IGO Limited

Thank you, Risa. Good morning, everyone, and thank you for joining our call this morning as we present IGO's audited financial statements and results for the 2022 financial year, which we released to the ASX this morning.

Joining me on the call today from Sydney is Scott Steinkrug, our Chief Financial Officer, who will be available during the Q&A session at the end of the call. Slide 2 highlights our cautionary statements and disclaimer.

Of note, all currency announced in the presentation today are in Australian dollars unless otherwise noted. Moving to Slide 3.

To begin, I wanted to talk to sustainability and some of the work programs we are progressing across the business to continue to be a leader in sustainability practices and reporting. Our focus on safety and well-being has resulted in a reduced incident severity over the past few years, and our culture of care has enabled us to better manage the impacts of COVID-19.

I am proud of the way in which our people have demonstrated adaptability and collaboration during this time. In parallel, we progressed our carbon reduction initiatives through the commitment to expanded solar and energy storage capacity at Nova.

Our internal carbon price implemented 12 months ago has generated approximately $3.7 million of internal funding that we will apply to our carbon reduction and offset initiatives, and it has been particularly gratifying to see the engagement and ingenuity of our people and partner organizations to our carbon reduction initiatives. With respect to see the continued external [ production ], we will see from key sustainability indexes on the quality and transparency of our sustainability reporting, and I note that we released our 2022 Sustainability Report today.

Moving to Slide 4. We're also incredibly proud of what we have achieved for the year.

Operationally, we met or bettered production and cost guidance at both Nova and Greenbushes and delivered the first battery grade lithium hydroxide production from Kwinana. Financially, we generated record revenue and underlying EBITDA, which was underpinned by record financial performance from Nova and a maiden profit contribution from the lithium joint venture.

In parallel, we continue to transform the business through the strategic acquisition of Western Areas while also progressing our exploration portfolio towards discovery. And finally, we successfully delivered for our stakeholders, delivering improved outcomes for shareholders, a stronger culture and value proposition for our people and proactive caring engagement with our host communities and traditional owners.

Moving to Slide 5, where we set out our financial results for the 2022 financial year. Strong commodity prices, combined with consistent operating performance, generated higher revenue from continuing operations of $903 million and higher underlying EBITDA of $717 million when compared to the prior year.

Net profit after tax at $331 million was lower year-on-year due to the absence of the one-off gain recorded in the 2021 financial year relating to the divestment of Tropicana. On a normalized basis, net profit after tax more than doubled year-on-year.

Similarly, underlying free cash flow was lower in the 2022 financial year due to tax payments during the year totaling $199 million, of which $140 million related directly to the gain on sale of Tropicana last year. The acquisition of Western Areas was funded via a new $900 million debt facility and approximately [ $363 million ] of existing cash, resulting in the year-end net debt position of $533 million.

Moving to Slide 6, where we illustrate the continued improvement in financial metrics over recent years. These results position IGO well for the future and reflect the transformation of our portfolio and our disciplined financial management.

I wanted to point out here that reported revenue for the 2022 financial year does not reflect revenue generated within the lithium joint venture as we report this contribution at the EBITDA level. Moving to Slide 7, where we provide a waterfall to reconcile the year-on-year change in the group cash position.

In particular, I draw your attention to the record free cash flow generation for FY '22 from Nova, which was primarily attributable to higher commodity prices. Also, the first dividend received from the lithium joint venture, TLEA of $71 million.

Also, the debt drawdown and cash payment with respect to the Western Areas acquisition, which settled in June 2022. And finally, the taxes paid, as mentioned earlier, arising primarily from our taxable gain on the divestment of Tropicana during the 2021 financial year.

Moving to Slide 8, where we reconciled the net profit after tax variance between the 2021 and 2022 financial years. Of note, we highlight the $254 million positive impact to net profit after tax, resulting from higher metals prices at Nova and the [ maiden ] net profit contribution from the lithium joint venture, TLEA of $177 million.

I also note, that the 2021 financial year net profit after tax result included the gain on sale of our interest in Tropicana, which when combined with the absence of Tropicana's earnings in FY '22 led to the $432 million negative variance when compared year-on-year. Moving to Slide 9.

Where I'm pleased to report that the Board has declared a $0.05 share fully franked final dividend for FY '22, which is consistent with our shareholder returns policy with target cash returns to shareholders equivalent to 15% to 25% of underlying free cash flow. This final dividend, which will be paid on the 30th of September, brings total FY '22 dividend to $0.10 per share, which is consistent with the dividend paid in FY '21 is at the top end of our payout formula and represents $76 million of returns to shareholders for the full year.

Moving to Slide 10, where I will take the opportunity to speak very briefly to each of the core assets within our portfolio, which we did discuss in greater detail during the June quarter conference call. I will start with Nova, where once again, our team has delivered another great result with nickel production and cash costs within or better than guidance, resulting in $631 million of underlying EBITDA and $574 million of underlying free cash flow for the year.

Looking ahead, our priorities at Nova are to continue to optimize the operation, particularly our metallurgical recovery, advanced our decarbonization programs and progress the Silver Knight Feasibility Study. Moving to Slide 11.

As announced within our June quarter results, we are revising the strategy and development plan for Cosmos to enable a number of work programs to be completed before producing first concentrate in mid-2022. The key work programs that need to be completed are the shaft infrastructure that was always set to complete around mid-2023.

Additional underground development and the expansion of the processing plant, all of which will contribute to a stronger production profile and lower cash costs when concentrate production does commence. This change to the development plan will result in additional preproduction development costs and we expect 12 [Technical Difficulty] on this with the September quarter results in October.

In parallel, we are progressing the Scoping study into Mt. Goode and commence our next phase of work to understand the downstream nickel sulfate opportunity.

Moving to Slide 12. Having acquired Forrestania at the end of June, its contribution to the IGO's financial results commenced as at the 1st of July.

The integration process is progressing well. And in parallel, we are progressing claims to optimize the operation and understand the potential for additional nickel and looking opportunities on the broader [indiscernible] package.

Turning to Slide 13. Greenbushes delivered a highly successful year with record production and financial results, which included EBITDA of $1.35 billion on a 100% basis.

The production results benefited from the first full year of production from chemical grade plant 2 and a maiden production contribution from the Tailings Retreatment Plant. This, together with very strong spodumene prices, [ both ] great financial results.

Already, the team at Greenbushes are focused on the next stage of growth with the construction of chemical-grade plant 3 commenced, which was approved back in March 2022. Moving to Slide 14.

At the Kwinana refinery, the team's focus for the year was on quality and getting the rest of lithium hydroxide battery grade product right. Having achieved this in May 2022, the focus is now on quantity and progressing the ramp-up of Kwinana Train 1.

In parallel, the works for the recommencement of construction of Train 2 has commenced, and we expect a decision to proceed with construction in late 2022. Moving to Slide 15.

Fields under investment and exploration by our industry has resulted in a shortage of projects to provide the metals critical to global decarbonization through electrification. Consequently, exploration is a key plan in our continued growth strategy with an objective to unlock transformative value for shareholders through the discovery of our next Clean Energy Metals project.

Following the Western Areas transaction, we have increased our exploration commitment in FY '23 to $75 million with a greater portion of our budget going to brownfields exploration in close proximity to our operating activities at Nova and Forrestania. Our greenfield exploration focus is on exploration for nickel and copper, on Fraser Range, Paterson and Kimberly projects with initial investments being made across the coming year in our [Technical Difficulty].

Turning to Slide 16. The 2022 financial year was an outstanding year across the business, with strong financial and operating results, deliver alongside the ongoing transformation of our clean energy metals portfolio.

Nova continued its track record of operational and financial delivery. We've enhanced our people nickel business through the acquisition of Western Areas, our lithium business generated outstanding financial results and delivered its first dividend to IGO.

We maintained our focus on shareholder returns and have declared a $0.05 final fully franked dividend for FY '22. We have advanced our decarbonization programs and remain committed to leading sustainability practices and reporting.

And finally, our people remain engaged with our purpose and have continued to make a difference. We also continue to strengthen the team.

And to that end, it was great to welcome Trace Arlaud to our Board yesterday, bringing our Board gender balance to 50-50. Thank you, everyone, for joining on the call this morning.

We will now open up for questions. Thank you, operator.

So a question on Kwinana. Just keen to get a sort of an update on how that's going.

Obviously, we saw it all at the Investor Day in late July, early August, just the progression on the battery grade sort of ramp-up and how that's going, particularly given you need to make a decision on Train 2 later this year?

Yes. Sure.

All of the work programs that you saw and heard about on the ground at Kwinana are continuing, and we'll provide a fulsome update with our September quarter results.

And just on the exploration portfolio. Peter, there's obviously a huge portfolio here.

Now I mean, you sort of outlined the 5 key priorities there. I mean, what are we thinking about in terms of an ongoing spend on this portfolio sort of beyond this year?

Is it going to be particularly success required? Or is there a number of the next phase of priorities that will see similar sort of spend going forward?

Yes. A lot of our investment to date has been to mature the portfolio that we did have, recognizing that the vast majority of the portfolio going back a few years was very greenfields.

The work we've done has given us the understanding of the geology, the geophysics, the geochemistry and through that across all of these belt-scale portfolio. So we're now very much in a target definition and [Technical Difficulty] stage, and you will likely see some significant rationalization of the portfolio over the next couple of years as we drill test the targets previously identified.

From [indiscernible] point of view, we would like to think that our [ spend ] matures and that in the coming years, a greater majority of the spend is going into resource drill-out on the discoveries that we've made.

Just 2 questions. First one, spodumene pricing, so obviously, key value driver here.

Can you just talk us through what your expectations are for the second half? And what does happen in September with the renegotiation of the contract?

How do we think about your second half pricing, I guess?

Yes. So at this stage, we've got no further -- at this stage, we've got no further news to update the market on what that may look like.

So the guidance for people would be to roll the existing formula forward. And given where spodumene prices continue to trade, I think that creates a [indiscernible] for the spodumene pricing for the second half of the year.

So we think about a strong financial results for Greenbushes that we just reported for FY '22. We'll have that on steroids for FY '23.

Yes. Yes, that's what we're looking forward too.

Is there anything else you can share on expectations around pricing? Maybe what [indiscernible] saying or what other feedback from the industry is?

I unfortunately can't, Levi. I can't confirm or deny anything that might be happening.

All right. I will try another different one then.

The Inflation Reduction Act, you've been talking a lot about strategic supply with -- for some of your commodities for a long time. Is this the first time that you can actually get paid more for some of that production.

So specifically now I'm thinking about hydroxide and maybe nickel or nickel downstream. Is that -- has there been any discussions along those lines?

What are your views on it?

We've maintained for some time that if you make a superior quality product in a jurisdiction where you can demonstrate that it's being made safely, ethically and sustainably then you will get -- and you can demonstrate that through traceability through from raw materials to in product, that you would be able to get a price premium. And I think some of the movements we're starting to see with the Inflation Reduction Act and others, it's starting to provide some substance to that theme that we have been talking to for some time.

And I think it really puts Australia in a very unique position from a clean energy metals perspective.

Pete, 2 questions. Spodumene, just if the bookings were, firstly, what you've got that's left in bookings now with Tianqi and how the booking is where you'll end up -- is where you'll end up ever going to be fully spot?

Is that on the radar or on new agenda? Or is that just untenable situation to go fully spot on?

Yes. I just don't want to make any sort of -- provide any congestion around what that may or may not be, Peter.

And given where spodumene prices are, maybe it's a scenario where you need to be careful what you wish for and at -- and if you take a view on whether spodumene prices might be at the top of the cycle, then a formula with a lag gives us a stronger price for longer. But none of us have the crystal ball that can tell us where we are in that cycle for spodumene and in fact whether there's more opportunity in front of us.

So back to what I said at the start Pete, there's really no clarity or granularity I can give you on what that pricing formula may look like going forward.

Okay. But in terms of the cash flow and capital management, I just had a few thoughts on capital management, I want to [ come ] by.

So firstly, when is your next update you set biannually? Is that still the case?

Yes. Sure.

So end of '24. So we provided an update June '21, and we said it would be 3 years after that.

And in terms of...

And just to sort of provide some clarity, our formula, our payout ratio is 15% to 25% of underlying free cash flow. And for FY '22, we've paid out that right at the top end of that at 25%.

And what we've said previously is that whenever liquidity, which is basically cash and available debt facilities is above $500 million, then the Board will use the discretion to adopt a buyer payout ratio. So if you run this through your model, you will see that we're likely to be in that scenario coming into FY '23.

And I would expect at that time, one of the decisions in front of the Board will be what geared in to distribute above the standard payout formula.

So is that net debt available or net cash available of greater than $500 million?

It will be cash available plus any saleable equities that we may have, plus any undrawn debt facilities. That's broadly our definition of liquidity.

Okay. That's greater than $500 million.

And just in terms of shaping the policy going forward, given you get large -- you will be getting large dividends from the joint venture, is there any thought about parceling those and passing them straight through to shareholders with a franking attached? Or will it always go through a full year like hold of company IGO process, i.e., can you have 2 parts at lithium pass-through plus OGI either?

We'll probably always take -- I'm shooting from the [ hit ] here, because ultimately, it will be a Board decision. But my sense is that we'll adopt a whole of winning strategy.

And in setting dividend, we'll always be looking at what the capital needs are for the company. And part of our discussion this year was the review we did of the capital programs, embedded across the lithium business with expansions at Greenbushes and Kwinana, but also the development project that we have at Cosmos.

And we'll always be looking at those cash needs to build and grow the business, in parallel to the decision-making on returns to shareholders.

The extension franking, the franking you generate going forward is extraordinary. So thoughts on that given there'll be potentially an enormous mismatch between franking balance build with the dividends paid out.

Yes. Peter, I might just comment on that one.

So, you're right. We virtually extinguished all of our carryforward tax losses.

So we're in an excellent position, so we will be building our franking account balance. At the end of June, we had a balance of about $150 million franking credits.

Keep in mind Greenbushes, they are also a taxpayer. So they will be delivering the franked dividends through TLEA.

And when they pass on to us, those franking credits they give rise to lower tax spend for IGO and they don't actually pass through to our franking account. So there's some [Technical Difficulty].

Okay. So that's tax offset, not a [indiscernible] price.

And my last question, do you change your gearing targets going forward based on the amount of cash you're looking to generate?

Look, I would say, we keep a view of what our long-term gearing is. And look, we will look to maintain that.

And we've always considered a number of our 2 as being something that – 2, 2.25 is something that we don't want to exceed. It's a long-term number.

We see ourselves gearing down below that fairly quickly. And as I said, that just remains a long-term number for us.

Look, I guess a few questions on the spodumene pricing, but I'll try to ask it in a slightly different way. You mentioned on the -- I think it was the Strategy Day or the Kwinana site visit that the ATO takes Fastmarkets to calculate its royalties as it better represents the spot ton in the market.

And I deem the Asian Metals was more lagged in this sense. Your current transfer pricing model uses both of these agencies.

So do you think the ATO is going to be supportive of you continuing to use Asian Metal if it deems it is a drag potentially on your transfer pricing?

Yes. I think just sort of recollecting the conversation we did have, it was really around the pricing mechanism that the state government uses to calculate royalties from Greenbushes.

And they do that because of the -- as a mechanism to provide some comfort for the state government versus the transfer pricing model that we do use. I say government uses a basket of 3 prices, which is Fastmarkets and Benchmark Minerals, which is slightly different to the pricing formula that's used for the transfer price by the shareholders, which is Fastmarkets, Benchmark Minerals and Asian Metals.

As you are probably aware, across all of those reference prices, the one that leads the pack is generally flat and the [indiscernible] lag is generally Asian Metals. And a more perfect formula from transfer pricing formula perspective going forward would probably lead to sample all reference prices and incorporate all of them into transfer pricing.

That doesn't indicate that that's where we get to in a discussion with the shareholders on a renewed transfer price going forward, but that's an indication of what a more perfect model would look like. Any other questions?

Yes. And I guess with your hydroxide uptake, you're using the same agencies as the state government, I guess, replacing Asian Metal with flat.

So do you see a situation here where spodumene is going to have to lean towards Platts, Benchmark Minerals and Fastmarkets?

I don't have any further clarity to provide other than what I just described on that one. With lithium hydroxide, it's a little bit different.

We've got no sales from one shareholder to another. And therefore, all of the pricing is on an arm's length basis to a third party, and that's a contracted price that's agreed on a contracted basis with the third parties.

Okay. And just on the nickel concentrate lending strategy, and I appreciate we'll hear more on this soon.

But is your focus just on Forrestania and Nova blending? Or are you also considering Cosmos as part of this strategy?

At this stage, the focus is more around Nova and Forrestania. But as we get closer to production at Cosmos, we will do the work there to understand whether that provides another layer of opportunity.

But longer term, of course -- longer term of course our aim is to go downstream, build a nickel sulfate plant. And at that point, we'll have the ultimate blending strategy, putting any materials -- any feedstock materials that we have into our own facility.

Understood. And my last question is just on Mt.

Goode, on the scoping study. If you do go explore your own -- construction of your own plants there to process the oxide material, are you looking to produce an MHP or an MSP intermediary product?

And I guess as part of the scoping study, are you also considering salt leaching done through third parties?

Yes. The nature of the scoping study is to do all of the trade-off analysis and understand what are all of the options for developing a project and then to narrow those options under the recommendation for the more detailed work that's been done in a feasibility study.

So all of those options would be under consideration during the scoping study stage, and it will be far too early for us to comment on what will be the preferred outcome.

Look, I perhaps wanted to revisit the capital allocation framework, Peter. As you correctly point out, next year seems to be a strong year for cash flows, both free cash flow and net cash balances.

I guess if we move away from the question of dividends for a second, how are you thinking about potentially doing buybacks potentially off market, I guess, because you're going to have plenty of franking credits? And then I guess, my second question connected to that one would also be how do you see yourself now in terms of your inorganic growth side?

I mean, do you think you've done what you need to? Or do you still think if opportunities come past, you can -- you want to keep some of your powder dry and perhaps look at opportunities into next year as well again?

Yes. So yes, all good questions Rahul.

On the capital allocation, broadly, my language every now and again slips into dividend, but our -- we have a more holistic view than that. It's all about cash returns to shareholders, and that can be via dividends or by share buybacks.

And certainly, that would be a tool in the toolkit going forward. But of course, we'd only do that in circumstances where it make sense to do that rather than return cash to shareholders via a fully franked dividend.

So we would continue to assess both options in the future. And we have option -- whatever option we used would be based on what delivered the best outcome for shareholders and the business.

On the second question, on the inorganic growth. Over the last couple of years, we've transformed the business, and we bolted on a lithium business unit to what we're doing.

We've got a lot of brownfields growth within that, building the third chemical grade plant at Greenbushes. After that finish, we're building the fourth chemical grade plant at Kwinana.

We expect to start building the second train later this year. And going forward, we would envisage a third and a fourth train.

And then within the nickel business, we are busy developing Cosmos and doing a couple of studies around Mt. Goode and the nickel sulfate.

So we've got a lot of digestion to do from a brownfield development within the group. But we're also [ started ] around looking for opportunities.

I've described myself and the business as serial lookers and we'll continue to look, but we'll always be very disciplined on what we may transact on. And the fact that we are busy within the business doesn't create a sense of urgency for us to do anything.

And therefore, we can afford to be a lot more disciplined and a lot more prudent about what we may or may not do. Hope that answers the question?

Yes. So, for the second one -- sorry, I'll go ahead.

For the second one, I was just going to perhaps touch on again the Silver Knight opportunity. Any sort of progress there that you can update us on?

And how you're thinking about that opportunity? Any other metrics or updates there?

Yes, we're doing the work. So a lot of metallurgical work and then all of the environmental baseline studies and permitting that we need to do for a new mine development in Western Australia.

And in parallel, we're doing some drill testing around Silver Knight to understand whether there are any extensions. And you would recollect that in the June quarter results, we did highlight that we had a number of circa 20 meter intersections with visible nickel and copper mineralization in close proximity to Silver Knight and the work there to continue to test that is continuing.

And we would look to provide a more fulsome update on what that looks like going forward. I have characterized over the course of the last couple of months, it's -- the results we're getting, you would argue they're material to Silver Knight but they're not material to the IGO business.

The first question was just to try and revisit the opportunity to toll trade some Greenbushes' spodumene and turn it into hydroxide, whilst Kwinana is not really producing any material volume. I know I sort of brought this up at the site visit, but is there anything more you can say about that opportunity or whether it is even an opportunity for the JV?

Yes. And rather than talk to what might be there, I think we're better off leaving that question.

And if we are able to do something in the future, we'll talk about that with a certainty of having done it. And it's certainly an opportunity that IGO will be constructive around and then it would be a matter of reaching the same conclusion with our joint venture partner.

Okay. And then the other question was just to push a little bit more on Kwinana and where we're up to.

You mentioned on site that 90% of product in the last 10 days had been on spec. I'm wondering if you could update as to whether we're still seeing 90% of product on spec and what sort of volume that's associated with?

Yes, like I said earlier, Lyndon, all of the work programs that we talked about were on site, we're progressing all of those, and we're better off talking to where we are on Kwinana in the ordinary course when we get to the September quarter results in October. Otherwise, we might need to start for doing monthly reports from an ASX point of view.

No, no worries, Peter. I'll see if I'm third time lucky.

So the final question I had was on Greenbushes, really just a long-term question. So by far and away, the most valuable asset in the company, I'm wondering if you're able to talk to the long-term optionality.

There was a discussion about going underground there was also not really any discussion about expansions beyond CGP4. Obviously, it's an amazing ore body.

I'd like to get a bit more of a flavor about the exploration potential or whether there is, in fact, some opportunity to grow this asset beyond the projects that have already sort of been put out there. Is there anything more you can say about that?

Or is it -- it just is what it is in terms of CGP4 and that's it?

So it's a great question, Lyndon. And from a strategic point of view, we do see additional potential below the depths of the current planned [ pit ], and there's an ongoing body of work to do the drilling to confirm that and in part, convert inferred resources into measured and indicated, so we can incorporate it into a larger pit plan, but also doing the work to identify extensions below that and understand the opportunity for further extensions, perhaps underground extensions below the depth of the Maximum pit.

And if you roll all that together as an opportunity, then very quickly from a strategic point of view, you start thinking about how do we extract value quicker. And one of the challenges at Greenbushes will always be the relatively small footprint we have there and the access to land that we would need to build more infrastructure.

And I think one of the real opportunities going forward would be to better understand what the maximum potential of those existing process plants is and what the opportunity is to take those well beyond nameplate as has been achieved with a chemical grade plant #1. Chemical Grade Plant #1, it operates at a level far above nameplate, and if we were to achieve that same level of performance from Chemical Grade Plant 2, 3 and 4, it will be similar to having another concentrator on the site.

And that may be a more realistic opportunity than building a fifth chemical grade concentrator. But all of those are in front of us.

And certainly, from a strategic point of view, those would be some of the things that we will be focused on through our participation in the Greenbushes joint venture.

Just on the Western Areas assets now that you've taken control. Forrestania, can you talk about the synergies you're expecting from the concentrate potential blending with Nova?

Can you blend, get a payability uplift? And three good question, but is there any potential benefit to the resource or reserve or mining at Forrestania from blending?

Yes, sure. So there's a number of work programs that we have underway, Dan, to understand some of those synergies across operations.

And an obvious one with Forrestania is what can be done to maximize recovery and therefore, both from an ore body point of view, but also metallurgically by being able to blend out some of the high arsenic at spot coal with lower arsenic material from elsewhere. So we are in the process of doing the work to understand that opportunity, and we expect to talk to that in coming quarters.

In parallel, we're having the discussions with all of our partner organizations, whether they be contractors or suppliers to understand what synergies we may be able to deliver across the multiple operations where we're working together with our partners.

Peter and team, two quick questions. I think prior to the acquisition, Western Areas is talking about signing offtake for Cosmos beyond what's agreed with Glencore.

Just wondering if there's any progress on that? Or how's the offtake approach changed with IGO's ownership?

Well, we're continuing on with some of the work programs that Weston Areas previously started, but also providing a sort of holistic overlay on that to think about the whole company concentrate package and how we deal with that strategically with our offtake partners. And I would expect that between now and the December quarter results, we would have an update for the market because that's certainly the time line that we need to get those discussions finalized.

Sure. And also just following up on Matt's question prior about blending.

I just wanted to see what benefit would arise from planning a higher [ CNGO ] with a lower CNGO, if that was the case, would Cosmos just be a stand-alone concentrate to be sold?

Yes. As I said before, we're doing the work to understand that opportunity and to understand what benefit may be achieved from a payability point of view by blending across initially Forrestania and Nova and then ultimately across the 3 sites, the longer term.

And here, I'm talking to maybe mid-2026. We would be focused on what's the right blend to feed into our own downstream processing facility.

And given the nature of what that facility would be, we would expect that it would be much less sensitive to a wider bandwidth of material types. So it would be much less sensitive to ratio, much less sensitive to concentration, which will then create a competitive advantage for us to compete with some of our offspec materials in the market.

And just a final one, just on the lithium JV. I wonder if you can sort of talk through or maybe give an update.

I think at the site visit, you mentioned monthly cash being distributed back to partners of the lithium JV. Over the last month, have you seen a larger pickup in cash flow being distributed back to IGO or JV partners?

Yes, sure. So the framework that we have there is a quarterly -- agreed quarterly distribution from Greenbushes up to the lithium joint venture company.

But in fact, that's actually happening every month at the moment. And then the framework at the lithium JV company, TLEA is a quarterly dividend distribution up to IGO.

And we get to have a dialogue around whether that should be a more frequent distribution and I'm really not able to talk to what distributions we've had in July, August, and we'll provide an update to the market on those movements with the September quarter results.

Firstly, I just wanted to follow on your comments on downstream processing. At the Strategy Day, you floated the concept, I guess, of an integrated process to produce cathode materials.

Yesterday, we had one of your peers or perhaps one of your competitors also flatting the idea of an integrated Australian battery production. So I guess wondering if you can provide the expected timing of that study.

Am I right to say it's due late FY '23. What's the scope being considered?

Is it simply a desktop study, the concept study? Or is it more involved?

Are you really assessing the economics of all these points in the value chain that you've highlighted? And then also what are the moving parts are being into that study in terms of assessing our upstream resources or perhaps your project partners on that study as well?

Yes, sure. So as we talked about on the Strategy Day, we see an actual evolution where a nickel sulfate downstream project actually incorporates a [ pre-CAN ] facility adjacent to it because that reduces overall capital and operating costs to put in effect nickel in solution across the fence into the pre-CAN facility.

So we are doing the work to understand the merits of both of those at the same time. It will be correct to core [Technical Difficulty] work on the nickel sulfate portion at the moment is running ahead of the work on the other one, but we expect that, that will catch up quite quickly, and the aim is to deliver a feasibility study, which would support a financial investment decision on both of those by mid-2024.

Got it. Okay.

That's very helpful. And then just following on quickly from Kaan's question on offtakes.

You talked about wanting to resolve the Cosmos offtake situation between now and the December quarter results. Is it fair to extend that to the portion of Nova concentrate and also Forrestania concentrate that you will have available around that time?

Yes. Like I may not have said, but my thinking when I was answering the question was it would be a broader update on all of our offtakes because we have a couple of milestones coming up for Nova and Forrestania as well as in the [Technical Difficulty ] on Cosmos.

So we'll be providing a broad update, that's by the time we get to our December quarter results.

Got it. Peter, you may have said it may be the one that...

I would have to pick the transcript to see what I said. We won't drive the commercial discussions with the counterparties around a date around the December quarter results.

If we need more time, we'll take extra time at that point to do it. But plus or minus, that's about when we should be getting there.

So does that mean that in the interim, you'd be happy to accept spot sales outside of existing offtakes? Or would you expect that any incremental volumes would just be delivered into the existing offtakes?

Too early to comment on that. I have anecdotally [indiscernible] quite high spot sales in recent times, 82% spot sales have been quoted to me on a payability point of view.

So it's an outcome we would look at, but the [indiscernible] plan is to get the offsite go up and to have that committed from 1st of January.

Yes. It's always nice to be able to, I guess, reference spot indexes with your pricing.

Maybe just finally on Forrestania. You mentioned that briefly in your slide around lithium exploration.

Wondering if you can expand on that a bit. Is that currently just a little bit of [ neurology, ] given that you're down the road from [ Mt.

Holland ]? Or are there any high priority targets there that you've outlined, any [indiscernible] that are ready for you guys to go and put a drill into?

Too early to talk to that, but the -- there's more substance than [indiscernible] or any sort of [indiscernible]. And we look forward to updating people on some of the those targets that are on the existing concession package in upcoming quarters.

Pete, 2 more on the nickel business. Firstly, Nova and the life of mine and thinking about this from the context of your new director.

She was on [indiscernible] ahead of joining the Board and that would have come up with a question to you saying, Pete, Nova has only got a short life. What are you going to do beyond Silver Knight and Nova?

And is there a gap there before you turn any more production there in Fraser Range into production? And then I've got a second one.

Yes. Given the likely depth of a discovery in Nova, I would expect it's fair to say that there would be a hiatus in any activity that we tried to bring any new discovery that's made from this point on in some operation.

Just the amount of time would need to do the resource assessment of that new discovery, the time it would take to do the feasibility studies and the permitting. It's just about guarantees that we would need -- there would be a high access in activity.

Okay. A maintenance scenario for a potential extended period if necessary?

That's correct.

Okay. My second one, on [indiscernible] supply more broadly holistically in WA.

And having met with BHP last week, the CEO, and he talked about nickel business and indicating that they wanted to partly grow the nickel business by reducing the units they buy from people like yourself. In the time frame of the next smelter campaign shut and the change of the way they look at metallurgy and chemistry.

Do you have enough time this decade or mid late this decade to evolve your own downstream nickel processing to fill that hole? Or will you be selling material spot as you just indicated from your previous question?

The time frame we're talking to for our own downstream facility subject to completing the feasibility study and reaching a financial investment decision will be circa mid-2026 and if there was a need to place offtake in the lead up to the commission of that and it's still a robust market outside Australia.

So to be clear, FID, FY '26 or that's first material effect?

FID by mid-2024 leads to construction completion by mid-2026.

Thanks, everyone, for your participation today to our presentation and Q&A session, and we look forward to engaging with you again very soon when we present our September quarter results in October. Thank you, and have a safe day.