IGO Limited

Thank you, Melanie, and good morning, everyone. Thank you for joining the call this morning as we present our combined December quarter and first half FY '23 results.

Joining me on the call today is our Chief Financial Officer, Kath Bozanic. Slide 2 highlights our cautionary statement and disclaimer.

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

While the focus of today's presentation will be on the December quarter results, I'll first want to acknowledge the excellent progress IGO has made during the first half of FY '23 on delivering to our strategy in building a globally relevant, vertically integrated business, delivering products critical to the clean energy transition. The period had its challenges, including the loss of our Managing Director and CEO, Peter Bradford in October, which came as a devastating shock to the IGO family.

Despite these challenges, the IGO team demonstrated resolve and determination, and we have delivered a set of record results for the half. Our focus during this period has been on delivering the significant growth of our lithium business, both at Greenbushes and Kwinana.

The successful integration of Forrestania and Cosmos assets into the IGO portfolio, enhancing our Nickel business through improved scale, diversification and the opportunity to drive value through synergies, which are unique to IGO. This has also been a key enabler to recommence studies on downstream nickel to produce cathode precursor directly from nickel concentrate.

And most importantly, continue to foster our unique culture and supporting our people's health, well-being and career development. It is our people and our culture that underpins our success.

Moving to Slide 4. As noted last quarter, our safety performance remains a key focus.

Pleasingly, we have seen improvement quarter-on-quarter performance with respect to our TRIFR rates. However, there's still a lot of work to do.

We acknowledge that we need to improve. I also want to take this opportunity to thank the emergency response team at Nova, who did a fantastic job in responding to the fire at the power station in December.

Moving to Slide 5, where we lay out some of our key highlights for the December quarterly results, including: we have delivered record earnings and net profit after tax. We are pleased to declare a record dividend payment to IGO shareholders of $0.14 per share.

At Greenbushes production growth, combined with continued strength in the lithium price, generated another record quarter for earnings and dividends. While at the Kwinana lithium hydroxide refinery, declaration of commercial production at Train 1 was a key milestone.

Within our nickel business, higher nickel prices helped offset the impact of Nova production loss due to the fire in December and weaker production and higher costs at Forrestania. Significant progress has been made at Cosmos, which remains on budget and schedule.

We're also proud to have been again included in the Dow Jones Sustainability Index for both Australia and Asia Pacific region, recognizing our commitment to actively contribute to positive outcomes for all stakeholders and the environment. Finally, and as discussed last quarter, Justin Osborne joined the Board in October and just last week, we were delighted to announce the appointment of Samantha Hogg as a Non-Executive Director.

These appointments form part of our board renewal program. Moving to Slide 6, where we detail the key financial results for the quarter and first half.

As with the prior quarter, IGO's strong financial results were driven by the Lithium business, with IGO's share of net profit from our lithium joint venture, TLEA, rising 21% quarter-on-quarter to $346 million and $631 million for the first half. Group underlying EBITDA was 10% higher quarter-on-quarter to $436 million, while net profit after tax increased 33% quarter-on-quarter to $338 million, both representing quarterly records for IGO.

Group underlying free cash flow was $235 million for the December quarter. This outstanding performance has positioned IGO's balance sheet with $515 million in cash and a net debt position of $175 million.

I'd also like to acknowledge the strong half-on-half results shown on this slide. The IGO business has been transformed.

In particular, I would like to note the 136% increase in underlying free cash flow in this half year. Moving to Slide 7, where we reconcile the 33% quarter-on-quarter increase in net profit after tax.

As shown, the key drivers of the increase include improved lithium business profitability and lower quarter-on-quarter income tax expense, reflecting income tax treatment on IGO share of net profit and dividends received from TLEA. This was offset by lower earnings from Nova and an $18 million unfavorable mark-to-market revaluation of listed investments.

Moving to Slide 8 and a reconciliation of cash. Again, the lithium business has driven a significant increase in cash to $515 million and a record $334 million dividend received from TLEA for the quarter.

Nova free cash flow was significantly below the prior quarter at $103 million. This was in part due to interruption to production caused by the fire, along with a large buildup in receivables.

This is more than doubling of the receivables quarter-on-quarter, which will positively impact cash flow in the current March quarter. Cosmos recorded $72 million cash outflow relating to the ongoing project development activity.

We also made $102 million of tax payment during the quarter which includes remittance of income tax related to the group's FY '22 income tax return. IGO's drawn debt as at the 31st of December totaled $690 million, resulting in a net debt position of $135 million.

Turning to Slide 9. With the excellent financial position over the first half and continued strength of the IGO business, I am pleased to advise that the Board has declared a $0.14 per share fully franked interim dividend.

This will be paid on the 31st of March. The dividend equates to $106 million, which is at the upper end of the 15% to 25% underlying free cash flow band stated in our dividend policy.

Given the ongoing strength of IGO, the Board has commenced a review on the group's capital management framework. We expect to be in a position to update the market on the outcomes of this review in conjunction with our FY '23 full year results.

Turning to Slide 10 and on to a discussion of the lithium business, which we hold via our joint venture interest in Tianqi Lithium Energy Australia, referred to as TLEA. Moving to Slide 11.

The contribution of TLEA to IGO's recent financial results has been significant. For the December quarter, IGO's share of net profit in TLEA was $346 million, up 21% compared to the prior quarter, while the $334 million of dividends received from TLEA brings total year-to-date dividends to $414 million.

This is an outstanding result, reflecting the quality of the Greenbushes asset, which has generated EBITDA margins of 87% for the half year. The joint venture announced in early January, the proposed acquisition of the Essential Metals by a scheme of arrangement and thereby expanding and diversifying its lithium portfolios in Western Australia.

The transaction remains subject to an independent expert report and shareholders and court approval with completion expected by May this year. IGO managed the exploration activities and initial project studies over the ESS portfolio on behalf of the joint venture.

Moving to Slide 12 and to the discussion of performance at Greenbushes. Production was 5% higher quarter-on-quarter at 379,000 tonnes attributed to improved plant throughput and higher recoveries, which helped offset marginally lower mill grades.

Sales, revenue and EBITDA were $2.3 billion and $2 billion, respectively. Cost of goods sold, excluding royalties, were 4% higher quarter-on-quarter at $263 per tonne, mainly due to higher mining and processing rates.

Average realized prices for both chemical and technical-grade products were USD 3,984 per tonne, which was marginally higher than the prior quarter. Moving to Slide 13 and to a discussion on several key drivers, which are expected to generate significant value at Greenbushes.

Expansion of mining and processing operations is continuing at Greenbushes. Construction of the chemical grade plant 3 is progressing to plan as is on track for practical completion by late in FY '25.

The works to expand the mine service area, tailings storage and installation of the 132 kV power line from Bridgetown to Greenbushes has also progressed well. In addition, the team is working to continually optimize the operation.

From the 1st of July 2023, Macmahon will be assuming the mining contract at Greenbushes, which will bring a new level of capacity and efficiency to the load and haul operations as the team ramps up production. Elsewhere, process modifications at CGP1 are being implemented to improve plant throughput and recoveries while studies have commenced to add further value through ore sorting in-pit and into the CGP feed stream.

In addition, construction of the new accommodation village site has been approved, which will help attract and retain talent at Greenbushes and enable future growth. Turning to pricing.

And as flagged in our September quarterly result, the Greenbushes spodumene pricing mechanism has been revised effectively the 1st of January 2023. From this stage onwards, spodumene concentrate will be transferred from Greenbushes to its state shareholders being TLEA and Albemarle using pricing -- price which references 4 key lithium benchmarks: Fastmarkets, Asian Metals, Benchmark Minerals Intelligence and S&P Platts.

The pricing mechanism will reset quarterly using the average price from the prior quarter to set the price less a 5% bulk discount. Turning to Slide 14.

The graph on the left-hand side of this chart shows exceptional growth in production achieved at Greenbushes over the last 6 quarters with costs remaining relatively stable especially given the impacts of inflation on cost. Looking ahead, as results of the revision of the spodumene pricing mechanism, the chemical grade spodumene price applicable to the March quarter sale is estimated to be USD 5,957 per tonne FOB.

For the March quarter, spodumene production is expected to be in line with the September quarter. IGO expects full year production to finish at or marginally above our stated guidance range of 1.35 million to 1.45 million tonnes of concentrate.

From a cost perspective, we're expecting the influence of escalation and inflation seen across the industry to have some impact on unit cost during the second half of FY '23. As a result, IGO expects unit cost for the full year to be at or marginally above the top end of the $225 to $270 per tonne guidance range.

And finally, accounting for the newly approved capital projects, including the process modifications at CGP1 and the new accommodation village, we expect to be implemented over the 2023 calendar year FY '23 capital guidance has been amended to be between $550 million and $600 million. Turning to Slide 15 and on to Kwinana.

Having rectified several bottlenecks and increasing plant availability and run times, operations at Kwinana have improved, with production increasing to 585 tonnes of lithium hydroxide in the December quarter. In addition, TLEA declared commercial production from Train 1, which reflects their confidence in the capacity of Train 1 to operate continuously and produce battery-grade product.

EBITDA of $12 million for the quarter was lower than the prior quarter, primarily due to a higher capitalization of costs in the September quarter compared to the current quarter. Capital expenditure was $16 million for the quarter, split between Train 1 and Train 2 works.

Now turning to Slide 16 and an outlook for the Kwinana refinery. While the Kwinana team have made strong progress towards direct operations at Train 1 over the last quarter, a full technical review conducted by TLEA with the assistance of the technical team from Tianqi China has redefined the packages of work required to enable Train 1 to deliver towards nameplate capacity.

As a result of this review, the ramp-up schedule has been adjusted by approximately 6 months with production capacity expected to reach between 60% and 70% by the end of the calendar year 2023 with final optimization to incur thereafter. To complete the necessary work, sustaining and improvement capital for Train 1 is expected to trend higher for the remainder of the financial year, with full year costs expected to be within the range of $35 million to $45 million.

At Train 2, early works continued during the December quarter, and the project execution strategy is being reviewed. It is unlikely that we'll make an early decision on the financial investment decision on Train 2 until the full completion of the front-end engineering and design feed stage.

Given this a change in approach, IGO now expects to make this financial investment decision during the second half of this calendar year. Moving to Slide 17, where we'll shift focus to the performance of our nickel business unit.

Moving to Slide 18 and starting with Nova. As announced during the quarter, a fire at the power station at Nova in December resulted in the suspension of operations for 18 days.

While the response and recovery from the fire has been tremendous effort by all. There's been an impact on our production and cash cost results for the quarter.

You can see this impact to metal production on this slide with nickel, copper and cobalt all down between 30% and 40% compared with the prior quarter. Consistent with significant lower production volumes, cash costs were higher at $5.30 per payable pound.

Sales revenue and EBITDA were also lower 19% and 25%, respectively, with higher metal prices marginally helping offset the production loss. Nova was safely brought on back online in late December after 18-day shutdown, and production rates have returned to normal levels.

I'd like to thank the team at Nova as well as our power partner, Zenith, for their efforts in bringing Nova back online safely. Moving to Slide 19.

At Forrestania, the December quarter was softer with lower quarter-on-quarter production and higher costs again offset marginally by higher realized nickel price when compared with the prior quarter. Lower production was driven by 3% lower mill tonnes and 5% lower recoveries and the trend which -- a trend which we expect to continue to see over the remainder of FY '23.

Cash costs of $10.97 per payable pound were 26% higher quarter-on-quarter with the rise attributable to cost escalation recognized during the quarter, including rise and fall of mining contracts as well as lower production volumes. As with Nova, 33% higher nickel price helped offset the weaker operational results and EBITDA of $45 million benefit from the absence of the one-off inventory fair value adjustment, which impacted the prior quarter results.

Free cash flow for the quarter from Forrestania was $22 million. Moving to Slide 20.

At Cosmos, the project delivery team has remained very busy with strong progress across many areas of the development. Of note, final day -- final design and long-lead ordering for the processing plant was complete.

Paste plant is near completion with the commissioning expected this quarter. Work on a shaft is progressing well with the second leg expected to commence this quarter, while the head frame assembly is advancing.

And finally, healing of the air strip is expected this quarter at end of commissioning. Capital for the quarter was $77 million.

The project remains on schedule and on budget. Moving to Slide 21.

On the basis of the first half operating results and reviewing the outlook for the second half, IGO is updating guidance for the Nova and Forrestania operations. At Nova and reflecting production loss as a result of the fire, FY '23 production guidance is being amended downwards to between 23,000 and 25,000 tonnes of nickel; 10,000, 11,000 tonnes of copper; and 800 to 900 tonnes of cobalt.

In line with the reduced production guidance, cash cost guidance is also being adjusted to between $3.30 and $3.70 per payable pound. This amended guidance on C1 cash costs also takes into account lower byproduct pricing, particularly copper as well as lower copper production.

At Forrestania, while the March quarter costs are expected to trend lower, they are unfortunately expected to remain higher than previously guided and as a result of lower production and cost escalation. FY '23 cost guidance is being amended to between $9.25 and $10.25 per payable pound.

Production guidance for FY '23 is unchanged. We are confident we can improve performance at Forrestania with the completion of concentrate blending opportunities as part of our broader offtake negotiations and also the rollout of group-wide contracts across all sites.

Moving to Slide 22. In the interest of time, I'll only touch briefly on our exploration activities for the quarter.

Moving to Slide 23. A commitment to unlocking discoveries through exploration has been at the core of IGO for many years.

For the world to continue its journey towards decarbonization, new mineral resources will need to be discovered and developed. This view underpins our exploration's team focus on the discovery of nickel, copper, lithium and rare earth deposits and is why we have built portfolio projects you can see on the map to the right of the slide.

Last quarter, the team's primary focus was on Nova, Fraser Range, Forrestania, Kimberley and the Paterson projects, many of which are held by exploration joint ventures and partners. By leveraging the best exploration technology implying leading geophysics and geochemical capacity, we believe we have the right ingredients to find the critical new resources we all need for the future.

A comprehensive update of our recent activities will be provided in our upcoming new mineral and ore reserve statement. Moving to Slide 24.

We're also focused on honoring our commitment to the environment and sustainability. To help deliver on aspiration to be carbon-neutral by 2035, we're in the process of delivering a range of projects that seek to remove or minimize emissions from our operations.

Pictured here is the VSUN Energy Ultra Standalone Power System, which will shortly be making its way to the Silver Knight Exploration Camp, utilizing combined solar and wind generating with battery storage capacity of the system will be the major source of site energy requirements at the camp. Elsewhere, the expanded solar farm is expected to be operational during the current quarter, slightly delayed due to the fire in December, and we are actively seeking alternative power solutions at Nova, which may reduce our emissions further.

These and many other projects are just some of the ways in which we're working towards achieving our sustainability targets. Moving to Slide 25.

In summary, and before we move to Q&A, we have delivered another set of outstanding financial results with our lithium business driving record EBITDA and net profit. We also declared a record interim dividend of $0.14 per share.

We are laser-focused on the many growth projects within the lithium business at both Greenbushes and Kwinana, which promised to deliver excellent returns over the coming years. Whilst the fire at Nova was a significant disruption last quarter, we have recovered quickly and determined to continue to optimize and maximize the broader nickel business through new offtake lending opportunities in the near term.

As discussed, we have updated guidance on Nova, Forrestania and Greenbushes to reflect our half year review of those assets, and we are actively addressing opportunities to improve performance at Forrestania. And as always, we remain intent on improving safety and well-being outcomes for our people with whom today's results would not be possible.

Thank you for joining us on the call this morning. I will now hand back to the operator for questions.

Can you hear me okay?

Yes, loud and clear.

Perfect. You've just given some CapEx guidance refresh for Greenbushes there.

You find it around the new village and CGP1 plant optimization. You obviously refreshed CGP3 and 4 capital estimates in August for the site visit.

I mean, the industry is obviously experiencing a fair amount of crip, and you've seen that in your costs and everything else. Is there any scope to changes for those capital estimates on those bigger ticket items?

Yes. So when you look at that reframing of capital for Greenbushes, it doesn't capture CGP4, so that hasn't yet been approved.

What it does capture is -- so essentially, if you break it into buckets, you'd probably give 60% to new projects, you'd give 5% to bring forward some of CGP3 capital just through changes in schedule. And then the rest would be associated with existing capital projects that are capturing additional scopes within those projects and some minor escalation within those.

Okay. That's helpful.

So broadly speaking, the capital increase or the guidance increase you've given today will, in essence, capture some of industry inflation for, at least, CGP3, is that a very simple way to look at it?

Yes, similar capital projects. And one of the things, too, is that for both Talison and TLEA, they work off a calendar year budget as well.

It's also reflecting the resolution that we can -- we get and also associated with Talison and Talison Board approvals on new capital projects, which ultimately deliver strong returns on all of those capital projects.

Perfect. Just on CGP3, as I understand it, the construction is on an old tailings sites.

I presume you've done all the geotechnical work there. Have you seen any issues around subsidence or any ground stability issues whilst you've undertaken early works there?

No. They did preliminary geotech work.

And then as part of the first phase that we're doing piloting testing, so they're doing the pilot testing and the design, and they're in the process of doing piloting work at the moment. So there's been no change to -- I'm aware of in terms of ground conditions or geotechnical concerns.

Perfect. Just around the delayed timing of FID on Train 2, just to be clear, that's second half of next calendar year?

Correct. Second half of this calendar year.

I thought it said in the presentation, '24, but I'm not sure I misread that.

Yes, there's actually a bit of a typo there. But if you go back to the quarterly second half of this calendar.

So we pushed it out. We're aiming for this first half of this financial year.

It will come into our next financial year. The change there is a little bit about execution philosophy.

So we previously were prepared to make a capital decision without actually finalizing feed. Given rectification on Train 1, learnings out of Train 1, it makes more sense to actually just push out the financial investment decision by an order of 6 months at maximum to make sure that all of the engineering designs, all of that is built into the final cost estimate of Train 2 before we make the final investment decision.

We're aligned. And we've been working with TLC.

It's a prudent approach.

Okay. I think I asked this last time I got the opportunity on a call.

Has there been any sort of major change to process flow sheet design at all? Or is there being any consideration based on your learnings from Train 1?

Or is it just literally getting the cost estimates and dotting the i's and crossing the t's before committing the body?

Yes. So you can break that question into 2.

The process design, the process flow hasn't changed. So what will change is some of the engineering components and engineering elements associated with different areas of that processing plant.

And that's some of that learnings rather than doing rectification, et cetera, like we're having to do on Train 1, we now will catch all of that in the feed in a total reengineered.

Congratulations on the quarterly result. Great to see Kwinana first commercial sales of hydroxide.

Just wondering with the hydroxide pricing achieved for the qualification process. Is there a discount to the index?

And what index is that of? And is there more than 1 customer taking part of that qualification process?

Yes. There's an element of commerciality that I'll keep to that one.

So yes, so I can't really get into that sort of detail, especially those sort of low volumes and where we're at with negotiations.

Sure. Not a problem.

Maybe the second one is on the acquisition of Essential Metals. Just trying to understand how that actually complements the existing TLEA assets?

And does IGO have a right of first refusal for any acquisitions brought to the table?

Correct. So I'll talk first about the joint venture structure.

So it's a global joint venture with TLC, Tianqi China, everything ex China. So we -- so both parties have the right to go and identify opportunities, but they'll have to offer it into the joint venture.

This -- and then each party will then have to make a decision whether they want to enter the joint venture, although if they don't, they have a right to do themselves. In -- for Essential Metals, it goes into TLEA.

So I've -- obviously, IGO is wanting that asset in TLEA. We view that as a steppingstone again for Western Australia to continue to build our lithium business in Western Australia.

We're working well with TLC. IGO will be the operator of that project.

We'll bring skill sets to that project through studies in exploration.

Sure. I'll just squeeze one last one in, if that's okay.

Just in Greenbushes back to see recovery rates of CGP2 and TRP increase, particularly given lower feed grade quarter-on-quarter, what's changed the quarter-on-quarter step up? And is the target to get to around 75 for CGP2?

Yes. Look, the change is about consistency.

And I'll call commissioning phase CGP2. So we'll take some of that back into CGP3.

I can't remember the final recoveries, and I'm not sure if we have virtually provided that target.

You've provided in the quarterly earnings.

Yes, I can't remember that one, but we can come back to that one, if you like. Rich will come back to you.

No worries. And can you share anything in terms of cover rates for CGP1?

We're trying to get away from actually sharing individual recoveries or actually ops. So we're sharing CGP2 because it was a TRP as part of the ramp-up.

But once we've reached ramp-up, the idea is just not to actually break it down at sort of granularity.

Look, I just wanted to ask what the latest budgets for CGP3 and 4.

CGP3 is still what we provided as a capital range. I think that was a $500 million and $550 million.

We haven't provided any update on CGP4.

And so in light of all the recent capital escalation, is it fair to assume that's a stale number? Or are you happy to say that that's kind of on budget?

At the moment, we're tracking on schedule and on budget. And as part of the capital improvement, we accounted for escalation.

Okay. So the revision CapEx today doesn't assume any increase in the CGP budget?

Is that what you're saying?

Correct.

Okay. What I'm really trying to get at is how to forecast CapEx for the next few years.

Is there any color you can provide? Or is it sort of likely to stay around this $0.5 billion.

Yes. A lot of the surface infrastructure would start to wind down so -- and then you'd just be building in CGP4, but then you would also have to account for additional deferred waste stripping that will come.

So even though -- we'll try and provide a little bit more clarity on some of that as part of our Lithium Strategy Day again.

Right. And I've got a similar line of questioning for Cosmos.

You mentioned that's on budget. Can you remind us what that is?

And I guess, how much is left to spend the following year?

Yes. So we had -- in the front of mind, we have 175 million, so it would be around about the following year in the order of 60 million, 70 million.

And because of where we're at the start of that project, we've got a good line of sight. Our capital number includes contingency as well.

So we're monitoring that as well. So at the moment, we feel comfortable of that.

And we are confident in terms of the remaining on schedule and on budget.

It would be great to see a list of all the projects and their associated budgets in the future. A final one, just on the Kwinana disclosure.

So there's no sales revenue disclosed. There is an EBITDA number which has gone down with higher production.

Is there some toll trading? It looks like there's a note 28 that isn't at least in the pack I've got.

Do you mind talking to that?

I missed the beginning of that question, if you could repeat that, sorry.

Just looking at Page 28 of the quarterly and the sort of final page with the Kwinana financials, there's EBITDA of $11.6 million which is down from $21 million last quarter, but the production is materially higher. I likely remember some toll trading last quarter.

Are we going to be seeing revenue come through? Or how do we think about the toll trading going forward as well?

So the difference in EBITDA was related to the -- getting ready for commercial production. So they did a whole heap of capitalization of costs in the September quarter, which impacted that quarter in a positive way, and that's why you're seeing the differential there.

In respect of sales revenue, we are getting sales revenue from both what I suppose there's a novation, which people are referring to a toll trading arrangement and also from our direct sales. But at this point in time, we've got some commercial sensitivities around those things, and therefore, we're not disclosing that.

Look, I have a couple. I might start with Kwinana, Matt, if that's okay.

Thanks for the clarity around sort of the ramp-up profile going forward. I just wanted to touch upon that 60% to 70% nameplate number that's been put out.

I mean how are you thinking about the asset in terms of the nameplate itself? I mean do you think that's still achievable at Train 1?

Or should we think about that as more an asset or a learning experience where you probably run below nameplate for life of asset or for a long period of time and that Train 2 is where we expect to get back on track? And then also if you can provide a bit of color in terms of how much spodumene you're currently using to convert to per tonne of hydroxide and where you plan -- or where you see that tracking?

That's the first one. I'll come back with second.

Yes. So let's break that first one down.

So nameplate at Train 1 is -- or from design is 24,000 tonnes. And you look at what drives nameplate, there's a couple of things: One is recovery, so efficiency of operations; the other one is throughput; and then the other one is reliability.

So to get to nameplate, you'll 3 to be to reach the design criteria. So what we've worked through is a detailed ramp-up profile.

We've really looked through where those constraints are on each of those 3 elements to get to that production profile. And we've got a program of work, including scheduled shuts about how we rectify and what those rectification programs would be as we work through to get to the 60% to 70% towards nameplate by the end of this calendar year.

Going forward, that ramp-up profile will continue, and we will continue to drive that closer and closer to nameplate. There is an expectation that we'll still get close to ore nameplate.

Okay. And just as a follow-up quickly, if I may.

You highlighted the 3 items that are required for the nameplate. Which one of these 3 would you identify as the biggest risk at this point in time or the biggest opportunity if you had to put it that way?

Again, they're all -- the time -- they take time and they're kind of engineering quite complex, but they -- I mean, even with the capital you're seeing on the capital increase, there aren't any minor changes. So things like heat exchanges, screw feeders, feed to the dryer, bag houses where we're covering the waste products.

All of those engineering things that we have to fix. Look, I couldn't signal out 1 or 2 to continue to get to the nameplate.

We've got to get all of those right.

Okay. All right.

I guess the recoveries covers the amount of spodumene, so you're obviously consuming more than where you should be in your plan to improve on that.

Yes. At this point in time, the recoveries would equal what the design was meant to be as we would expect to get closer and closer on that as we do these reifications.

Okay. Perfect.

And look, just then on to perhaps Train 2 and given the delay in FID. Firstly, I'm -- is it fair to assume that, that would then impact your schedules for Train 3 and 4, which then potentially brings about perhaps a bit of a delay in CGP3 and 4 because they were supposed to be timed with Train 3 and 4?

Unlikely and unlinked. If anything, there may be an option to actually bring Train 3 and 4 together so that we can actually -- because what we're doing is capturing all the engineering designs into Train 2 and then it could be a cookie cutter of Train 3 into Train 4.

Understood. Okay.

Look, final one from me around Forrestania then. Look, the costs are obviously much higher, but you had a bit of seismicity this period, I just wanted to touch upon your work around the blending strategy, how that's progressing and how are you feeling about the reliability of these assets, given their age and the issues that you faced this quarter?

Yes. Look, we understood that on those assets, and we -- they don't have the same sort of flexibility as a new asset, as you expect.

But as we deliver some of these benefits, we will expect to see that cost come down.

Matt, if I could just start on Greenbushes, CGP1, the optimization work you're doing there. I recall the nameplate of the plant was about 700,000 tonnes of concentrate, and I think you've been operating above that.

How should we be thinking about the incremental production from the mag separation circuit?

Yes. I was -- again, we haven't provided that because we're kind of capturing -- we need to try and capture all into one.

But what it does, the mag separation means that you can actually improve both recovery and minor throughput, and recovery is the key value driver in that when you're looking at it as a stand-alone business decision on that capital decision.

Okay. Got it.

And then just probably -- you've provided a similar response on CGP2. The ore sorting, this is a relatively low capital item, and I understand a few of the spodumene operations are looking at it.

Any indication from trial work you've completed as the uplift you could see on CGP2 and the timing? And also, I guess, are you considering ore sorting for CGP3?

Yes. It's too early.

So they're finalizing studies at the moment. Once we make it -- once we're in a position to actually -- Talison Board makes a decision on those capital items and approves, then there might be an opportunity to talk to those in a little bit more detail.

Okay. That's great.

And the -- just going on to Kwinana, you've entered commercial production, but you mentioned the product qualification process is continuing. So I'm just keen to know why this is?

And when do you expect to have your product fully qualified with your offtake partners?

That qualification is happening at the moment. So it will happen over the next 3 to 6 months.

Do you want to talk about the decision to do commercial production at Kwinana?

Yes. Commercial production was related to the fact that there's confidence that we'll be able to do continuous production and be able to achieve consistent chemical grade through that plant.

That's driven by accounting treatment, which is a little bit different to actually getting to sort of that nameplate and a lot.

One question. I'll need to ask one more on Kwinana.

So when do you expect under the new schedule to get to nameplate?

Yes. We haven't actually given that.

We would expect to work through that in the calendar year '24.

Okay. And I'm going to be cheeky.

And the technical product from Greenbushes, what was the price and what's the expected price? And what are the plans going forward in terms of continuing to produce it?

That's an easy one because we can't disclose anything on that. So I mean Greenbushes has the capacity to get to nickel grade.

They've got long-term contracts with the other shareholders. You'd expect those contracts to be renegotiated with time.

You indicated that spodumene production at Greenbushes is going to be the upper end or slightly above the top of the range. Obviously, year-to-date, you've been running extremely well at 1.48 million tonne right.

Is there anything in the rest of the year that might cause a pullback like grade or maybe the contractor changeover as a risk?

Shouldn't the contractor changeover will be -- well managed and will be the risk profile there will be the ramp-up into '24 -- calendar year '24. So we feel comfortable we'll deliver to that top end.

Okay. And just being cheeky like Levi, Kwinana, you did 10% throughput on average during the quarter, but I imagine there were some run times where you had a good go.

Is there any way you can outline to us like a time period, like a number of days or something where it was running 40, 50, 60, some number? Like can you give us some feel for how the plant was running continuously when you had a good run at it?

It doesn't really work that way because we're restricting throughput as we work through some of the bottlenecks. But so we were at -- the back end of December, we're about 15%.

So you can't just do -- it's not like a real true sprint where you will just turn it on and run it 70% could you have to get all the chemistry right and balance it or you end up just -- end up actually taking yourself offline. So it's a gradual ramp-up.

Your nickel study, the timing of those, are we still expecting updated life of mine OpEx from Cosmos or the WSA assets, I guess, in the back end of this calendar year, was that?

Yes. So we'll provide some further guidance when we come out with the FY '23.

And then -- and also we'll look at FY '24, and then we'll also look at Cosmos as we get closer to that production profile coming in. And then in terms of...

[ Will it be ] separate announcements?

Yes, we'll look at whether -- we'll provide guidance when we issue our guidance for FY '24, plus Cosmos may come back through we're getting up to commissioning. Yes, some of the other studies.

So we also have that Mt Goode study that's designed to finish mid-calendar '24 and also the feasibility study on the downstream mid-calendar year '24.

Sorry, what was that first part?

Mt Goode. Yes, Mt Goode '24 and then -- in mid-'24 and downstream mid-'24 as well.

I've got 1 question. It's in a few different parts, but I promise it is just one question.

You called out cost inflation impacting your operating costs during the quarter, I guess, particularly related to your mining contractors at Forrestania, but also Greenbushes. And you suggested that those increased costs are likely to be sustained over the rest of FY '23.

So I'm interested in a couple of things here. Firstly, in transition to Macmahon's at Greenbushes at the start of FY '24.

How do you expect that's going to impact your unit cost? Is that going to be a better outcome for Greenbushes in terms of mining unit costs or albeit considering that clearly, you're going to be moving much higher volumes going forward?

And then secondly, the nickel business, part of the synergy value on offer at the time of the merger with Western areas was obviously consolidating some of your supplier contracts. Obviously, you've got Barminco at all 3 sites.

So are those discussions around consolidation of contracts still ongoing? Is there any opportunity there to extract a bit of a better unit cost outcome across the nickel business?

Yes. So let's -- I'll take Greenbushes first.

So Greenbushes, we've changed to -- change of mining contract, a bigger gear, more efficiencies on a unit cost basis, we'll see costs go down. But as per any operation or any sites, we've seen labor costs, we've seen power costs go up.

Yes, so that -- some of those will start to balance out. So still driving for efficiencies, still opportunities to drive efficiencies and productivities, but that headwind is still there with inflationary escalation of costs.

On the nickel business unit, we're partway through that what we would call delivery on synergies and optimization. So we have yet deliver on the blending strategy.

And we have yet to implement all the group-wide mining contracts and some of the contractual synergies that we can extract and drive value from all 3 operations.

Okay. That's pretty clear.

I'll sneak in my cheeky one, which is can you just update us on the offtake in blending discussion. I thought we would expect to see that with today's results, but unclear what's driving the delay there.

Yes, still in commercial discussion. So that's why we're not in the position to actually release it.

So your royalty over the past few quarters has been calculated on the WA Department of Mines assess price rather than your reported price because there was such a large difference between the lag. Does the new price mechanism change how that functions at all?

And was there any engagement with the ATO prior to the change on how they might view it given that it appears that your lag pricing on the way up, but now you're connected on the way down?

In terms of -- I'll respond to the first one -- or the second one. I mean, as part of this process, this is all managed through Windfield Board.

And the Windfield Board takes a position and shareholders on how they protect themselves from tax, et cetera, and making sure we're doing the right thing from a tax perspective. So we don't think there's any risk there on change in the pricing mechanism, if anything, it actually provides greater transparency.

In terms of the royalty, I don't know -- I can't answer that one.

It's unchanged at this present moment. Obviously, we would like to influence that through Greenbushes.

It's unchanged.

Yes.

Excellent. And I might get my cheeky second one, which is at Nova, can you give us some guidance on the timing of capital for Silver Knight and when that first production might come from the asset?

Yes, we're still working through that on Silver Knight. The challenge with the Silver Knight is ensuring that we actually get the right recoveries.

At the moment, it looks like Silver Knight -- the urgency of Silver Knight is dropping because we can't blend. So if it's going to come into the production profile will come in at the end of Nova.

Okay. So yes, finish one mine and start the other.

It's about 6 months' worth of production. So it's not...

Yes. And I mean in terms of that recovery, does that require any capital?

Or is that just tweaking the plant?

No, what it does is some tweak of the plant. And then -- but what it does is if you mix, you end up reducing recovery out of Nova and on an NPV basis, just does it make sense.

Just sort of level your point on Kwinana, if I could. But I was just wondering if you could go into some more detail around the modification or rectification projects you've identified?

Is it still the dryer as identified at the site visit? And then just how much of the planned CapEx increase will add to the various components?

Yes. We won't get into that sort of resolution.

But it's fair to say the dryer is one of the elements that we need to drive in terms of both and the dryer feed, and the dryer will be one of the elements that we need to fix to ensure that we work towards nameplate capacity.

And then just one more, if I could, in keeping with everyone else. Just curious to the extent that you can talk on behalf of the JV around the ESS acquisition.

Just in terms of target, how important was that business having an existing resource the JV look at other assets? And then in terms of broader strategy, how important is diversifying that upstream exposure?

And then any comments around the timing of the acquisition?

Yes. I'll talk from an IGO perspective rather than TLC perspective, but we're keen to continue to grow that joint venture.

That joint venture is -- our lithium business is structured as a global joint venture. You can see how well it's working where TLCs helping with downstream processing, and we're becoming -- and we're working with -- the mining and the processing side at the upside.

So actually bringing both of those groups together for us is a winning proposition, and we continue to interest in growing that business.

I'll just keep this to one. You've seen other industrial facilities in Kwinana had their production curtailed due to lack of access to gas over the last couple of months.

Do you see that as being a problem over the coming 12 months in your ramp-up? Or is it a risk that'll end or how would you go about mitigating that risk?

Yes. We haven't seen that have an impact on us at the moment.

We're also probably not one of the larger of the gas users in Kwinana, but it's something that we'd have to look through and make sure that we actually do mitigate. That mitigation compared to the east coast, I mean what we saw from the gas was some disruption to multiple sites -- gas producing sites across Australia.

Thank you, operator. I think it's been a good conference call.

So I will just finish here now. So thank you very much, everyone.