push back underway , which I've talked about in previous quarters .
Speaker #2: That's progressing . At the end of the day , that opens up that high grade core , which is where all that , critical value lives and , you know , that's still a work in progress .
Speaker #2: Hence why we're seeing this sort of step down in grade naturally , as we finish the work on that life of mine optimisation and open up the the mine plan , we'll try and look to stabilise grade .
Speaker #2: But ultimately you want to drive value first and foremost and the the grade isn't consistent across the the ore body . And so we'll work through that and and determine what's the best schedule and sequence to get through that .
Speaker #2: The Talacen team is doing some great work there. Speaking of that work, the life of mine optimization work is continuing, and you know we'll naturally see some real benefits from that as they get into that more deeply.
Speaker #2: Understand what part of the ore body will be accessed through the surface mine. What part might come through underground, and ultimately how we get the best value from the ore body in parallel to that.
Speaker #2: And I think you can almost consider it as two separate pieces of work: a broad productivity program. Out of Malaspina, it's up and running and doing a stellar job there as CEO, working with Rob.
Speaker #2: And you've got a deep pedigree in this kind of productivity program. Got that stood up, looking at asset management, looking at throughput and recoveries.
Speaker #2: You know , all of the different aspects that you'd expect . And again , we've we've talked about broadly in context in the previous quarters .
Speaker #2: He's he's getting those programs moving . And obviously that'll start delivering results quarter on quarter . So that's that's I guess the kind of the key headlines for Greenbushes I mentioned that sales was lower quarter on quarter , which is a flow through from from production and you know , the last point to note is probably just pricing .
Speaker #2: And there was quite a lot of volatility through the quarter . And we as you know , have a one month lag on our pricing .
Speaker #2: And so, as it washes through, we'll see the pricing play out. Overall, what we have seen, though, is the realized pricing.
Speaker #2: The Greenbushes is actually achieving really strong results. If we look back through the trend and compare it with our peers in the industry.
Speaker #2: So, it's a very simple model. There's no big sales and marketing effort. It really is just a one-month lag on the PRAs.
Speaker #2: And that actually delivers a pretty good outcome . On Nova , not too much more to add there , really , I think just to talk to the misfire , there was one stope there that had a misfire which , you know , I guess first and foremost didn't result in any safety concerns .
Speaker #2: And then in terms of recovering it , that's where the safety starts . And the team did an extremely good job . Risk assessing that and working through how they'd recover it .
Speaker #2: They've done an outstanding job, and you know, effectively, there's not going to be any long-term impact in our mind. Plan.
Speaker #2: There may be a small amount of of of tonnes that , that we don't recover , which we're assessing at the moment , but ultimately the teams work through that very effectively .
Speaker #2: The the other point to note , there is the closure planning . That's progressing well . We've got a very strong team on that .
Speaker #2: And, as we've signposted, our intent is to have the study work done and the approvals in place so that we can move directly to closure at the end of production late next year.
Speaker #2: Once , once the ore bodies run out . The on the lithium production at Kwinana , I think I've covered the key points .
Speaker #2: You know, step up in production related to set down in the unit conversion costs. CapEx was pretty modest. The team is into a shutdown.
Speaker #2: This month and you know , there's obviously more projects focused around that . But overall , you know , the team has continued to work extremely hard to try and get the asset to perform to lift production rates , to continue to deliver high levels of battery grade product .
Speaker #2: And I give them full credit for that . As I said , though , it doesn't doesn't change the the degree of challenge on the economics for the asset .
Speaker #2: As we look into the industry . I'm sure everyone on the call knows that , you know , China , the Chinese refineries are extremely competitive , running at about 3000 a tonne US , some actually below that .
Speaker #2: But that's kind of the benchmark in the industry . And it's very difficult to see Australian ought to be honest , Western refineries getting anywhere near that level of performance , not dissimilar to other processes like copper or aluminium , where China continues to demonstrate extremely capable downstream processing in the way that they operate .
Speaker #2: I might, I'll hand off to Cath in a second. Maybe just a couple of other quick points on exploration. We put in a small update in the quarterly.
Speaker #2: I didn't put a slide in on it, but you know, there are a number of lithium targets that we've been working through testing and will continue through this.
Speaker #2: This field season, and probably some will run into next year. Nothing more to report at that point. We are continuing to rationalize the ground and clean up the portfolio across our exploration team.
Speaker #2: The tenements we've gone through with a fine-tooth comb, and we're managing that quite well. There is some work going on around copper again, which I've mentioned previously.
Speaker #2: Nothing material to report at this point , but teams , you know , got some some interesting things . They're working through and I've , I've already covered Cosmos and Forrest in terms of the key news there .
Speaker #2: So, look, I might hand off to Cath to just run through some of the key highlights and the financials.
Speaker #3: Good morning, everybody. Stepping through the financials this quarter, revenue was down, with Nova having one less copper shipment and also realized prices being lower.
Speaker #3: The Nova EBITDA was lower on the back of lower revenues, and the underlying share of net profit from Tlia was also down from the lower sales at Greenbushes.
Speaker #3: Its important to note that we are expensing capital at Kwinana , having impaired the asset to zero . Underlying EBITDA was higher as it includes a movement in the mark to market listed investments with the prior quarter impacted by the expensing of rehabilitation provision , which increased last period .
Speaker #3: We remain laser focused on cost , noting that corporate costs continue to trend down and you will see in the cash flow that it is a higher number , that that's a timing issue around payment of short term incentives only .
Speaker #3: There's a reduction in costs on the care and maintenance side, including the decision to cease the dewatering at Cosmos and moving towards the completion of the sale of Estonia.
Speaker #3: As Ivan noted , and we've got reduced capital spend at Nova , where we expect the run rate to continue to produce as we head towards closure .
Speaker #3: Free cash flow was positive at $15 million, and this included $12 million of spend on care and maintenance at the Cosmos and Forest sites.
Speaker #3: Finally, our balance sheet was further strengthened with net cash increasing to $287 million. I'll hand it back to Ivan now to give a summary.
Speaker #2: Thanks , Cath . Well , let's . I think let's jump into some Q&A from here .
Speaker #1: Thank you. If you wish to ask a question, please press *1 on your telephone and wait for your name to be announced.
Speaker #1: If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question.
Speaker #1: Your first question comes from Hugo Nikolic from Goldman Sachs. Please go ahead.
Speaker #4: Morning , Ivan , and thanks for the update this morning . I just wanted to dig into the grade and weather . Peace is more at Greenbushes , particularly given the simplified disclosure no longer has the mine physicals in it .
Speaker #4: Are you able to just give us some color on those physicals? And whether this was more a mine or processing plant impact around weather and grade, just given that, I think at last quarter you had the better part of five months of ROM stocks there.
Speaker #4: So I presume it'd be more of a mine and grade impact. But just any color there would be helpful.
Speaker #2: Yeah . Thanks , Hugo . It is . Look , it's mine . Related . The processing plants are fine . I mean , there's work to do on them in terms of maintenance and just asset performance , but the the driver here is , is , is from , from the mine , the weather impacts , as I said , in two parts , one just material movements .
Speaker #2: Trucks are moving slower , cycle times are longer . There's just just more impacts because you lose productivity with all of the the wet impact , the second is just standing water through the pit and access to that high grade core , which means that we're we're drawing off either lower grade stockpiles in some case , oxidized material .
Speaker #2: And of course , some of the lower grade material in the pit . So , you know , it's a confluence of of events that affects us .
Speaker #2: But , you know , the core of this is that pushback on that Western side of the main pit , which exposes that high grade core as that's completed and that's worked on goes is ongoing through into early next calendar year .
Speaker #2: Once that opens up , of course , we you know , we have a nice runway looking forward . I know Rob is working to try .
Speaker #2: And as he gets through the life of mine optimization, he just thinks through the pit sequence, the mining sequence, and tries to stabilize this as much as possible.
Speaker #2: Value first , but equally , you know , just trying to get the very best out of the plants . We don't want to have to adjust those dramatically because that affects recoveries .
Speaker #2: And overall throughput performance .
Speaker #5: Thanks. So then, if I can just in terms of how you expect the rest of FY26 to look, I appreciate that the calendar.
Speaker #4: Year is to be budgeted for the JV , but you've called this roughly in line with plan . So I guess relative to FY 26 , guidance , should we expect production to pick up quarter on quarter from here , or is December likely to still see some impacts ?
Speaker #4: And it's more of a second-half story?
Speaker #2: Yeah , it's more a second half story . Hugo . That this quarter will be similar . You know obviously with less of the wet weather or that said it's been raining again today .
Speaker #2: I don't know when it's supposed to be in this beautiful period of , of just 200 days of sunshine in WA . And it keeps raining .
Speaker #2: But no, I think, look, the weather's less of an issue now. It's really just more about where they are in the mine sequence.
Speaker #2: . And still going that'll that'll impact this quarter . So we're going to see the second half of the financial year , i.e. the first part of 2026 is , is where we'll see that lift .
Speaker #2: We don't see any cause to change guidance. I mean, we saw the mine plan. We saw what was coming and put that forward.
Speaker #2: I know everyone thought that that was, you know, conservative. We don't know where CGB 3, how quickly that will ramp up.
Speaker #2: That's probably still the wildcard we've put in a view based on what we expect on the plan. But at this point, that guidance really looks quite sound.
Speaker #4: Got it . And then just if I could just to put some numbers around the mine piece in the quarter , you know , last quarter you did 1.4 million tonnes at 1.86 , I think .
Speaker #4: Where did that sit this quarter?
Speaker #2: Sorry. We've just got a bit of background noise as you came through. Can you repeat that?
Speaker #4: Oh , sorry . Just just on the mine physicals , just in terms of ore tonnage and grade is able to give a little bit of color .
Speaker #4: There .
Speaker #2: Oh, you mean just general material movements and so on?
Speaker #6: Yep .
Speaker #2: Look . Yeah , it's down through this period just because of the weather . As I said , you're naturally not getting the same truck movements .
Speaker #2: And productivity . But overall , Rob and Adam have been stepping that up on material movements . So I think as the , you know , they get through winter that productivity will improve .
Speaker #2: They're far from what you would call good and that's I think I've been quite open and candid that , you know , the , the contractor performance there has not been at what I would call industry average or standard .
Speaker #2: And they're working on it . I think there's a great program trying hard . Rob's had very intense focus on it , and they are making improvements , but look , it's it , you know , in terms of progress to plan , I think we're comfortable they're making the headway through the the strip .
Speaker #4: Great. Thanks. I'll pass it on.
Speaker #2: Thanks , Hugo .
Speaker #1: Thank you. Your next question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Speaker #7: Hi , Ivan . Just a question about how market communication , I guess so . I mean , the grade in the mine sequence .
Speaker #7: Obviously you've outlined today , that's a big driver of the mining physicals that we've seen at Greenbushes . In addition to weather , which can be unpredictable , but when you communicated with the market and gave guidance , why not just simply flag , you know , market ?
Speaker #7: Don't forget, or just FYI, there's going to be a grade that's going to be a bit lower in Q1 and Q2.
Speaker #2: Sure , sure . Dan I mean , we can we can do our best . Their function of what we can share through through our JV .
Speaker #2: Well, yeah, keep that in mind and do our best to keep you guys informed so you can see the variability through the year.
Speaker #7: Yeah, thank you. And I guess the question is, the second question I've got is just the intention with CP3 and the collective JV mood on how you're going to ramp that up.
Speaker #7: And is that going to be very much subject to the speed of that ramp up ? Is that going to be subject to market conditions and the improvement there or and I guess if the market is not sufficiently strong to run everything , might there be a decision to take down and do a big maintenance program at some of the other concentrators to have a look and go , well , you know , let's see if we can improve .
Speaker #7: The recovery improvements or whatever it is to make them , you know , best in class so that when the market improves , you know , you're running well .
Speaker #2: No. Look, we've got a clear plan, as I sort of signposted last quarter as well. The plan is to ramp it up as quickly as possible.
Speaker #2: There's no change to that . The two customers who are also owners , are , you know , very keen to see those tonnes flowing .
Speaker #2: That's the plan, and that's what we're working towards. So we're pushing the team on construction to hurry up and get finished and hand it off.
Speaker #2: You know , the ops team are ready . They've already . Commissioned the dry plant . There's a bunch of material already crushed and waiting as a stockpile to start feeding the wet plant .
Speaker #2: As soon as that's finished, they can start commissioning and get on with it.
Speaker #7: Okay, thanks very much for your perspectives.
Speaker #2: Thanks , Dan .
Speaker #1: Thank you. Your next question comes from John Sharp from CLSA. Please go ahead.
Speaker #8: Yeah . Hi , Ivan and team , just a question . Regarding the dividend . So Winfield they paid a 50ml dividend to JB partners in September .
Speaker #8: Just what? When do you expect Tlia to pass these distributions onto IGA?
Speaker #2: Oh look John . Yeah we a relatively modest dividend from from greenbushes or Winfield . That said nice to see that . You know such a strong cash conversion at the site even through the bottom of the cycle .
Speaker #2: It's generating cash and we're covering all of that growth CapEx and so on that the distribution to Tlia , obviously , we need to make sure we can fund the the work at Kwinana .
Speaker #2: While there have been improvements there , it's still every ton that's produced effectively costs us money . And , you know , I don't expect any of that money to flow back out to the shareholders of tlie i.e. TLC and IGA .
Speaker #2: At this point .
Speaker #8: Okay . Thanks . And just interested in your thoughts on there's been recent commentary about a floor price for lithium producers . Another producer talked about the unintended consequences of such a policy .
Speaker #8: Just interested in your view: how do you see this? Would it be good? Would it be bad? What are your thoughts on unintended consequences?
Speaker #8: Thanks .
Speaker #2: Yeah . Look , John , I mean , I'm not going to comment more broadly on the market positioning . I think the takeaway is that the Australian government , the US government , other Western governments are recognising the criticality of of critical minerals and the need to support the versified production .
Speaker #2: They're they're trying to find the best , best pathways to do that . And I think that's something we should all thank them for .
Speaker #2: And recognise . It's great to see a little bit of sunlight and and interest in our industry . The various mechanisms , how they do it .
Speaker #2: I mean , I think there's a good consultation process that going through to manage and come up with the best pathways . And , you know , I support the work they're doing .
Speaker #8: Okay, thanks, John.
Speaker #1: Thank you. Your next question comes from Matthew Friedman from MST Financial. Please go ahead.
Speaker #9: Sure . Thanks . Morning , Ivan . And Cath . Ivan , maybe a bit of a high level one from me . It's coming up on two years in the job for you .
Speaker #9: Clearly, a lot has changed in the business. However, over that time, IGO has underperformed all the other Australian lithium producers compared to your peers.
Speaker #9: You know , you haven't had a major governance crisis . You haven't had to raise capital . You've got the best asset . You're actually growing production , you've got a strong balance sheet , but clearly the market is choosing not to value these attributes .
Speaker #9: You know , talking to investors , they might point to a lack of clarity over the life of mine plan and the value that's inherent in greenbushes .
Speaker #9: Or maybe they might point to the poor performance at Kwinana, which I guess in my mind both link back to the more fundamental issue, which is really a perceived lack of influence in the JV.
Speaker #9: So I know that's a lot of words , but really the question is , you know , now two years into the role , you know , the business had a strategy refresh a year ago .
Speaker #9: Looking forward now, what's the timeline for shareholders to expect a resolution to these issues? Thanks.
Speaker #2: Okay . Thanks , Matt . I think it's a good round up of the the key issues . And I've been , I think , quite open about that .
Speaker #2: Naturally , the ability to look through into , you know , I guess a full perspective on greenbushes its potential , its performance and so on .
Speaker #2: You know , we're feeding it out more backward looking . And I know as Rob and he's only just a year in the job now as he gets through that optimisation work and he lays it out , his ability to to to share that with us and , and inform the market I think is very important .
Speaker #2: So I think that will be a key factor . Secondly , I guess is then just the the overhang that Kwinana presents as a drag on those on the cash generation and the benefit that flows out of Greenbushes , you know , I guess two years ago or so when I started , there was probably still some optimism in the market around the refinery and potential .
Speaker #2: There , something that we spent time studying pretty hard and trying to deeply understand the economics and the potential there . And we came to a conclusion that both the asset itself and the positioning in the Australian context was was pretty challenged .
Speaker #2: Hence, the view that we took on it, and that obviously then translates into some conversations that are ongoing with Tianqi about the JV and the structure there, which are not complete.
Speaker #2: I can't give you a time frame or a date for that . It's it's work that we're working through and we we expect that as that's resolved , that will unlock some of the discount or some of the anxiety that probably sits around the potential of greenbushes .
Speaker #2: That said , I think also , you know , in a in a low point of the cycle and , you know , no one's got a crystal ball to see how the lithium world plays out .
Speaker #2: But to expect that it continues at this level for forever is probably not realistic . Naturally , when you're in that low ebb , those negatives are amplified .
Speaker #2: I can imagine that , you know , the price moves , the cash is flowing , things look very different because this is a very highly leveraged asset .
Speaker #2: And you can imagine, with the extra production coming online from CP3, when you flow.
Speaker #6: That through .
Speaker #2: That's going to have a significant impact on the cash generation for all of the joint venture partners. So look, you've summarized the issues.
Speaker #2: We're working very hard on them . I think we've been quite transparent about that . The work and the issues and I see that as you know , it's critical outcomes to to unlock some of the discount on our equity .
Speaker #9: Yeah . Appreciate that . Thanks , Ivan . Maybe not so much a follow up as a general comment , but I mean , myself and other analysts have asked repeatedly for I guess , some more specifics around these ongoing optimization studies .
Speaker #9: You know , I think your share price would tell you that , that that's a little bit too general for for the most material assets and the market's telling you that they want more clarity on the asset .
Speaker #9: So, you know, and additionally, arguably you've got an obligation there to your shareholders, I guess, despite the commerciality elements of the joint venture.
Speaker #9: So I know you said you're not able to give it currently , but certainly any specific timeline of what you're wanting to capture in those studies and the timing of when you'd like to release them to the market , would , I think , be be very , very welcome .
Speaker #9: So thanks for that .
Speaker #6: Yeah .
Speaker #2: I completely understand , Matt . And we're working hard on that . So point your point is well made .
Speaker #9: Thanks , Ivan .
Speaker #1: Thank you. Your next question comes from Tim Hoff from Canaccord. Please go ahead.
Speaker #10: Hi , guys . Yeah , I was I was largely looking similar questioning to to Matt's line of questioning , but just wanted to confirm that that optimization study will will come out to the market in some form .
Speaker #10: Like I know, obviously, it's not going to be as comprehensive as what you see, but we will get to see that, and I presume this year.
Speaker #6: Well , yeah .
Speaker #2: Look, Tim wants the teams to complete their work, and they're ready to share that. We'll work through that with the joint venture.
Speaker #2: And and then determine exactly what and how we share that . So I mean , naturally everyone's got an interest in in telling that story about Greenbushes .
Speaker #2: But I think letting the team work through and make sure they've got a comprehensive answer, and they've worked through all of the different questions, is important.
Speaker #2: So I don't have a date for you . Naturally , we're eager . We're pushing . And Rob is he's he's driving this really hard .
Speaker #2: But there's a bit more complexity than a 100% owned asset, obviously, to work through that.
Speaker #10: Yep . For sure . And then perhaps just around pricing obviously that one one month lag has impacted you guys . You know , picking up that the worst of the pricing in in June , you know , as you're looking at the profile now and we're seeing pricing improve I guess there's been some mixed commentary on on pricing forecasts .
Speaker #10: But we are seeing an improvement here is that translating to the , you know , the shipments as you're watching them go out ?
Speaker #6: Yeah , for sure .
Speaker #2: I mean, I think we took a bit of time to look at realized pricing over the last 18 months or two years.
Speaker #2: And to be honest , without a sales and marketing team , we're getting great outcomes . So I'm very comfortable that the model that we've got in place gives us equal best value , certainly better than a number of our peers in the market .
Speaker #2: So it's a, you know, it's certainly delivering good outcomes for us.
Speaker #10: Excellent. We look forward to the December quarter numbers, then. Thank you.
Speaker #2: Thanks .
Speaker #6: Tim .
Speaker #1: Thank you. Your next question comes from Colin Baker from RBC. Please go ahead.
Speaker #11: Good morning, Ivan. Just on Greenbushes and Kwinana, it looks like CapEx spend is running below the guidance rate. Could you maybe add some detail around that?
Speaker #11: And I'll pull up with a second.
Speaker #6: Yeah .
Speaker #2: Look , I mean it's just starting to taper now . I don't want to get into , you know , a debate on guidance .
Speaker #2: We've put that out . We think that still stands naturally , as I've signposted in previous quarters , Rob and the team are being very , very focused on CapEx spend .
Speaker #2: And there's a lot of scrutiny on the dollars that are being applied across the business. We don't want to, obviously, compromise the assets.
Speaker #2: So , you know , they'll put the investment into asset health and to asset performance . But all of the extras , all of the other nice to haves there challenging .
Speaker #2: They're also challenging CapEx intensity to make sure that we're getting the best value for every dollar . That is spent . So , you know , look , to be honest , if we get later into this financial year and we have a down step in guidance , that'd be fabulous .
Speaker #2: But right now we're saying , look , that's our guidance . We stick with it . We're just pleased to see that continued tension on on capital spend and I again , I know , you know , back to Matt and Tim's comments .
Speaker #2: You'd love to have , you know , I had this question 20 times . What is the the sort of medium term dollars per tonne of capacity in CapEx that we can guide on .
Speaker #2: And , you know , I'm chasing it . We'll get to it . That's the kind of thing that's helpful for you to do your modelling and see what that full value of Greenbushes will be .
Speaker #11: Sure , maybe I'll ask another way in your words , the the nice to have component of capital spend for both Kwinana and Greenbushes .
Speaker #11: What percentage of capital spend does that make up for this year?
Speaker #2: I'm not sure I can answer that . I mean , the the point is , we're every every individual projects stress tests and and challenged .
Speaker #2: I'll give you an example . I know in the plan it's an anecdote , right . They had some car parks . They wanted to pave with bitumen .
Speaker #2: And they said , well , we're not going to do that . We're just going to leave it as crushed . Crushed rock .
Speaker #2: So you debate , was that nice to have or whatever . But the point is we're going to challenge and say safety , asset , health asset performance .
Speaker #2: These are the kind of things that need CapEx. Have we got a strong business case? Can we see what the NPV or IRR on that particular project is?
Speaker #2: Can we see what the time for payback is? Can we see that we're getting good value for money there? All the questions that the team are now asking.
Speaker #2: You know , consistent capital process that was not the case . Just just two years ago when I started . I can assure you it was a very different approach .
Speaker #2: And Rob's brought, with his commercial team, a lot of discipline and focus there. And I don't sit there and go through and try and, you know, differentiate within those projects.
Speaker #2: They're making wise decisions. We have a committee that, you know, each of the JV partners have reps on that sits and works through that on a routine basis.
Speaker #2: And I think they're making good decisions to drive very careful capital allocation across the business.
Speaker #11: Well thank you . And then the second one again on Greenbushes , maybe around what specific actions could be included in that mining optimization program besides opening up the ore , any sort of detail around there , blending tighter feed control ?
Speaker #11: Anything that you could sort of add to that conversation?
Speaker #2: Yeah . I mean , go back to the last couple of quarters we've had slides on this . There's kind of a list of the programs that are underway and certainly there's the , you know , looking at the the ore body itself , all characterization block model , the schedule , etc.
Speaker #2: , which is the big picture . Then you do get into the different head grades or , you know , and how we do blending and , and the run of mine feed into the plants .
Speaker #2: The asset health and asset performance of those plants and making sure you're getting lots of uptime at drives , recoveries and throughput , product grades .
Speaker #2: The recoveries , I mean , you know , it's a pretty full program . I don't think there's anything I've worked through in my experience in other mines that we're not tackling as a lever here .
Speaker #2: Rob's got a lot of fronts open. He's working on to drive that uplift in improvement, uplift, and improvement in performance.
Speaker #2: So if you went through that list from prior quarters and we can drop it in and maybe try and add a bit more color for for next time , that's , that's all in play .
Speaker #11: Thank you. I'll pass it on.
Speaker #1: Thank you. Your next question comes from Levi Spry from UBS. Please go ahead.
Speaker #8: Hi .
Speaker #12: G'day . Yeah , thanks for your time . Just come back to a couple of questions at the start . So just in terms of guidance , can you can you talk through what's embedded in your your guidance for the ramp up of CB three ?
Speaker #12: I think you previously said a 12-month ramp-up, and this quarter is going to be the same as last quarter. So, can you just walk us through that for the second half?
Speaker #2: Yeah I haven't we're not breaking that out specifically . Levi . We've got obviously the plan that the teams put together , we're not going to overpromise on a ramp up because you never know .
Speaker #2: You know how those things start . They should be you know , a rapid ramp up front end loaded . But you don't want to bank that .
Speaker #2: We don't provide a breakout of the guidance or that detail at this point, so I can't give you any more detail or clarity.
Speaker #2: Once we start , we can probably give you an update and indicate how we're seeing that against what we anticipated . But , you know , at this stage , I guess the key takeaway is that , you we expected the first half of this financial year would be softer given grades .
Speaker #2: And obviously, we would have a stronger production rate through the second half of this financial year.
Speaker #12: Okay . Thank you . And then in terms of finished inventory , can you give a feel for where that sits today ? I guess that yeah .
Speaker #12: End of October, we built a bit during the quarter.
Speaker #2: I'm not sure. What's the question? Are you asking about inventories?
Speaker #12: How much concentrate inventory do you have lying around?
Speaker #2: I don't have the number top of mind. I don't know if you do know. No, I don't. I don't have that.
Speaker #2: Unfortunately . Levi , I think you saw through the last two quarters . I mean , sometimes timing of shipments can move and we'll get a build and then a draw down .
Speaker #2: That was , you know , it was a big , big run out in July . I . Yeah I don't have the sort of at hand inventory number in front of me now I would I mean I'd say , look there's not there's not much to see there .
Speaker #2: The team , they ship it as we produce it . So it , it . Yeah . I think it's pretty stable .
Speaker #12: Okay . You built 20,000 tonnes for . Yeah . All right . And then just in terms of conversion costs at Kwinana , just confirming that there's no costs for spod in there .
Speaker #2: No, that's just a product conversion cost. Yeah.
Speaker #12: Yeah, okay. Thank you.
Speaker #2: Thanks , Levi .
Speaker #1: Thank you. Your next question comes from Mitch Ryan from Jefferies. Please go ahead.
Speaker #13: Morning , Ivan . Just one question for me . Can you just quantify the financial impact of the lithium support program at Kwinana , please ?
Speaker #2: Well , yeah , we don't break out the specifics there . That's , you know , just a function of those agreements . I would say clearly , we are receiving benefits .
Speaker #2: They're very welcome. Great that the West Australian is contributing, but we don't actually carve out the quantum of that. And that's just a function of the agreements.
Speaker #13: Okay. But that would be offsetting the conversion costs or helping to keep them.
Speaker #2: Yeah . Sorry . Yes it does offset the conversion costs . Naturally . So things like our our energy costs and other consumables , there's a there's a you know obviously a benefit there .
Speaker #3: And just to add just to add to that , it is not lumpy anymore . We had a catch up in the last couple of quarters .
Speaker #3: So, it’s stabilizing now.
Speaker #13: Okay. So does that mean you're receiving it on a monthly basis or similar?
Speaker #3: Yeah, or similar balanced over the quarter.
Speaker #13: Okay. Appreciate the color. Thank you.
Speaker #1: Thank you. Your next question comes from Ben Lyons from Jordan Securities. Please go ahead.
Speaker #14: Oh, thanks. Good day, Ivan and Cath. Just one question from me. This is a similar line of questioning to Frido and Hof.
Speaker #14: I guess just noting the exploration costs of $10 million and the corporate and other costs of $20 million for the quarter. If I include the share purchases there.
Speaker #14: I mean, Cath called out short-term incentives as being a significant part of that. So, what was the extent of those incentives given the sustained underperformance of this business?
Speaker #14: And when can we expect to see a meaningful reduction in the level of corporate costs, given the relative lack of operated assets in the business?
Speaker #14: Thanks .
Speaker #2: Well , Ben , we don't we didn't provide any detailed guidance on the breakout . I mean , you can go through the REM report and you can sort of see the or in the annual reports got got all of that background and detail in it .
Speaker #2: The corporate costs . I mean , if you and we've looked at the numbers , if you do the comparison and we aggregate our corporate costs , we don't allocate a lot back to , to Nova .
Speaker #2: I think we've continued to trend those down. We've explained the work that's been worked, delivered around forest and Cosmos. So we've sort of addressed those assets.
Speaker #2: I feel like the team's made great progress reducing those costs quarter on quarter. Since I've been here, they've been very frugal and focused on it.
Speaker #2: We've benchmarked it. We feel like that work is well, and where we're sitting is in good shape and a function of where we're at with Nova.
Speaker #2: Naturally , as Nova winds down , then we'll look at , you know , obviously what that needs to be in the context of the rest of the business .
Speaker #2: But yeah , I don't I don't think that's out of out of step . The exploration spend . We've obviously made a massive change from where we were when I started in the business .
Speaker #2: And signposted that. The work that's going on targets we're pursuing everything; everything is going through a lot more rigor in terms of the financial and economic assessments.
Speaker #2: Before we we commit to it and we'll continue to keep that challenge up . But we feel like that's an important part of of our business and where we're investing for value .
Speaker #14: Okay, thanks, Oliver.
Speaker #1: Thank you. Your next question comes from Austin Yun from Macquarie. Please go ahead.
Speaker #15: Moni, Island team, first question on Kwinana. Just note that your JV partner commissioned a new hydroxide plant in China in September.
Speaker #15: And the commissioning and ramp up seems to be working all right . Just wondering if there has been any discussions posted from the JV side for learning for Kwinana , or would that serve as a wake up call for them to really be more ready to walk away from Kwinana ?
Speaker #15: To capacity with the second one? Thank you.
Speaker #2: Okay , thanks , Austin . I look you'd have to ask Dante for more on their views on on Kwinana , but yeah , certainly we followed from a distance .
Speaker #2: Probably don't have any more than you do . They've done an extremely good job ramping up their new asset in China . Very good construction , commissioning , ramp up .
Speaker #2: It's, you know, been a great story, and it's a parallel of what we see on many other refinery assets in this space.
Speaker #2: In China . And I think it just points to the nature of the challenge at Kwinana . It's fundamental to the design and construction and engineering of the asset here .
Speaker #2: The team aren't , you know , not doing their best . They're trying hard every day , but they are fundamentally challenged with the reliability and the underlying engineering and performance of the asset that they're faced with , which is , you know , a pretty high bar to get over .
Speaker #15: Thank you . Second one , just on the green bushes , quite a clear on the production profile , which will be second half weighted .
Speaker #15: Can you understand the shipping profile? Is there any flexibility for you to pump out a bit more in the second quarter?
Speaker #15: Just noting that, you know, the market is tightening. Now we can see visible lithium carbonate inventory drawing down, and the futures price is going up.
Speaker #15: So can you take any opportunity to sell more product? Thank you.
Speaker #2: Well, I think, look, we basically work on a model of just selling and shipping whatever's produced there. At some points, there will be some congestion and challenges.
Speaker #2: Just normal port . Port operations . But you've seen in prior quarters the team's ability to ship and sell materially higher volumes than , than this quarter .
Speaker #2: For example . So I don't think that's a big issue . I know Rob's been working through the plans for the ramp up with CP3 recognizing the extra volume they need to deal with .
Speaker #2: They've got a good plan in place . So I you know , I think we'll we'll basically just continue to target a place a situation where our sales and shipping matches or broadly matches production quarter to quarter .
Speaker #15: Okay. So the second quarter will still be a production matching the sales number.
Speaker #2: Correct ? Yeah .
Speaker #15: Okay. Thank you. Okay. Apart from.
Speaker #2: Okay. Thanks, Austin.
Speaker #1: Thank you. There are no further questions at this time. I'll now hand back to Mr. Vella for closing remarks.
Speaker #2: Okay . Thanks , Darcy . Thanks for the questions . And , you know , I guess I just reflect on the the drive or the pull for more information .
Speaker #2: I hear you , and we're doing our best . We will share what we can naturally . That's within the the context of the joint venture .
Speaker #2: And, you know, I appreciate how important that is for you to get more visibility and more confidence in what is the best hard rock lithium asset in the world.
Speaker #2: Rob and the team are doing , you know , really , really good work improving that . They're working through a bunch of issues and challenges .
Speaker #2: They look at that long term plan and and really optimizing it . And naturally that's a big part of what I know will also help build your understanding of of where their focus is and what sort of improvements you can expect .
Speaker #2: To summarize, key messages: look first on safety. I'm really pleased to see the continued improvement there, and that's something that we'll keep focused on.
Speaker #2: Right to the end of of Nova's life . Naturally , the lessons and the maturity that we build through our business will will carry with us .
Speaker #2: Nova had an inline quarter and delivered well against what we expected from our mine plan, tracking well for the life of mine.
Speaker #2: Nickel tons that we've indicated and I think the last point was , you know , just I'd take your your questions , Ben , but the team are managing costs very thoughtfully .
Speaker #2: We continue to challenge every dollar we spend, and we've generated positive cash flow through this quarter, which I was really pleased to see.
Speaker #2: We're very conscious that we don't want to spend beyond our means and ultimately protect the strong balance sheet that IGO has, and prepare ourselves for the future.
Speaker #2: On that basis, thanks everyone for joining and listening in, and covering some good questions.