Q3 2025 Neo Performance Materials Inc Earnings Call

November 14, 2025

Good morning, and welcome to the meal for foremost with you real strict quarter 2025 earnings conference call for opening remarks, and introduction that each article over Q Corrine Murray General Counsel Paul.

Please go ahead.

Karen Anne Murray LTD.): Thank you operator, and good day everyone. Today's call is being recorded and a replay will be available starting tomorrow in the Investor Center on our website at neomaterials.com. Our call will be accompanied by a live webcast presentation. If you are joining us online, the slides will advance automatically as we progress through the discussion. You can also download a copy of the presentation from our website. On today's call are Rahim Suleman, Neo's President and Chief Executive Officer, and Jonathan Baksh, Neo's Chief Financial Officer. Please note that some of the information you will hear during today's presentation and discussion will consist of forward-looking statements, including, without limitation, those regarding revenue, EBITDA, adjusted EBITDA, product volumes, product pricing, income and expense measures, cash returns, operational changes and future business outlook, including potential expansion plans and agreements. Actual results or trends could differ materially from those discussed today.

Karen Anne Murray ): Thank you operator, and good day everyone. Today's call is being recorded and a replay will be available starting tomorrow in the Investor Center on our website at neomaterials.com. Our call will be accompanied by a live webcast presentation. If you are joining us online, the slides will advance automatically as we progress through the discussion. You can also download a copy of the presentation from our website. On today's call are Rahim Suleman, Neo's President and Chief Executive Officer, and Jonathan Baksh, Neo's Chief Financial Officer. Please note that some of the information you will hear during today's presentation and discussion will consist of forward-looking statements, including, without limitation, those regarding revenue, EBITDA, adjusted EBITDA, product volumes, product pricing, income and expense measures, cash returns, operational changes and future business outlook, including potential expansion plans and agreements. Actual results or trends could differ materially from those discussed today.

Thank you operator, and good day, everyone. Today's call is being recorded and a replay will be available starting tomorrow in the Investor Center on our website at Neal materials Dot com.

The call will be accompanied by a live webcast presentation. If you are joining us online the slides will advance automatically as we progressed through the discussion you can also download a copy of the presentation from our website.

On today's call are Rahim Sulaiman, Neo as President and Chief Executive Officer, and Jonathan Bach, Nicos, <unk> Chief Financial Officer.

Please note that some of the information you will hear during today's presentation and discussion will consist of forward looking statements, including without limitation those regarding revenue EBITA adjusted EBITA product volumes product pricing income and expense measures cash return.

These operational changes and future business outlook, including potential expansion plans and agreements.

Actual results or trends could differ materially from those discussed today.

Karen Anne Murray LTD.): For more information, please refer to the risk factors discussed in Neo's most recent financial filings, which are available on SEDAR+ and on our website. Neo assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. Financial amounts presented today will be in US dollars. Non-IFRS financial measures will be used during this conference call, and information regarding reconciliation to the IFRS measures is set out in the financial statements and MD&A. I will now turn the call over to Rahim.

Karen Anne Murray ): For more information, please refer to the risk factors discussed in Neo's most recent financial filings, which are available on SEDAR+ and on our website. Neo assumes no obligation to update any forward-looking statements or information which speak as of their respective dates. Financial amounts presented today will be in US dollars. Non-IFRS financial measures will be used during this conference call, and information regarding reconciliation to the IFRS measures is set out in the financial statements and MD&A. I will now turn the call over to Rahim.

For more information please refer to the risk factors discussed in <unk>, most recent financial filings, which are available on SEDAR plus and on our website.

Oh assumes no obligation to update any forward looking statements or information, which speak as of their respective dates financial amounts presented today will be in U S dollars non Io for rest financial measures will be used during this conference call and information regarding reconciliation to the I FRS measures has set out.

In the financial statements and MTA.

I will now turn the call over to Rajiv.

Rahim Suleman: Good morning, everyone, and thank you for joining us today. Let's move to slide 4. The Q3 was another strong period for Neo, marked by continuing to execute our growth strategy in global rare earth magnetics, momentum across the business and end markets, and solid financial results. We are advancing our strategic growth plans as an integrated rare earth magnetics and critical materials company. Our product platforms and technologies continue to benefit from mega trends in electrification, robotics, AI, and clean energy. The industry is accelerating its need for critical materials from both robust and localized supply chains. It's important to note that for Neo, we are well prepared to grow into this generational opportunity in rare earth magnetics. Neo, of course, has been in the rare earth magnetic space for 30 years and already has an integrated supply chain with rare earth separation in Europe for decades.

Good morning, everyone and thank you for joining us today.

Move to slide four.

The third quarter was another strong period for Neil.

By continuing to execute our growth strategy and global rare Earth magnetics momentum across the business and end markets and solid financial results.

We are advancing our strategic growth plans as an integrated rare Earths magnetics and critical materials company, our product platforms and technologies continue to benefit from Megatrends electrification robotics, AI and clean energy.

And the industry is accelerating its need for critical materials from both robust and localized supply chains.

It is important to note that for Neal we are well prepared to grow into this generational opportunity in various magnetics. Neil of course has been in the rare Earth magnetic space for 30 years and already has an integrated supply chain with rare separation in Europe for decades.

Rahim Suleman: Thanks to our operational history, we are extremely well-positioned to capture more opportunities with the focus in critical materials to serve our long-standing customers as they need to be served. Moving to slide 5. Our new European permanent magnet facility held its grand opening in September, a major milestone for Neo and indeed all of the critical material space in Europe. The event drew senior government officials from the European Commission and customers from major automotive and technology OEMs up from across Europe and North America. Our successful grand opening of this European magnet plant is a tangible demonstration of how industrial policy, customer commitment, and private investment can converge to create a resilient and regionalized supply chain. Our partnerships with government and industry stakeholders in Europe underscore the strategic value of this project.

Thanks to our operational history, we are extremely well positioned to capture more opportunities with the focus in critical materials to serve our long standing customers as they need to be served.

Moving to slide five.

Our U European permanent magnet facility held its grand opening in September a major milestone for Neil and indeed, all of the critical materials space in Europe.

And two senior government officials from the European Commission and customers for major automotive and technology Oems.

From across Europe, and North America.

Our successful Grand opening of this European Mega plant is a tangible demonstration of how industrial policy customer commitment and private investment can converge to create a resilient and regionalized supply chain.

Our partnerships with government and industry stakeholders in Europe underscore the strategic value of this project.

Rahim Suleman: It's not just a plant, it's the cornerstone of a European magnet ecosystem designed to support the transition to electrification, clean energy, and digital technologies. The early feedback from customers has been exceptional, with OEMs recognizing that Neo's European presence provides the reliability, transparency, and ESG assurances all increasingly required in critical material supply chains. This facility is designed as a scalable platform. Phase One A establishes 2,000 metric tons of annual capacity, supporting both pilot production and initial customer programs for traction motors and eDrive systems. The next step, Phase One B, is already being planned and will expand the site to approximately 5,000 tons. Given overwhelming customer demand, Neo will also expand its product offerings and magnetic solutions toward additional applications, including accessory drive systems, wind turbines, robotics, drones, and automation. This endeavor will be one of the largest integrated magnet facilities in the Western Hemisphere.

It's not just the plant it's the cornerstone of a European makes it ecosystem designed to support the transition to electrification clean energy and digital technologies.

The early feedback from customers has been exceptional with Oems recognizing that neil's European presence provides the reliability transparency and ESG assurances all increasingly required and critical material supply chain.

This facility is designed as a scalable platform phase one eight establishes 2000 metric tons of annual capacity supporting both pilot production and initial customer programs for traction Motors and E Drive systems. The next step phase one b is already being planned and will expand the site too.

Ultimately 5000 tonnes.

Given overwhelming customer demand Neil will also expand its product offerings and magnetic solutions toward additional applications, including accessories drive systems wind turbines robotics drones and automation.

Endeavor will be one of the largest integrated maintenance facilities in the western hemisphere.

Rahim Suleman: Importantly, this growth can be achieved within the existing site footprint, providing an efficient pathway to scale as customer commitments, responsible launch timelines, and policy incentives align. At the grand opening, Neo also showcased our European rare earth separation business, highlighting the integrated nature of Neo's existing business. We are in the process of installing a heavy rare earth separation line in Europe as well, building on the vast infrastructure, skills, technology, and operational history that we already have. We expect to start separating heavy rare earths at small scale later in 2026. Moving to slide 6. Equally important this quarter was the signing of our expanded strategic partnership with Bosch, one of the world's most respected automotive technology leaders.

Importantly, this growth can be achieved within the existing site footprint, providing an efficient pathway to scale, that's customer commitments responsible launch timelines and policy incentives aligned.

At the Grand opening Neil also showcased our European rare Earth separation business, highlighting the integrated nature of nios existing business we.

We are in the process of installing a heavy rare earth separation line of Europe, as well building on the vast infrastructure skills technology and operational history that we already have.

We expect to start separating heavier errors at small scale later in 2016 2026.

Yeah.

Moving to slide six.

Equally important this quarter was the signing of our expanded strategic partnership with Bosch one of the world's most respected automotive technology leaders. This memorandum of understanding extends a long standing relationship and formalize. This collaboration on the supply of advanced railroads Magnetics for Bosch is next generation.

Rahim Suleman: This memorandum of understanding extends a long-standing relationship and formalizes collaboration on the supply of advanced rare earth magnetics for Bosch's next generation e-motor platforms and other applications. The agreement provides a multi-year framework for magnet supply from our new European facility and underscores Bosch's confidence in Neo's technical capabilities, execution record, and alignment with their commitment to resilient and localized supply chains. This MOU represents a pivotal commercial milestone and a clear validation of our strategy of investing in Europe. It directly connects Neo's new magnet capacity with another leading tier one supplier. The multi-year nature of this agreement shows Bosch's desire to secure long-term capacity while reflecting one of the key mantras at Neo. It is about working together and managing responsible launch curves.

<unk> E motor platforms and other applications the.

The agreement provides a multiyear framework for maintenance supply from our new European facility, and underscores boxes confidence and newest technical capabilities execution record in alignment with their commitment to resilient and localized supply chains.

This Mou represents a pivotal commercial milestone and a clear validation of our strategy of investing in Europe. It directly connects meals, new magnet capacity with another leading tier one supplier.

The multi year nature of disagreement shows bosses desire to secure long term capacity, while reflecting one of the key mantra that Neal it is about working together and managing responsible launch curves.

Rahim Suleman: In addition to Bosch and our first awarded customer, Schaeffler, Neo continues to advance qualification programs and contract discussions with additional automotive, industrial, and renewable energy customers. These engagements are translating into providing long-term demand visibility and supporting our path to scale. I think what should be of particular interest to our shareholders and partners is the nature of Neo's awards and Neo's customers. These are firm awards for real multi-year programs with difficult technical specifications and for which we have already delivered samples. These programs are with some of the most advanced and largest motor manufacturers in the world. After all, to a magnet maker, the motor manufacturer, which is sometimes an OEM and sometimes a tier one, is the customer. Neo and Magnequench have served motor manufacturers for decades. These are our customers. They know us well, and we will continue to grow with them.

In addition to boss and our first award at customer Schaeffler, Neil continues to advance qualification programs in contract discussions with additional automotive industrial and renewable energy customers. These.

These engagements are translating into providing long term demand visibility and supporting our path to scale.

I think what should be of particular interest to our shareholders and partners is the nature of Neil's awards and nios customers.

These are firm awards for real multi year programs with difficult technical specifications and for which we have already delivered samples.

These programs are with some of the most advanced and largest motor manufacturers in the world After all to Omega maker the.

The motor manufacturer, which is sometimes an OEM and sometimes a tier one is the customer and Neil and Magna Quench has served motor manufacturers for decades. These are our customers. They know us well and we will continue to grow with them.

Rahim Suleman: Shifting gears to slide seven. We are making meaningful progress in simplifying our portfolio and focusing our capital allocation on the highest value segments. In 2025We have continued to deliver steady EBITDA expansion driven by operational efficiencies, improved product mix, and a disciplined approach to cost management. In our two largest manufacturing facilities, including the emission catalyst facility we opened in 2024, we are seeing significant conversion cost savings with the introduction of new automation and advanced data analytic techniques applied to our established manufacturing processes. We have also made advances in sustainability. Neo's Rare Metals business continues to expand its recovery and recycling capabilities, including gallium and hafnium, supporting both environmental and economic goals. These capabilities not only reduce waste, but also strengthen our supply chain security.

Shifting gears to slide seven.

We are making meaningful progress in simplifying our portfolio and focusing our capital allocation on the highest value segments.

In 2025, we have continued to deliver steady EBITDA expansion driven by operational efficiencies improved product mix and a disciplined approach to cost management.

Our two largest manufacturing facilities.

The environmental catalyst facility. We opened in 2024, we are seeing significant conversion cost savings with the introduction of new automation and advanced data analytic techniques applied to our established manufacturing processes.

We have also made advances in sustainability.

Those rare metals business continues to expand its recovery and recycling capabilities, including gallium and have him supporting both environmental and economic goals. These capabilities not only reduce waste, but also strengthen our supply chain security.

Rahim Suleman: From a liquidity standpoint, our balance sheet gives us the flexibility to advance Phase One B of the European magnet expansion, invest in next-generation processing technologies, and pursue additional opportunities that enhance our downstream value add capabilities. As this slide 8 illustrates, Neo continues to be a pure play beneficiary of the global shifts reshaping supply chains for critical materials. This is the convergence of 3 powerful forces. The macro demand for electrification, robotics, AI, and clean energy technologies, public policy tailwinds and customers driving regionalization, and our own unique asset base, technical experience, and years of operational excellence. Neo is positioned at the center of these 3 key success factors. Our differentiated platform enables us to meet customers' needs across geographies and technologies, from magnetics to catalysts to rare metal recycling.

From a liquidity standpoint, our balance sheet gives us the flexibility to advance phase one b of the European magnet expansion.

First in next generation processing technologies, and pursue additional opportunities that enhance our downstream value added capabilities.

And as this slide eight illustrates.

<unk> continues to be a pure play beneficiary of the global shifts reshaping supply chain for critical materials is the convergence of three powerful forces.

The macro demand for electrification robotics, AI and clean energy technologies public.

Public policy tail wins and customers driving regionalization.

And our own unique asset base techno experience and years of operational excellence Neil is positioned at the center of these three key success factors.

Our differentiated platform enables us to meet customers' needs across geographies and technologies for magnetics to catalysts to bare metal recycling.

Rahim Suleman: These markets are supported by enduring macro trends rather than short-term cycles, which gives us the confidence in the durability of our growth plans. Our teams have done a remarkable job executing on complex projects across multiple geographies, maintaining safety, cost discipline, and a long-term focus on profitability. I would like to thank them for their hard work and dedication. With that, I will now turn the call over to Jonathan for the financial review.

These markets are supported by enduring macro trends rather than short term cycles, which gives us the confidence in the durability of our growth plans.

Yeah.

Our teams have done a remarkable job executing on complex projects across multiple geographies, maintaining safety cost discipline and our long term focus on profitability I would like to thank them for their hard work and dedication and with that I will now turn the call over to Jonathan for the financial review.

Jonathan Baksh: Thank you, Rahim. Good morning, everyone. Moving to slide 10. For Q3, Neo generated $122 million in revenue and $19 million in adjusted EBITDA, reflecting a resilient demand and strong execution across all three business segments. Year to date, adjusted EBITDA stands at $55 million, up 27% compared to the same period last year. Given the solid results so far this year, we have raised our full year 2025 guidance to a range of $67 to $71 million, up from $64 to $68 million when we last reported in August. Growth this quarter was driven primarily by increased magnet volumes up about 20% year-over-year, combined with solid contribution from emission catalyst and Rare Metals recycling.

Thank you Rahim and good morning, everyone moving to slide 10 for the third quarter, new generated $122 million in revenue and $19 million and adjusted EBITDA, reflecting a resilient demand and strong execution across all three business segments.

Year to date, adjusted EBITDA stands at $55 million up 27% compared to the same period last year given the solid results. So far this year, we have raised our full year 2025 guidance to a range of <unk> $67 million to $71 million up from $64 million to $68 million. When we last reported in August.

Growth this quarter was driven primarily by increased magnet volumes up about 20% year over year combined with solid contribution from emission catalyst and rare metals recycling.

Jonathan Baksh: Our margin profile remains resilient despite market volatility, reflecting the benefits of operational efficiency, pass-through pricing, and previous portfolio actions that divest highly volatile assets. With that said, during the quarter, we experienced some benefit from customers pulling demand forward, along with favorable movements in rare earth prices. While we continue to use pass-through pricing mechanisms in our customer contracts, short-term margin impacts from price fluctuations may still occur. These dynamics underscore the importance of our disciplined approach to managing volatility and maintaining predictable performance. Moving to slide 11, I'll touch briefly on performance by segment. Magnequench delivered strong profitability and volume growth in Q3, with volumes up 21% year-over-year and adjusted EBITDA rising 27% to $8.1 million.

Our margin profile remains resilient despite market volatility, reflecting the benefits of operational efficiencies pass through pricing and previous portfolio actions that diverse highly volatile assets.

With that said during the quarter, we experienced some benefit from customers pulling demand forward along with favorable movements in rare earth prices, while we continue to use pass through pricing mechanisms in our customer contracts short term margin impacts from price fluctuations may still occur. These dynamics underscore the importance of our disciplined approach to managing volatility and maintained.

Predictable performance.

Moving to slide 11, I'll touch briefly on our performance by segment.

<unk> delivered strong profitability and volume growth in the third quarter with volumes up 21% year over year, and adjusted EBITDA rising 27% to $8 $1 million year to date adjusted EBITDA reached $22 4 million up 20% from last year supported by higher volumes operational efficiency and disciplined cost management.

Jonathan Baksh: Year to date, adjusted EBITDA reached $22.4 million, up 20% from last year, supported by higher volumes, operational efficiency, and disciplined cost management. Growth reflected solid underlying demand and customer restocking activity amid evolving supply chain and geopolitical conditions. Bonded magnet shipments reached a record quarterly high of 38% year-over-year, driven by demand in automotive, AI data centers, and energy-efficient applications. Bonded powder volumes increased 18%, reflecting continued market share gains and healthy downstream demand. Moving to slide 12, the Chemicals & Oxides segment delivered another strong quarter with adjusted EBITDA up 213% year-over-year and 358% year to date, reaching $4.1 million and $16.4 million respectively. These results are reflective of higher rare earth prices, portfolio transformation, and continued operational discipline.

Growth reflected solid underlying demand and customer restocking activity amid evolving supply chain and geopolitical conditions bonded magnet shipments reached a record quarterly high of 38% year over year, driven by demand in automotive AI data centers and energy efficient applications.

While bonded powder volumes increased 18%, reflecting continued market share gains and healthy downstream demand.

Moving to slide 12, the chemicals and oxides segment delivered another strong quarter with adjusted EBITDA up 213% year over year, and 358% year to date, reaching $4 1 million and $16 $4 million respectively. Please.

The results were reflective of higher rare earth prices portfolio transformation and continued operational discipline. Following the sale of the Chinese separation of assets and the relocation of the emission control catalyst operation. The business is now focused on higher margin growth areas, including emission catalysts and wastewater treatment solutions demand remains.

Jonathan Baksh: Following the sale of the Chinese separation assets and the relocation of the emission control catalyst operation, the business is now focused on higher margin growth areas, including Emission Catalyst and Wastewater Treatment solutions. Demand remains robust with Emission Catalyst volumes up 20% in the quarter and Wastewater Treatment volumes up 42%, driven by global sustainability and environmental regulations. The segment also continues to strengthen its European capabilities, operating one of the region's few non-captive separation facilities and advancing a new Heavy Rare Earth Separation pilot line, which remains on track and on budget as construction nears completion. Products continue to benefit from tighter environmental standards globally, particularly in Asia and Europe.

Robust with emission catalysts volumes up 20% in the quarter and wastewater treatment volumes up 42% driven by global sustainability and environmental regulations.

The segment also continues to strengthen its European capabilities operating one of the region's few non captive separation facilities and advancing our new heavy rare Earth separation pilot line, which remains on track and on budget as construction nears completion.

Products continue to benefit from tighter environmental standards globally, particularly in Asia and Europe.

Jonathan Baksh: Moving to slide 13, the Rare Metals segment delivered resilient financial performance with adjusted EBITDA of $11.5 million for the quarter and $30.9 million year-to-date, down 30% and 10% respectively from last year, reflecting the anticipated normalization of hafnium prices after record highs in 2024. Despite this, end market demand remained strong across aerospace, industrial gas turbine, and semiconductor applications, supported by continued global investment in advanced manufacturing and clean energy technologies. While hafnium margins declined 41% year-over-year as pricing stabilized, the gallium business performed well, benefiting from solid performance and regulatory tailwinds. Neo also remains one of the only gallium recyclers in North America, a key competitive advantage that supports long-term growth and market resilience. Across all three businesses, our teams have executed extremely well in balancing near-term profitability with long-term growth priorities.

Moving to slide 13.

Our metal segment delivered a resilient financial performance with adjusted EBITDA of $11 5 million for the quarter and $39 million year to date down, 30% and 10% respectively from last year, reflecting the anticipated normalization of patheon prices after record highs in 2024.

This end market demand remained strong across aerospace industrial gas turbine and semiconductor applications supported by continued global investment in advanced manufacturing and clean energy technologies, while how can your margins declined 41% year over year as pricing stabilize the gallium business performed well benefiting from solid.

Performance and regulatory tailwind.

Neil also remains one of the only gallium recyclers in North America, a key competitive advantage that supports long term growth and market resilience.

Across all three businesses, our teams have executed extremely well in balancing near term profitability with long term growth priorities.

Jonathan Baksh: Moving to slide 14 and turning to the balance sheet. Neo's financial position remains very strong. We ended the quarter with a net debt position of approximately $28 million and total liquidity exceeding $110 million, including credit facilities and government grants. Importantly, this includes a healthy gross cash balance of $61 million, reinforcing our strong financial position. Our disciplined approach to working capital and low leverage gives us the financial flexibility to fund ongoing growth projects and weather any near-term macro volatility. We also continue to prioritize shareholder returns. During the quarter, we maintained our regular dividends and NCIB while continuing to invest in growth capital projects. As we move into Q4 of the year, we expect to maintain steady momentum across our core platforms.

Moving to slide 14, and turning to the balance sheet <unk> financial position remains very strong we ended the quarter with a net debt position of approximately $28 million.

And total liquidity exceeding $110 million, including credit facilities and government grants.

Importantly, this includes a healthy gross cash balance of $61 million.

Enforcing our strong financial position.

Our disciplined approach to working capital and low leverage gives us the financial flexibility to fund ongoing growth projects and weather any near term macro volatility. We also continued to prioritize shareholder returns during the quarter. We maintained our regular dividend and then CIB, while continuing to invest in growth capital projects.

As we move into the final quarter of the year, we expect to maintain steady momentum across our core platforms.

Jonathan Baksh: Reflecting this confidence, we have raised our 2025 adjusted EBITDA guidance to a range of $67 to 71 million, underscoring our ability to deliver strong financial performance. As we move into 2026, our priorities continue to center on operational efficiency and capital discipline. With that, I'll turn the call back to Rahim for closing remarks.

Reflecting this confidence we have raised our 2025 adjusted EBITDA guidance to a range of $67 million to $71 million underscoring our ability to deliver strong financial performance and as we move into 2026, our priorities continue to center on operational efficiency and capital discipline with that I'll turn the call back to <unk> for closing remarks.

Rahim Suleman: Thank you, Jonathan. Moving to slide 16. As we approach the end of 2025, Neo is in a strong position strategically, operationally, and financially. We are executing on a long-term strategy to grow our industry-leading permanent magnet business, enabling supply chain diversity and robustness, and supporting the global energy transition and technology advancements in multiple arenas. Our focus remains on operational excellence, delivering reliable, high quality, critical material solutions to our customers, investing in innovation, and maintaining financial discipline. With our strong balance sheet, solid customer demand, and a pipeline of long-term strategic growth projects, Neo is well positioned to deliver profitable growth and long-term value for our shareholders. Thank you for joining us today, and we will now open the call for questions.

Thank you, Jonathan and moving to slide 16.

As we approach the end of 2025, Neil is in a strong position strategically operationally and financially we are executing on a long term strategy to grow our industry, leading permanent magnet business, enabling supply chain diversity, and robustness and supporting the global energy transition and technology.

<unk> in multiple arenas.

Our focus remains on operational excellence delivering reliable high quality critical material solutions to our customers investing in innovation and maintaining financial discipline.

With our strong balance sheet solid customer demand and a pipeline of long term strategic growth projects Neal is well positioned to deliver profitable growth and long term value for our shareholders. Thank you for joining us today and we will now open the call for questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star followed by the number 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star followed by the number 2. With that, our first question comes from Daniel Harms with Sidoti. Please go ahead.

Thank you and ladies and gentlemen, well now begin the question and answer session.

Ask a question you may present star followed by the number one on your telephone keypad.

Using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press star followed by the day.

Our first question comes from Daniel Harman with Sidoti. Please go ahead.

Daniel Harms: Hey, guys. Good morning. Thank you so much for taking my questions and congratulations on the great quarter. I'll start off with two and then I'll get back into the queue. Starting off with Narva now online after the grand opening and export controls continuing to tighten, I'm wondering if you're hearing from interest from customers if they are explicitly requiring localized magnet supply. If so, how do you think that's going to change the volume or quality of the programs you're being invited into? Secondly, just with Magnequench and magnet volumes seemed exceptional in the quarter once again, I'm curious if you could kind of break down how much of that strength feels structural from traction motors, data center cooling, and industrial automation versus maybe just short-term restocking from your customers. Really appreciate it, guys. Thank you.

Hey, guys. Good morning. Thank you so much for taking my questions and congratulations on the great quarter.

I'll start off with two and then I'll get back into the queue, but starting off.

With Narva now online after the Grand opening and export controls continuing to tighten and I'm wondering if you're hearing from interest from customers. If they are explicitly requiring localized magnet supply and if so how do you think that's going to change the volume or quality of the programs you are being invited into and then secondly, just with Magnum Crimson.

Magnet volumes seemed exceptional in the quarter. Once again I'm curious if you could kind of break down how much of that strength field structural from traction Motors data center cooling in industrial automation versus maybe it would be just short term restocking from your customers, but I really appreciate it guys. Thank you.

Rahim Suleman: Sure. Good morning to you, and thanks for both questions. In terms of the first question with respect to the grand opening and the continued export controls, I think you're right in terms of we are seeing increased customer interest. Although, you know, I kind of break it into two pieces. I think there was already significant customer interest when we began the planning for this facility, and we did the groundbreaking of this facility, you know, call that two, three years ago. I think customers already knew that they had a concentration risk issue that was important to them. I think with the restrictions that were put in place on, you know, in early April, it absolutely ramped up that level of tension, the level of urgency in those requirements. Those requirements remain today.

Sure.

Good morning to you and thanks for both questions. So in terms of the first question with respect to the Grand opening and the continued export controls I think youre right in terms of we are seeing increased customer interest.

Hello.

Just kind of break it into two pieces I think there was already significant customer interest when we began the planning for this facility and we did the groundbreaking of this facility.

Called out two three years ago, I think the customers already knew that they had a concentration risk issue that that was important to them I think with the restrictions that were put in place.

In early April.

Absolutely ramped up.

That level of tension, though outlook urgency and those requirements those requirements remain today, the grand opening facilitated more customers more potential customers coming and asking for more agreements.

Rahim Suleman: The grand opening facilitated, you know, more customers, more potential customers coming and asking for more agreements, and more opportunities. The MOU that we have with Bosch raised more customers to come to the door to ask for similar type of contracts or alternative type of opportunities. For us, the issue is never actually about customer demand. There is absolutely plenty of customer demand, and our customers know our capabilities, and they trust us, and they work with us. It's really just about time to launch. I think we're pretty darn confident in the sales funnel. We're pretty darn confident in our operational and technology capabilities. We are also darn confident in understanding how a plant of this size gets launched, and what a responsible way to do that is.

More opportunities the Mou that we have with Bosch raised more customers to come to the door to ask for similar type of of contracts or alternative type of opportunities, but for us. The issue is never actually about customer demand. There is absolutely plenty of customer demand and our customers know our capabilities and they trust us and they worked with US it's really just about time to launch.

I think we're pretty darn confident in in the sales funnel, we're pretty darn confident in our operational and technology capabilities.

But we are also darn confident in understanding how a plant of this size gets launched and.

And what a responsible way to do that is so from a demand perspective, there is theres really no issue.

Rahim Suleman: From a demand perspective, there's really no issue. It is figuring out what the right launch curves is and how you bring each customer on board with all of the related PPAP documentation and kind of control mechanisms that we have. You know, when you are an automotive supplier or another supplier on mass production levels, you put a lot of controls in place around your production process for every part. Every part that we win, remember, every platform, at least the traction motor platforms that we're winning, these are $50 to 100 million dollar cumulative revenue programs.

It is taking out what the right launch churches, how you break each customer on board with all of the related Pee Pap documentation.

Kind of control mechanisms that we have when you were an automotive supplier or another supplier on mass production levels, you've put a lot of controls in place around your production process for every part and every part that we win remember every platform at least the traction motor platforms that we're winning these are.

$50 million to $100 million cumulative revenue programs. When you launch them you better be good you better be right you better have your cost in place and that's the way that we approach that.

Rahim Suleman: When you launch them, you better be good, you better be right, you better have your costs in place, and that's the way that we approach that. With respect to the Magnequench volumes, your second question, extremely high order for Magnequench volumes, extremely impressive for us. I think you pointed it out correctly. It's actually both. It is demand across virtually all of the applications, we do think some of that is a response to geopolitical environments. The question that is in front of everyone will really be, is this resetting people's inventories, pipelines so that people feel more comfortable on how much inventory they're holding? Was this a temporary, like, is this a pull forward that'll get reversed in a future quarter?

With respect to the Magna quench volumes to your second question.

Extremely high quarter for megaplex volumes extremely impressive for us and I think you pointed out correctly, it's actually both.

It is demand across virtually all of the applications, but we do think some of that is a response to geopolitical environments.

That is in front of everyone well.

Really be is this.

Resetting peoples inventory pipelines.

Pipelines, so that people feel more comfortable on how much inventory, they're holding or was this.

Temporary like is this a pull forward that'll get reversed in the future quarter I think it's more likely that the pipelines are being built.

Rahim Suleman: I think it's more likely that the pipelines are being filled, and that customers wanna hold more inventory through the system. I think we'll see if that means that some of these volumes unwind or volumes just return to normal or if there's kinda continued pipeline growth. I think that the volume number of Magnequench was kind of above our forecast and expectations of what the normal business looks like. The normal business continues to grow. Traction motor business continues to grow even in the existing Magnequench segment. AI data centers continue to grow. I think all of those elements of the business are performing extremely well, and I think that they'll continue to perform extremely well.

Customers want to hold more inventory through the system.

So.

Well, we'll see if that means that some of these volumes are lighter volumes just returned to normal work. There has kind of continued slight.

Pipeline growth, but I think that the volume number which was kind of above or.

Forecast and expectations of what the normal business looks like but the normal business continues to grow traction motor business continues to grow even in the existing magna quite a segment AI data centers continue to grow so I think all of those elements of the business are performing extremely well.

And I think that they'll continue to perform extremely well.

Daniel Harms: Perfect. That's a really helpful answer. Thank you so much.

Perfect. That's really helpful answer thank you so much.

Rahim Suleman: Thank you.

Thank you.

Operator: The next question comes from Nick Boychuk with Cormark Securities. Please go ahead.

And the next question comes from Nick Boy, Chuck with Cormack Securities. Please go ahead.

Nicholas Boychuk: Thanks. Good morning, guys. Coming back to the Bosch partnership, and you mentioned that, you know, other partners are coming to you looking for similar deals. Can you give any update on how those negotiations are going, expectations with Bosch to convert that into a formal order, and your appetite to sign similar type contracts with other partners?

Thanks, Good morning, guys coming back to the Bosch partnership and you mentioned that other other partners are coming to you looking for similar deals can you give any update on how those negotiations are going expectations with Bosch to convert that into a formal order and your appetite to sign similar type contracts with other partners.

Rahim Suleman: Yeah. You know, when you say negotiations per se, it's really not negotiations in the traditional form. They're more. You know, everybody talks about what partnership means and the supply chain all needs to be partners and this, that, and everything else. I'd say it's one of the first times in my career that I feel that this is a partnership-based conversation that we're having dialogues with our customers and for others that are coming to the door and we're talking about, Look, these are the reasonable launch windows we have available at this point, and this is what the development timeline for any particular product would be. People are really understanding in terms of how do they fit into that development type pipeline and how do they fit into the launch curves.

Yes so.

When you say negotiations per se, but really not negotiations in the in the traditional form.

There are more.

Everybody talks about what partnership means in the supply chain all needs to be partners in this that and everything else I would say, it's one of the first times in my career.

I feel that this is a partnership based conversation.

That we're having dialogues with our customers and for others that are coming to the to the door and we're talking about look these are the reasonable launch windows. We have available at this point and this is what the development timeline for any particular product would be and people are.

Really understanding in terms of how do they fit into that development pipeline and how do they fit into the launch curves.

Rahim Suleman: I would say that the factor here at play is not negotiating over price or negotiating over specifications or this, that, or anything else. The factor here is saying, Okay, in order for us all to be successful on this path, they require both a level of urgency but a level of reliability. We require a level of cost certainty, so margin, confidence, as well as not putting other customers in jeopardy. I think both sides appreciate the openness of our dialogue. The opportunities are there, and we'll pivot our pace depending on how launches go and depending on what types of programs.

I would say that.

The factor here at play is not negotiating over price are negotiated with the specifications or this that or anything else to factor here is saying, okay in order for us all to be successful on this path. They require both the level of urgency butter level of reliability.

And we require a level of cost certainty so margin.

Confidence.

As well as not putting other customers in jeopardy, and I think both sides appreciate the openness of our dialogue.

So the opportunities are there and we will pivot our.

Pace, depending on how launches goal and depending on what types of programs.

Rahim Suleman: You know, we're having conversations with customers on, look, certain types of programs that have certain compositions are probably faster for us to also go through a development cycle for than compositions that are different. We just kinda make choices with the customer, but we do it in a fairly transparent and open environment because everybody wants everyone to be successful here.

Having conversations with customers on certain types of programs that have certain compositions.

I'll, probably faster for us too.

Also go through a development cycle for then then compositions that are different so we just kind of make choices with the customer, but we do it in a fairly transparent and open environment, because everybody wants everyone to be successful here.

Nicholas Boychuk: Just to clarify then that, in these development partnership conversations you're having, you're able to, you know, directly express the margin or the pricing that you need in order to justify investment, and they're comfortable with that type of a negotiation or?

Okay. So just to clarify then that in these development partnership conversations Youre, having youre able to exit.

You expressed the margin or the pricing that you need in order to justify investments and they're comfortable with that type of a negotiation.

Rahim Suleman: Yeah. Look, we're not talking about specific price at this point. Like when we talk about specific price and those things, we have a sample developed, the composition established, the product flow established, and all of those types of things. They understand that there is a difference between the Chinese cost and cost in manufacturing elsewhere in the world. I think we're fortunate in as in our manufacturing location is actually quite cost-effective. I think our customers appreciate that cost effectiveness matters, but it doesn't mean that it's the same price or the same cost as producing it in, you know, in Southeast Asia. Therefore, there is an open dialogue on the costs are not the same.

Yes look we're not we're not talking about specific price at this point, we like when we talk about specific pricing those things we have.

Sample developed.

The composition establish the product flow established in all of those types of things they understand that there is a difference.

Tween, the Chinese cost and cost and manufacturing elsewhere in the world like they were fortunate.

In our manufacturing location is actually quite cost effective I think our customers appreciate that that cost effectiveness matters.

But it doesn't mean that it's the same price or the same cost is producing it.

Southeast Asia. So therefore, there is an open dialogue on the costs are not the same it's not hostage pricing. It's it's dialogue around costs are not the same margin expectations are not the same new capital in place to return on capital expectations are not to say, but let's work together to figure out how we solve.

Rahim Suleman: It's not hostage pricing, it's dialogue around costs are not the same, margin expectations are not the same, new capital in place and return on capital expectations are not the same. Let's work together to figure out how we solve the ultimate challenge, which is a diversified supply base. They're very good conversations. It's less about price negotiation more than it is about understanding what the requirements are and how and what that path to success looks like.

The ultimate challenge, which is a diversified supply base, so they're very good conversations there.

Less about.

Price negotiation more than it is about understanding what the requirements are.

What that path to success looks like.

Nicholas Boychuk: Okay. What impact, if any, is that having on your thoughts around developing out Phase One B? Is this potentially pulling that forward, giving you a little bit more certainty to make that investment maybe sooner?

Okay, and what impact if any is that having on your thoughts around developing a phase one b is this potentially pulling that forward, giving you a little bit more certainty to make that investment maybe sooner.

Rahim Suleman: I think it's about, you know, certainty and comfort on making the investment. I think that the investment will proceed on a timeline that makes sense for the operation. It's not just about winning the programs, but each program has its own launch curve too, right? It's about finding the right time that matches all the various launch curves that we have, of the programs that we have, of those that we're onboarding and know when that capacity will be required. Again, the factor is managing the launch curves and then just planning so that we're not spending capital unnecessarily, and that we're just finding the right timeline for it. Certainly huge visibility into demand.

Yes, I think it's about it's about.

Certainty and comfort on making the investment I think that the investment will.

Proceed on a timeline that makes sense for the operation to Rochester.

Not just about winning the programs, but each program has its own launch curve too right. So it's about finding the right time that matches all of the various launch curve. So if we have of the programs that we have of those that we're onboarding and know when that capacity would be will be required again that factor is managing the launch curves and they just planning so that we're not spending.

Capital unnecessarily.

And that we're just finding the right timeline for it so certainly huge visibility into demand I guess, if you were to I would say it. This way when we started this project three years ago, we evaluated financial risk customer risk technical risk operational we evaluated a whole series of criteria for us to move forward on these and then we had levels of confidence.

Rahim Suleman: You know, I'd say it this way. When we started this project three years ago and, you know, we evaluated financial risk, customer risk, technical risk, operational risk. We evaluated a whole series of criteria for us to move forward on these, and then we had levels of confidence on each of those that ultimately led to the business decision to move forward with this. If you look at one of those criteria, which was customer acceptance, you know, it's more than 100% now. You know, if we were to look at what our criteria was, our score on customer acceptance would be greater than 100%. We still have to get through the time to launch.

On each of those that ultimately led to the business decision to move forward with this.

You look at one of those Criterias, which was customer acceptance, it's more than 100% debt.

If we were to look at what our criteria.

Our score on customer acceptance would be greater than 100%, but we still have to get through.

The time to launch.

Daniel Harms: Okay. Understood. Thanks, Rahim.

Okay understood. Thanks, Ryan.

Rahim Suleman: Thank you.

Thank you.

Operator: Again, if you would like to ask a question, simply press star one on your telephone keypad. The next question comes from Ian Gillies with Stifel. Please go ahead.

And again, if you would like to ask a question. Thank you press star one on your telephone keypad. The next question comes from Ian Gillies with Stifel. Please go ahead.

Ian Gillies: Morning, everyone.

Good morning, everyone.

Rahim Suleman: Morning.

Good morning.

Ian Gillies: Could you talk a little bit more about the heavy rare earth separation expansion plans in Estonia? Maybe a bit around ultimately how large you would like that to be, if possible, what you intend to produce. Do you expect it to be a material financial contributor and the like?

Could you talk a little bit more about.

The heavy rare separation expansion plans in Estonia, maybe a bit around ultimately how large you would like that to be a possible. What you intend to produce do you expect it to be material financial contributor and alike.

Rahim Suleman: Sure. What I'd say is on heavy rare earth separation, we also follow the same methodology of step-by-step. What we are producing here is a mini production line. It's not a lab. We've done lab stuff through all through our career. We have our Singapore lab that's been doing heavy rare earth-related stuff for 30 years. We have one of the most advanced rare earth magnetics labs in Estonia already. Obviously and all the infrastructure attached to it. This line is not a lab line. It is a mini production line.

Sure. So what I'd say is on heavy reps separation. We also follow the same methodology of step by step.

So what we are producing here is a many production lines subtle lap.

We've done lab stuff.

Also our career, we have our Singapore lab, that's been doing heavy rare related stuff or for 30 years, we have one of the most advanced whereas magnetics labs in Estonia already obviously in all of the infrastructure attached to it. So this line is about lab line. It is but it is a many production lines.

Rahim Suleman: The purpose of building the mini production line at first is, A, to roll it out and see some of the dynamics, to be able to separate for a while and get real-life experience on some of the timelines and some of the chemistry and some of the purity levels that we're going to get. It will then lead to subsequent decisions on how do we integrate that with the existing light rare earth line. There's various points in time that one can make choices around how one would integrate it or whether one would build an expansion into the light rare earth line as well, and whether one would do that on a parallel basis or an integrated basis. There's lots of decisions and planning and engineering that we would still do.

And the purpose of building the many production lines at first as a to roll it out and see some of the dynamics.

To be able to separate for a while and get real life experience on some of the timelines and some of the chemistry and some of the purity levels that we're going to get it will then lead to subsequent decisions on how do we integrate that with the existing light rare Earth line and Theres various points in time that one can make choices around how wasn't with integrated.

Or whether one would build that expansion into the light rail line as well and whether one would do that on a parallel basis or an integrated basis. So theres lots of.

Decisions and planning and engineering that we would still do again and I would say that.

Rahim Suleman: I would say that because we have the history, the knowledge, and the technical expertise to make what I say is the best decisions, right? To make the right decisions, not to just run forward with whatever one thinks is the right thing to do. We have the ability to play out different options and model different options and see how all of that comes together. To get it back to your question, the scale remains small. We haven't said specifically what the scale of the product will be. It depends largely on the feed that we're receiving. We have some heavy rare earths in our existing sets of feed, but not enough. We'll be working through stockpiles while we're also receiving material from our feed, from our existing feedstocks.

Because we have the history of the knowledge and the technical expertise to make what I would say, it's the best decisions right to make the right decisions not to just run forward with whatever one thinks is the right thing to do.

We have the ability to play out different options and model different options to see how all of that comes together so to get it back to your question. The scale remains small we haven't said specifically what the scale of the product will be it depends largely on the feed that we're receiving so we have.

Some heavy rare in our existing sets of feet, but not enough. So.

So we'll be working through stockpiles, while we're working while we're also receiving materials from our feed for our existing feedstocks, we need more feedstocks of heavy rare earth.

Rahim Suleman: We need more feedstocks of heavy rare earth generally in the world. In terms of the availability of NDPR, like, separate it into the two pieces. Do we need more feedstock to support separation, or do we know we need more feedstock to support magnets? Magnets can buy feedstock from other people, like raw material as well, and they do. This isn't an issue that is tied to our ability to make magnets. This is just an opportunity that tied to our rare earth separation business of scaling that business to be larger. We'll scale the heavy rare earth line in due course when we have better visibility to more rare earth feed. We wanted to get this mini production line in place. A, it does provide some rare earths to Magnequench, not enough. More particularly...

Generally.

In the world in terms of the availability of N DPR.

Separated into the two pieces do we need more feedstock to support separation or do we need more feedstock to support magnets magnets can buy feedstock from other people like raw materials as well and they do.

So there isn't this isn't an issue that is tied to our ability to make magnets. This is just an opportunity that tied to a river separation business of scaling that business to be larger so we will scale. The heavy rare earth like in due course, when we have better visibility to more rare earth fee, but we wanted to get this many production line in place.

Does provide some rare earth to magna question not enough.

But more particularly in its never intended to be in us, we always want to make that much to be multi sourced.

Rahim Suleman: It's never intended to be enough. We always want Magnequench to be multi-sourced. We'll always partner with Lynas and MP and others in the industry for sourcing for Magnequench. We've been partnering with them and Lynas in particular for decades. We'll continue to do that. Like, there's no dialogue on us not continuing to partner with others in the rare earth industry and wanting supply. It really doesn't matter how much we build in our Silmet separation business. Our philosophy will always be to be dual-sourced or multi-sourced in those environments. In terms of the actual economics, I think you have to wait to answer that question until we actually have a better view on what the largest and most likely form of next feedstock will be, what the exact heavy composition will be.

So we will always partner with Linus in MP and others in the industry for sourcing for Magna question, we've been partnering with them in Atlantis in particular for decades.

So we will continue to do that like Theres no dialogue on us not continuing to partner with others in the industry and wanting supply it really doesn't matter how much we build in our sone that separation business, our philosophy will always be to be dual sourced or multi sourced.

In those environments in terms of the actual economics, I think youll have to wait to answer that question until we actually have a better view on what the largest and most likely form of next feedstock will be what the exact heavy composition will be in terms of what we will separate I. Appreciate this is getting to be a long answer now.

Rahim Suleman: In terms of what we will separate, appreciate this is getting to be a long answer now. In terms of what we will separate, this is always to start by separating DY and TB because of the imminent need in magnetics for more DY and TB. The reality is, because we've been doing heavy rare earth separation for 30 years, we have customers around the world for all of the various different heavy rare earth elements. We have one of the largest global technical sales forces in rare earths. We'll have opportunity to separate other materials as well, working with our customers to satisfy their demands. You know, we haven't made those decisions as yet. As I said, we approach it on a step-by-step basis. Sorry for the long answer.

In terms of what we will separate there's always the start by separating <unk> TB because of the immediate need and magnetics for more <unk> TV, but the reality is because we have been doing heavier air separation for 30 years, we have customers around the world for all.

Of the various different heavier elements, we have one of the largest global technical sales forces in rare Earths.

So we will have opportunity to separate other materials as well.

Working with our customers to satisfy their demand, but we haven't made those decisions yet so as I said, we approach it on a step by step basis.

Sorry for the long understood.

Ian Gillies: Understood. No, thoroughness is always appreciated. Similarly around capital projects, one of the things that came up during the Estonia tour and the investor presentation was a potential expansion of Korat in Thailand. Is that a formal project yet? Or is it a thought on the back of a napkin? Like, where would you define that potential opportunity at this point in time? Because it also seems like something promising.

No thoroughness as always appreciate it.

Similarly around capital projects, one of the things that came up during the Estonia tour and the investor presentation or is it potential expansion of core AD in Thailand.

Is that a formal project yet.

Or is it a thought on the back of the napkin, where would you define that potential opportunity at this point in time, because it also seems like some promising.

Rahim Suleman: It's certainly not a thought on a napkin, but it's also not yet, and I think, you know, times are going to be measured in weeks here, not in months or quarters, where it will become an official project, which is to say I ostensibly believe it's already official project within the Magnequench planning team, but it still has to be reviewed, and, you know, go through the appropriate approval processes. I very confident in the growth rate of magnets in general, very confident in having more capacity. Probably, you know, what's really the focus of the review processes that are coming are things around capital efficiency more than opportunity.

Yes, it's certainly not a thought on a napkin.

But it's also <unk>.

Not yet.

I think it's.

Times are going to be measured in weeks here not months or quarters, where it will become.

Official project, which is to say I believe it's already official project within the magnet.

Planning team, but it still has to be reviewed.

And.

Go through the appropriate approval processes.

Very confident in the growth rate of magnets in general very confident having more.

Capacity, so probably what's really the focus of the review process that are coming are things around capital efficiency more than opportunity.

Rahim Suleman: It's likely going to happen, but it has to go through the right approval processes and have the right metrics attached to it before, you know, before we say yes or no.

It's likely going to happen, but it has to go through the rate approval processes and have the right metrics attached to it before before we say, yes or no.

Ian Gillies: Okay. Are you willing to disclose how much you think that debottlenecking could improve production by at that facility?

Okay.

Are you willing to disclose how much do you think that debottlenecking could improve production by at that facility.

Rahim Suleman: Probably not yet. I'm, you know, I think what we would be doing in Thailand would be partially debottlenecking, but frankly, it would actually be adding gross capacity because there's just more business. It would be the types of capacity and the types of programs that we would be focused on within the review process. It would be like primarily volume and product related style capacity, more than trying to solve an existing problem. Conversion costs and everything else are separate projects. There is capital that goes into conversion cost improvements. It has its own return on capital metrics that we measure. Those things kind of continue in everyday light. Expansion capital goes through a different review process.

I'll, probably not yet.

I think what we would be doing in.

Thailand would be partially debottlenecking, but frankly, it would actually be adding gross capacity because there's just more business.

And it would be the types of capacity and the types of programs that we would be focused on within the review process that it would be.

It's primarily volume.

And product related styles capacity more than trying to solve an existing problem conversion costs and everything else are separate projects that risk capital that goes into conversion cost improvements and it has its call on return on capital metrics that we measure those things kind of continue in everyday life.

Capital goes through a different route process.

Ian Gillies: Understood. Listening to your remarks on Phase One B of the Estonia expansion or phase two, however we choose to frame that, it sounded certainly a bit more optimistic even than a few months ago. A question I get often is why isn't the decision being accelerated from early 27? Like, are you putting any thought to pulling that decision forward given what you're seeing?

Understood.

Listening to your remarks on phase <unk> of <unk> expansion of our phase III <unk> choose to frame that sounded certainly a bit more optimistic given them a few months ago.

A question I get often is why isn't the decision being accelerated from early 2017. There like are you are you putting any thoughts to pulling that decision forward given what youre seeing.

Rahim Suleman: Yeah, I think so. I mean, like I said, I think that there's a number of different decision criteria that go into whether we would pull that forward. The limiting factor, as I said, is not customer interest, it's not demand. That is crystal clear that that is not the limiting factor in our decision-making process. Our decision-making process, it's frankly, it's not even about an if, it's merely about a when, and the when is merely tied to capital efficiency, and ensuring the greatest returns on shareholder capital. It's like it's, you know, we haven't committed to it, so it's odd for me to say it's not an if decision. It obviously is an if decision. I still need to see proper economics. We still need to go to the board.

Yes, I think so but I mean like I said.

I think that there is a number of different decision criteria that go into.

Whether we would pull that forward the decision the limiting factor as I said is not customer interest it's not demand.

As.

Crystal clear that that is not the limiting factor in our decision making process.

Decision, making process. It's so much it's frankly, it's not even about if it's merely about the when and the when is merely tied to capital efficiency.

Ensuring the greatest returns on shareholder capital.

Like it's.

We havent committed to it so it's hard for me to say, it's not in a position. It obviously isn't as decision is still need to see proper economics, we still need to go to the board, we still need to do a number of things, but from a customer demand perspective.

Rahim Suleman: We still need to do a number of things. From a customer demand perspective and from what we know about, you know, our ability to make the magnets and ability to understand pricing and have customers, like, all of those things are well established for us by now. Again, I'll save the decision is primarily one related to timing, and that's really just about capital efficiency and the greatest return on capital to shareholders.

From what we know about.

Our ability to make the magnets and ability to understand pricing and have customers like all of those things are.

Well established for us by now.

So again the decision on I'll say the decision is primarily one related to timing and Thats really just about capital efficiency and create the greatest return on capital to shareholders.

Ian Gillies: Okay. Last one I'll ask. At this juncture, given your conversations with whether it be the EU or specific European governments, like, do you get any sense yet as to whether any sort of similar pricing arrangements, could happen in Europe similar to what's happened with the DoD in the United States?

Okay.

Last one I'll ask you.

At this juncture given your conversations with.

Whether it be the EU or specific European governments like do you get any sense, yet as to whether any sort of similar pricing arrangements could happen in Europe similar to what's happened with the Dod.

In the United States.

Rahim Suleman: I'll break the question into two, which is to say, unfortunately, we're not gonna comment on specific conversations that we're having with various governments around the world. We, we won't provide any specifics on those dialogues. In terms of the general concept around price floors or price supports or this, that, or everything else, let's bear in mind that for Magnequench, which is, you know, the magnet-making portion of this kind of supply chain and probably the most important element of the, of the dialogue for us, the raw material is on pass through. It's less of an economic consideration for Neo in terms of Magnequench.

So I'll break the question into two which is to say Unfortunately, we're not going to comment on specific conversations that we're having with various governments around the world.

So we won't provide any specifics on those dialogues.

But in terms of the.

General concept around <unk>.

Price floors or price supports or this that or everything else.

Let's bear in mind that.

So we're making the quench which is the.

The magnet, making portion of this kind of supply chain and probably the most important element of the dialogue for us.

The raw materials on pass through so it's less of an economic consideration for Neil in terms of magnet, which it just affects the viability to the customers' side of things and provide certainty to our customer in terms of pricing and I think those things are valid, but there's pros and cons to both in terms of the separation.

Rahim Suleman: It just affects the viability to the customer's side of things and provides certainty to a customer in terms of pricing, and I think those things are valid and, you know, there's pros and cons to both. In terms of the separation side of the business, I think it does have a bigger impact to the separation side of the business. You know, we're not a mining company, so it doesn't have that level of impact. A couple of different dynamics to put into the mix, as I said, we won't comment specifically on government conversations.

Side of the business I think it does have a bigger impact to the separation side of the business, but we're not a mining company. So it doesn't have that level of impact. So a couple of different dynamics to put into the mix, but is that we won't comment specifically on government conversations.

Ian Gillies: Fair enough. Had to try. Thanks very much. I'll turn it back over.

Fair enough had to try thanks.

Thanks, very much I'll turn it back over.

Rahim Suleman: Yeah, absolutely. You know, we are everybody's favorite phone call these days.

Absolutely, but we are we are everybody's favorite phone call. These days.

[laughter].

Operator: Thank you. I'm showing no further questions at this time. Ladies and gentlemen, thank you all for joining us. This now concludes today's conference call. You may now disconnect.

Thank you and I'm showing no further questions at this time, ladies and gentlemen, Thank you all for joining US. This now concludes today's conference call you may now disconnect.

Yes.

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