Earnings call: IGO Limited CEO discusses performance, plans amid market volatility

In a recent earnings call, IGO Limited's CEO, Ivan Vella, provided an overview of the company's current status and future prospects.

Despite a challenging market environment with volatility in the lithium sector, the company reported strong financial performance, particularly from its Greenbushes asset, which achieved an EBITDA margin of nearly 68% in the June quarter.

Vella also introduced Rob Telford as the new CEO of Talison, tasked with optimizing Greenbushes' performance. The company is preparing for significant strategy refreshes, particularly in the battery metals sector, and is focusing on managing costs, especially as it transitions some assets into care and maintenance.

CFO Kathleen Bozanic mentioned a cash balance of around A$200 million, affected by dividends and tax payments, but also by capital expenditure needs. The company is also considering monetizing assets and prioritizing closure and rehabilitation processes.

Key Takeaways

• IGO Limited reported strong financial performance, with Greenbushes asset achieving high EBITDA margins.
• Rob Telford appointed as new CEO of Talison to optimize Greenbushes.
• The company is focusing on cost management and preparing for a strategy refresh in the battery metals sector.
• Cash balance stands at approximately A$200 million, influenced by dividends, tax bills, and CapEx needs.
• IGO Limited is considering asset monetization and prioritizing closure and rehabilitation processes.

Company Outlook

• IGO Limited is preparing for growth with a strategy refresh and organizational changes.
• The company is working on improving operational stability and control, particularly at Kwinana.
• Management is optimistic about the fresh experience and energy new executive leadership team (ELT) members will bring.

Bearish Highlights

• The lithium market is experiencing volatility and subdued prices, with uncertainty in Western markets.
• The company acknowledged the need for further safety improvements and psychosocial safety focus amid change.
• IGO Limited is nearing the end of life for its Nova asset and is transitioning Forrestania into care and maintenance.

Bullish Highlights

• Greenbushes continues to perform strongly with low production costs and high EBITDA margins.
• New leadership under Rob Telford is expected to elevate business performance.
• The company's focus on managing cash and performance in the Nickel division remains strong.

Misses

• IGO Limited recognized an impairment of A$275 million to A$295 million against its exploration portfolio, primarily related to nickel assets.
• The upcoming shutdown of Kwinana will require improvements in operational stability and control.

Q&A Highlights

• Management discussed production plans, cost inflation, and cash balances in response to questions about Nova's production and Greenbushes' CapEx.
• The company is aligning sales with production and working on qualifying more customers for Kwinana's product.
• The focus on value over volume was emphasized, with a mature approach to the lithium market needed.

IGO Limited (ticker: IGO) CEO Ivan Vella addressed various challenges and strategies during the earnings call, indicating a commitment to responsible and sustainable growth. With a focus on maximizing the value of existing assets and careful consideration of new investments, IGO Limited is navigating through market volatility with an eye towards a strong future in the battery metals sector.

Full transcript - None (IPGDF) Q4 2024:

Ivan Vella: Thank you. Good morning. Welcome. Thanks for joining us everyone. Kath Bozanic is joining me on this session again today. I'm going to try and run through the highlights quite quickly and just leave more time for the Q&A. There is a couple of slides we'll step through. First of all, on safety, look, the last quarter, we've seen a continued improvement in performance, which is encouraging. There is still plenty to do. I guess I feel the momentum and the direction of improvement is good when we look back over the last financial year, but still at a TRIFR of 10.4 is still not where we need to be. And it's great to see the focus across the team, across the business on safety. Our leading indicators regards to safety interactions and leadership engagement, the general focus across the business is continuing to lift, and that gives me a lot of encouragement and a sense that we are on the right track, but need to keep working at it. We've also been focusing heavily on the psychosocial safety of our people, and I'll talk more to the changes in our corporate structure and exploration later in the call. But as you can appreciate a period of a lot of change, a lot of uncertainty within the business, and also within the broader market that thinking about the wellness and the psychosocial safety of our people is very important. Before I dive into Greenbushes, I thought I'd just share a few reflections on the market, which probably isn't going to add a whole lot across the call. I think that we would all agree there is a lot of uncertainty, a lot of things we don't know about the world of lithium. It's still very volatile and obviously prices are quite subdued at the moment. There is a fairly high level of pessimism across the market both on the demand side, we see lots of media and commentary around EVs. My observation is that in China, there is still a pretty solid momentum and progress and strong take up. There is obviously quite a lot of focus on that from the government in the way it's being incentivized. Equally, there is a great product being offered to consumers there in the EVs and a great price point. Then contrast that with Western markets where there is a lot more uncertainty and more questions, and obviously the political situation in different environments is playing into that as well. So not much signal – real tight signals for direction on demand overall. And I guess we see that on the supply side as well. There is a mixed set of stories coming through around projects that are progressing, some that aren't. And overall still a fairly high degree of uncertainty. Our view there continues to be that over the medium term, supply will be more challenged than a lot would hold out. And of course, we want to continue to focus on our asset Greenbushes, which is right at the bottom of the cost curve, and continue to, I guess, get the very best from it, help it with its performance. Let's talk through Greenbushes briefly. I think some real highlights from the quarter. Clearly, it's great to see it back to full production. The 200,000 ton sale that we talked about in the last quarter is a good outcome and I think removed any constraints there from production, it's nice to see. The challenges of Q1 and the uncertainty there unraveled and put us back on a path of full production. The EBITDA margins for the June quarter were just shy of 68%, which is fabulous in this kind of market, and 85% across the full financial year. It just shows you the incredible strength of this asset. That translated to some good cash generation and dividends that flowed through to IGO totaling A$760 million over the full financial year, A$159 million for the quarter. Looking into FY2025, we've got a new CEO for Talison coming. Rob Telford, who some of you I'm sure will know ex-BHP, stunning career, very, very strong technical background. He has a pedigree around operating excellence and improving mines across that business in his career. He's got extensive experience. He was the Global Head of Health and Safety for BHP at one point as well. He comes very motivated to make this shift and to, I guess, bring all of his experience to bear as he helps to optimize and lift the performance of Greenbushes. We are also continuing our construction of CGP3, which is the next step of growth for Greenbushes. We've had as you know some early delays on the piling, which added some time and cost. And beyond that, we are still progressing towards or expecting our commissioning to commence in the third quarter of next year. From a guidance point of view, we are expecting the Greenbushes to continue to run unconstrained through FY2025. The midpoint of our production guidance is just a little bit higher than where we finished in FY2024. And costs are guided between 320 and 380 per ton. On Kwinana, look, a good quarter, better quarter, maybe not good, a better quarter, certainly some improvement. The team's focusing very hard on operational stability and control, and doing their best to manage the asset as it is until the shutdown in the last quarter of this year. That's where we will expect to make some more material changes to the way that the asset's configured and lift performance again. The production of the battery grade material progresses and I think that's very stable and something that we can depend on now and the sales have started to flow as well, which is good. We need to work through some of the backlog of inventory there. But it's nice to see our customers taking that product. A couple of comments on Nova, which had a really strong finish to the year. They had a tough last quarter and quarter prior, this quarter they really came home well and finished the year just a little below guidance on tons pulled in their cost guidance. And overall, this is a mine that's obviously delivered very well for IGO over the years. It is getting towards its end of life and the optionality in that mine is certainly well less and more constrained now. We don't have the open pathways and schedule that we've had in the past. So very conscious of that. And our guidance for the financial year 2025 reflects that. We think that we need to be quite attentive to that schedule and make sure that we get the very best out of the asset. Equally, we are working hard on our costs across Nova to make sure that they are trended and managed in alignment with our production. This team at site doing a fabulous job. I was there last week, spent a few days with them, went underground, went through the mill again, and performing well, doing a fabulous job. And I have a lot of confidence that they will manage this much more complex phase of the mind through to closure in a couple of years time. Forrestania, so we see, that's obviously much closer now. It's got a matter of months to go effectively. We expect that we will move that into care and maintenance by the end of the year. And we just recently had another seismic event. This is not unusual for a mine of that depth and that age. And that's definitely affected some of our plan schedule on the stopes and the tons that we can pull out. These are I guess the normal challenges that you get when you are nearing the end of life of a mine. We will manage that closely. The cash position is still strong given the hedge that we have in place. And we continue to focus on our [indiscernible] lithium exploration. There is some good potential there. And something that makes a lot of sense given the infrastructure base that we've got in place. On exploration, we've been working through that broader business review that I assigned posted last quarter. That's progressing at pace. Suzanne's, our GM exploration's done a fabulous job working through an end-to-end rethink of how we approached our exploration. We've got, as I've said before, fantastic ingredients in terms of our tenement landholding belt-scale positions in very prospective ground. Fantastic capability in our team. Just deep technical capability across all the disciplines that we need. Access to incredible range of data that underpins our work. And we are now just rationalizing that program of work, the portfolio that we focus on, and directing our attention on to the areas that are most prospective to generate value, where our guidance for the FY2025 takes that budget down to A$50 million to A$60 million. But ultimately that's going to trend down towards a target run rate for the following year of less than A$50 million. And that's really about making sure we manage all of the commitments across those tenements and our position to make sure that we've gone and tested each of those as we unwind some of that portfolio. I'll also note the impairment that we announced a few weeks ago, A$275 million to A$295 million against our exploration portfolio, and that's part of this rationalization and review that's going on. That focused predominantly on Silver Knight, Mt Goode, and a range of other largely nickel-related assets in our portfolio. I won't go through the guidance slide, which I've sort of touched on much of this as I've gone through it. But we can come back to that in Q&A as you need to. Maybe just to sum up, and I wanted to sort of take us back to the five priorities that I've talked about. I'm now just over six months into the role, and these five priorities, I think really stand well, and we are making good progress against them. Firstly, on safety and sustainability. We continue that focus on safety, and I think, of course, it's a journey. But there's a good momentum and direction of improvement there through this period, and I'll talk more to the changes. We are also very focused on our culture, and that's something that IGO has been well regarded and recognized for. We are going through a lot of change affecting our people, and that's very difficult. It's so hard hearing from people in our business, where they are leaving our business that they are deeply connected with IGO and they are not necessarily worried about finding another job. They are worried about not being part of IGO. And that's heartbreaking to hear, but equally it speaks to the culture that we build and what we need to reinforce and not lose sight of through this period of change. And of course, that has a very strong link to safety performance across the business. Secondly, on Greenbushes. I've talked about our focus there, working closely with our joint venture partners. We are very aligned on that future for Greenbushes. Everyone's equally committed to the success and performance of that asset, driving efficiencies, productivity, and very careful allocation of our growth capital. It is clearly the best place we can allocate capital by a long shot. There is a lot of potential there, and we believe that the new management under Rob's leadership will absolutely make a standout difference. He will bring fresh eyes, fresh experience that deep pedigree from his time in BHP and help us lift the business to the next level. Kwinana, look the big focus is on that shutdown. The team is preparing well for that. Getting all of the materials and equipment in place. That will be a significant milestone for Kwinana and will tell us the potential of that asset. It is good to see in the intervening period that they manage very closely on their day-to-day operating performance. Nickel, I've talked about – really the priority there is managing our cash and our performance from safe production at Nova, and then taking Forrestania through to care and maintenance as quickly as possible. And then lastly, I've talked about preparing for growth, and that really is about reviewing our business top to tail. I've sort of signposted some of this in my prior calls. The focus on getting the right capability, the right strategy, and the right focus across our business is key. We are finalizing the exploration business review that's progressed well. We've gone through a significant corporate review looking at our operating model and our org structure. That's well progressed as well. We've been working through the impairments of different assets across our balance sheet in exploration as we rationalize that portfolio. And as you know, we are working through and well progressed on a significant strategy refresh as well, which has taken a very deep dive into the commodities that we are focused on in the battery metals sector. So all of this significant work all in parallel, which has been tough on the team. They have done a great job to steer through that, and I feel very confident with where we are getting to. We've got new ELT members joining. Brett just started last week, and it's great to have him on board. Marie comes in a few weeks time. She is excited about that as well. And I think both will bring fantastic fresh, new energy and experience to the team. And with that new strategy allow us to look forward with a lot of confidence where we take IGO in its next chapter. The last point I wanted to note was that our quarterly reporting in the spirit of simplifying our business, which we are doing from top to tail. We are also going to simplify that. And you'll see next quarter a re-cut and reshaped and much simplified quarterly report really focused on our operations and our operating performance and separating that from more of the detailed financial results that we've tended to put in the past. With that, I'm going to – did I go 15 minutes. Probably a bit longer than I'd hope, but anyway, let's throw it open to Q&A and tackle the questions you've got.

Operator: Thank you. [Operator Instructions] Your first question comes from Rahul Anand from Morgan Stanley (NYSE:MS). Please go ahead.

Rahul Anand: Hi. Good morning, team. Thanks for the call. Two questions from me. First one, perhaps on Nova. And seems to be a bit of a drop off in production into next year at least versus our forecast and consensus, which I think were informed by some of the slide presentations in the past. I just wanted to check in on a few things. I mean, is this a bit of a change in the plan to preserve mine life? Are you still expecting mine life to be around that FY2027 mark? And how are you thinking about grades till the end of mine life? That's the first one on Nova. I'll come back with a second on Greenbushes. Thanks.

Ivan Vella: Rahul, yes, thank you. Great question. I'm sure it's on everyone's mind. And look, I haven't been here to sort of be part of the calls and the conversations in the past. There is no change in the plan from my point of view. The teams basically run the stope sequence and schedule. And this is what basically what pops out in terms of production. Grades are reasonably flat. There's nothing material that we're expecting in terms of change on that. So ultimately this is really about just that sequence and making sure that we've got a reliable and predictable production plan through this year. So yes, I don't know – helps you much.

Rahul Anand: So basically flattish production up till FY2027 is…

Ivan Vella: Yes, it will continue. It'll dip off at the end naturally, right? The tail of any mine as you run down to the end will start to dip. But yes, that timeframe is still the plan. We can see the stope sequence right to the end and subject to seismicity or other issues that come up, which can happen. We have pretty good confidence in our production plan right through to the end now.

Rahul Anand: Got it. Okay. Look, my question on Greenbushes then, around the CapEx, obviously the 900 number for next year. Just wanted to understand, I mean, has there been inflation in the CGP3-related CapEx? Or we're talking about pre-strip requirements seems to be quite sizable. I mean, is this the point where we start to have a bit of congruence between the mine plan that was put out by Albemarle (NYSE:ALB) versus what was put out by Tianqi, I mean, if you can help me square the circle on the CapEx for next year please?

Ivan Vella: Yes. Look, let me make a few comments and Kath can add to it as needed. The CapEx, if we talk about the big bites, obviously CGP3, is a key piece in there. There's work on tailings as well, so new tailings facility that we're expanding there. Water as well and pre-strip, which you've already mentioned. The other piece that's probably not on your mind is some land purchases when we think about our waste management, waste dumps across the site. So there's some in there which are one-offs, of course, and go through growth CapEx and there's some which like tailings and stripping, which are part of the business now. They will go up and down. You know that with Kapanga coming, we've obviously got some elevated stripping in parts of the mine life. But I don't see this as something that says, well, you draw a straight line across our CapEx going forward at that level.

Rahul Anand: Okay. So, I mean, has there been an increase in the cost for CGP3? I guess because I wouldn't go back to the acquisition presentation because that 500 to 550 number was probably ignoring the inflation that was going to come through the years. But I mean, how much has CGP3 ended up costing in the end? If you can provide us a ballpark on that?

Ivan Vella: Yes. Look, I can't share that. I mean, our joint venture partners are all parties to this and we're not open to sharing all that detail at this point for each individual projects. But I mean, clearly there has been cost inflation. WA has seen that across the board. And I also called out the initial impacts of the piling challenges they had at the start of the project, which both affected the schedule to some degree and the costs. So there's growth in rates, but there's also been some change in scope as well due to that.

Rahul Anand: Understood. Okay. Thank you very much. I'll pass it on.

Ivan Vella: Cheers Rahul.

Operator: Thank you. Your next question comes from Jon Bishop from Jarden Group. Please go ahead.

Jon Bishop: Good morning. Thanks for taking my questions. Just on your guidance for Greenbushes. You've given sort of a broader range than what you've done in previous years. Can I get some context as to the drivers there?

Ivan Vella: Okay. Thanks, Jon. Look, the midpoints just above where we're at now, there's certainly an opportunity as we optimize and stabilize CGP2 and the tailings repurposing – and re-treatment facilities to drive more production. We've got a plan from Talison. That's what we sort of used to drive our guidance. But there's certainly upside opportunity on that. So I wanted to broaden that range until we get a better sense. As we know more information from them, we can always tighten that.

Jon Bishop: Okay. And possibly interrelated, you talked about China versus Rest of World signals. I mean just using rudimentary maths of a 7.50 to 1 conversion at current chemical prices at the moment. Looks like conversion costs would need to be sort of below US$4,000 a ton to make a margin at current prices. Are you seeing any changes in joint venture behaviors particularly from an off-take perspective?

Ivan Vella: So, on your maths, that's assuming that you don't count the margin you make on the spodumene. So if you roll it at US$7,000 for your spot as a cost and then US$4,000 that gets you into the territory. Is that what you mean, Jon?

Jon Bishop: Yes.

Ivan Vella: Yes. Sure. Yes, look, I mean, I think, that's the whole world's thing. Converters are under pressure, right? There's plenty of people who are finding it difficult to make a lot of money at this price point. Even the people who are converting that industry standard, which what we would see is 3,000 to 3,500 is probably the leading practice in the industry. And maybe four to five for those that are still refining their processes in that range with spodumene at the level it is. There's not too many people making money. Of course, what you then call out is of course, at that point, we're still making EBITDA margin in the mid-60s.

Jon Bishop: Yes. I guess where I'm getting to is, are you seeing any change in your partners particularly given their vertical integration around off-take behavior?

Ivan Vella: No.

Jon Bishop: No. Okay. All right. Thank you very much.

Operator: Thank you. Your next question comes from Kate McCutcheon from Citi. Please go ahead.

Kate McCutcheon: Hi. Good morning, Ivan, Kath. You announced that cash sweep out of TLEA in June. How much cash sits in that JV at end of June? I think from the last disclosures, it would imply there's over a couple of 100 million there. So just want to check my maths there. And how do we think about timing on when that suite might normalize, i.e. that cash consistently gets swept across? And maybe that ties into a train to FID decision. If you can talk through that, please?

Kathleen Bozanic: Yes. The cash balance has come down considerably with the dividends that have been paid. But also there was quite a large tax bill that was paid out of Greenbushes. So it's normalized to a fair level which we're confident with is a sustainable level going forward. Kate, when we put out our Annual Report, we'll do the summary that we've done in the past in the next two or three weeks, which will give you a little bit more detail across the two businesses. It's in the order of about A$200 million cash being held. So that probably gives you a bit of an indication around where that balance is at the moment. It will be a bit lumpy going forward based on where our CapEx is in and what we need to retain from that perspective. In respect of Train 2, it's in FEED process at the moment that would be coming out or being provided to the shareholders and joint venture partners late this year and FID will follow that. And we will do a very robust review of that in terms of timing and approvals.

Ivan Vella: And I'd maybe just add to that, Kath. It's a good summary. Clearly, we're going to stress test that economically very thoughtfully, one on the performance and the economics of Train 1. Two, albeit that half of Train 2 is built, that still doesn't mean to say it's a free kick. It does give us some optionality. But it does need to pass the hurdles and the test for capital allocation. And it's a very, very difficult industry. It's highly competitive. There's a lot of capacity that's been built in China. Those refiners, converters are making very limited margins. So we're very close to that. We're aware of it. We will stress test that very thoughtfully and make sure it – as we look at the FEED, we have a very clear view of the economics and the potential of it in the market.

Kate McCutcheon: Okay. Got it. And then a quick one on your Nickel guidance. What byproduct pricing have you assumed maybe for copper?

Ivan Vella: Sorry, what by-part product?

Kate McCutcheon: Yes, correct. What copper pricing have you assumed in your guidance for Nova for your cash costs?

Kathleen Bozanic: As we always do, Kate, it's consensus. I don't have the exact [indiscernible] at this present moment, but consensus is what we utilize.

Kate McCutcheon: Okay, cool. Thank you. And then when you're recutting your quarterly, if we can put back in the cash flow waterfalls that would be excellent. Thank you.

Ivan Vella: Yes. Okay. Thanks for the feedback. The problem is, I guess, copper consensus seems to be changing. Doesn't it?

Kate McCutcheon: Sorry, the cash flow waterfall charts?

Ivan Vella: No. Just having a laugh at the copper consensus, that's all. It's hard to keep up with all the AI.

Kate McCutcheon: Okay. Thank you.

Operator: Thank you. Your next question comes from Hugo Nicolaci from Goldman Sachs (NYSE:GS). Please go ahead.

Hugo Nicolaci: Good morning, Ivan and Kath. Thanks for the update this morning. One on Greenbushes. You've noted that maximizing the value of Greenbushes is going to be part of the strategic review. And appreciate we'll get more color on that one in August. But at a higher level, if I look at it, the JV is already looking to implement or sorting across a number of the plants and at the site level. I mean, do you think that extending the TRP with some of those optimizations could potentially push out the need to do CGP4 and you could potentially get the same volume out of that optimization? And then I'll come back with a second. Thanks.

Ivan Vella: Yes. I mean, great question Hugo. Absolutely. The asset we have at the TRP obviously absent the grinding capacity you would need is a part of the plan. And how we repurpose and rethink, that's got to be part of the broader optimization. The other point which you're calling out is, how do you get more out of the existing assets? We've got two significant processing assets there with CGP1 and 2, and then soon with 3. The recoveries are still not where they need to be. We know that. The throughput improvements and potential is another area of focus. So from me, and I guess the wiring I have is get the very, very best out of your existing assets before you sign up a bunch of capital for new assets. That's certainly going to be my bias as I look at those investment decisions with the other joint venture partners. I suspect they'll be of the same mind. But what we've got to do is bring in the best thinking to help us make sure we've got that potential being realized step by step. I think Rob Telford is going to be a huge part of that with his background. And making sure that we've squeezed every drip we can out of those existing processing facilities before we just jump to a new investment decision. That's not to say that that CGP4 in itself doesn't have value. We need to think about that in light of the broader market as well though. And this, as I called out at the top of the call, there's so much uncertainty and unknowns. We just need to be really thoughtful and careful about those kind of big capital decisions.

Hugo Nicolaci: Great. Thanks, Ivan. And then just one on Kwinana also called out 80 million to 100 million spend on those Train 1 improvements. Can you maybe give a bit more color on what those improvements of the December quarter are and what level of performance you expect them to deliver at this stage?

Ivan Vella: Yes. Hugo, I mean, I'm not going to give you a number unfortunately. I know you'd love it to give you specifics. Set the team up on that basis. But they're in the backend of the plan in the hydromet phase or section of the plant. I'll give you an example, a portable centrifuge or an extra centrifuge separating the lithium crystals as they start to form. So there's some new pieces of equipment, there's modifications as well. There's also gas treatment facility that we're putting in. That'll go in post the shut. But it's a separate standalone piece of work, which is happening in Q1. So though that capital that we've guided on covers the full financial year, it's not all being consumed in that shut in Q4 this year. Some of that will run. In fact, a fair chunk of it will also run into the second half of this financial year.

Hugo Nicolaci: But then just to clarify that, I mean, is that kind of most of what you expect to have left in terms of Train 1 rectifications? Or is this another step and maybe there'll be another significant leak of rectifications in FY2026?

Ivan Vella: Well, yes, great question. Don't know. It's still too early to tell. I'm asking that question as well. So the team's got a clear view of what they need to do for this shut and the modifications and the improvements they're expecting. We've got the gas treatment facility to finalize that the foundations are done. We're waiting on some of the equipment to come through and then that'll be installed. There are then things we need to do beyond that, which they're anticipating and planning for, hence the guidance. But can I give you a runway beyond that into FY2026? No, not yet. That is certainly something I'm eagerly awaiting.

Hugo Nicolaci: Thanks for that. I'll pass it on. Thanks.

Operator: Thank you. Your next question comes from Tim Hoff from Canaccord. Please go ahead.

Timothy Hoff: Hi, Ivan. Thanks for the call. I was just wondering if we get some – an idea of what care and maintenance costs might be for the Cosmos and Forrestania over the course of the next year.

Ivan Vella: Okay. Yes, sure Tim. I think 12 to 15 is what we've guided for Cosmos. And have we given a number on Forrestania yet?

Kathleen Bozanic: No. We haven't given a number. But it will be less than the Cosmos because we'll be actually flooding the mines, which saves quite a bit on energy.

Ivan Vella: Yes. It's quite – I mean, Tim, I guess, probably the context that's helpful is, it's a very different approach. Care and maintenance is I guess about keeping our assets in a healthy position at Cosmos and we're continuing the work on the study and looking at the mineralization. There's some brownfield exploration there going on across that property. For Forrestania, it's a very different context where those mines will ultimately close and we don't have to maintain them.

Timothy Hoff: Yes. And just around Forrestania, are there any options on that for monetizing the asset, realizing there's a few gold bits and pieces around the area or has there been any approaches on that one?

Ivan Vella: Look, as a general principle, we'll always look to get the best value out of our assets. And I'm sure this question will come from Nova's assets in due course. But I think a fine line we have to walk around making sure that the rehabilitation and closure process is done professionally that meets the kind of standards that IGO expects and wants to be known for, and then equally partnering well with others if they can get value from our assets to get the best out of that. So with that kind of principle in mind, I will always look for those opportunities and try and get the best value for our shareholders with that constrained around or being very clear about our closure and rehab process.

Timothy Hoff: Thank you. Perhaps with the debt at Greenbushes, was that 1.55 drawn in the end or is that still undrawn?

Kathleen Bozanic: We had about 1 billion drawn before that debt. We have drawn down part of that to support the CapEx that we are doing, and we anticipate a large proportion of that will be drawn during the course of the next six months as we continue to pay for the CapEx. But we'll give more clarity in the Annual Report. You'll be able to see in a note the summary of the consolidated balance sheet in August.

Timothy Hoff: Brilliant. Thank you very much for that. Thank you.

Operator: Thank you. Your next question comes from Daniel Morgan from Barrenjoey. Please go ahead.

Daniel Morgan: Hi. Thanks, Ivan and team. Just on the Kwinana asset. Were there any net realizable value changes embedded in the Kwinana result? And, also if you could just touch on the sales outlook of that, when will we have sales roughly aligned with production? Thank you.

Kathleen Bozanic: Yes. There were NRV adjustments in there as we closed out the end of year. The inventory was revalued. The other thing in there is there's some stock adjustments we obviously produced more than we sold, which is factored into that number. Ivan, do want to cover off forward in terms of sales?

Ivan Vella: Yes. Look, I mean, so clearly we work on getting those sales aligned with production. And in production, we're trying obviously to ramp up. There's still going to be some time as we qualify more customers for Kwinana's product, and that gives us more optionality. And equally they've got their own supply chain to manage. So their demand's variable. I think it's just a work in progress as we mature our sales and marketing process for Kwinana and we start getting steady production. So I can't give you a date as such as when we get there, but clear intent focus is to get that inventory sold down and then have that production flowing straight through to our customers.

Daniel Morgan: Thank you. And second question just relates to the relationships with JV partners and also the beefing up of your executive team. Just wanted to dive in if you could touch on, when you started, you wanted to improve the relationships with JV partners and you've also beefed up the executive team. Just wondering how that's going to – how those two might relate and how embedded you might be in helping to optimize these assets for the JV partners.

Ivan Vella: Okay. A couple of different parts of your question. So look, we continue to build that partnership. I'm obviously six months in or just over that now and still relatively new. And I've been to China a number of times, met with TLC equally with Albemarle as well. I think about both as really key partners for us in the primary asset of Greenbushes and then just with TLC on Kwinana. And the future growth and as we look forward in our business how we approach and think about that with TLC as well, getting alignment on those aspects. So that's a work in progress and that kind of deep trusted relationship is something that I'm passionate and committed to. I think there's enormous benefit in the partnership between – and potential in the partnership between TLC and IGO. We bring very different strengths and backgrounds and together, I think there's a lot that we can do. The same holds for Albemarle, who's preeminent, fantastic player in the lithium industry and they don't know mining in depth. And I'm sitting on the board of Windfield now and much more involved in Greenbushes. It's great seeing the three different shareholders or joint venture partners, they're working together each bringing their strengths to try and build and optimize that business. And I think this is where IGO can bring more and more value to the table with our mining depth. You talked about our team members. So Brett clearly brings real depth in sales and marketing in commodities, a number of commodities across Asia and China. He knows China very well having lived and worked there several times through his career. And he's got that broader commercial and corporate development background. And then Marie brings real operating pedigree and will get very involved with the work at Greenbushes and Talison supporting the team, supporting Rob as he ramps up. They know each other well from their past and again, doing what we can to bring more mining pedigree and support to the optimization of Greenbushes.

Daniel Morgan: Thanks so much for your perspectives.

Operator: Thank you. Your next question comes from Kaan Peker from RBC (TSX:RY). Please go ahead.

Kaan Peker: Hi, Ivan and Kath. Two questions for me. The first one is on the nickel assets. There's comments around nickel concentrate for domestic delivery being directed for exports. Can you give a bit more detail around that?

Kathleen Bozanic: Yes, I can. We delivered to Nickel West in Kambalda. But we were asked to do a delivery – export delivery during this process or during the last couple of months. And so we delivered down to Esperance for a shipment, which is, I think imminently going if it didn't go in the last day or so.

Kaan Peker: So I assume that's got to do with take or pay commitments with Nickel West?

Kathleen Bozanic: I wouldn't say take or pay, but under our contractual arrangements they can ask us to deliver to a different location.

Kaan Peker: Sure. And how much of your product is that? And I assume that's the same pay abilities for Nova?

Kathleen Bozanic: Yes. We don't really talk to commercial arrangements. But it is the same pay abilities as what we had in the Kambalda deliveries.

Kaan Peker: And the percentage of your product that can be asked to be redirected?

Kathleen Bozanic: Well they can redirect all of it should they choose and under the new arrangements we will be exporting.

Kaan Peker: Sure. And who pays for the transportation difference?

Kathleen Bozanic: It's standard. There's a freight differential that is in the contract that gets dealt with.

Kaan Peker: So that's IGO or BHP?

Kathleen Bozanic: It's BHP because the freight differential is certainly risk.

Kaan Peker: Sure. Thank you. And maybe just the second one on the TLEA cash sweep. If Windfield hadn't restructured its JV debt i.e. got more debt on the books to pay for CapEx, would that dividend been as large?

Ivan Vella: Look, I think, you can't take a point in time to assess that. We'd accrued quite a lot of cash. Well Windfield, Talison, accrued quite a lot of cash in the lead up to that dividend payment. And it was within a judgment of what do we need to look forward for our CapEx requirements, what do we need in terms of buffer with a view on the market and the price realization for the production that we're producing and taking a perspective on that, we've then released the cash that we could. So there's a number of factors that came into that, including the 200,000 ton sale to clear that and open production fully and equally pull those receipts in. So, yes, it's not as simple as saying, well, the debt equals the dividend.

Kaan Peker: Yes. Understood. Thank you.

Operator: Thank you. Your next question comes from Lyndon Fagan from JPMorgan (NYSE:JPM). Please go ahead.

Lyndon Fagan: Good morning. Just with the CapEx guidance for Greenbushes. I'm wondering if you're able to separate sustaining and growth for me. I'm just a bit unclear on how to think about sustaining CapEx going forward considering how big that number is? Thanks.

Ivan Vella: Yes. Look, great question. I understand the driver behind it, it's not something that we can share given our JV there to separate that we don't guide on that split out of CapEx unfortunately.

Lyndon Fagan: Is there something within the kind of scope of the operations that may have affected the sustaining piece? If you can't talk to numbers, just to try and understand a bit more about what's happening on the ground?

Ivan Vella: So stripping will obviously vary and particularly when we've got new parts of the pit we're opening. I mentioned purchasing land to give us more access for waste dumps. So that's not – is that growth or is that sustaining, probably hard to judge how you want to assess that. So there's a few things in there that are not normal. As I mentioned earlier, when I went through the CapEx, obviously CGP3 is playing growth and that runs through our tailings facility. So that's in flight at the moment and some of our water management as well. I think some of these things you can argue their growth because they underpin the growth and without them you don't have the basis to continue to grow and deliver CGP3 and CGP4 and so on. So I know I'm not giving you clear specific direct answers on sustaining CapEx. But it's also an asset where probably the other point I'd make is, we've now ramped up CGP1 and 2, they're running at full rate. And we've got a much bigger mining function across the business that we still need to get to a place where that's optimized and stabilized. So we're far from a place of being able to point to a long run or stable sustaining CapEx requirement for the business.

Lyndon Fagan: And I guess, how many more years are these lumpy items continuing for, like when would the sustaining CapEx start to look a bit more normalized?

Ivan Vella: Well, can I maybe answer the question a different way? I'm really eager for the business to go through that full life of mine optimization. I think that's what tells you the best pathway, the best NPV from it, and obviously we'll give you a clear view of how you balance your CapEx over time and optimize the cash. So I don't have that yet. So I think to jump to it, it'd just be guesswork at this point. I mean, we have a point of view from the plan. But I think there's still so many things to work through, so many upside options to look at before we try and put a stake in the ground on that.

Lyndon Fagan: Okay. Thanks for that. And then I guess the last one is also on Greenbushes. I'm just trying to reconcile the EBITDA with the implied net profit that feeds into your underlying EBITDA. I'm wondering if you can help us understand some of the items there. Like what's the depreciation running at these days? Maybe what's sort of interest bills coming through that's affecting that just to kind of set some parameters going forward? Thanks.

Kathleen Bozanic: So one thing I'll comment on there is when you actually look at our net profit and the depreciation, we've also got the purchase price allocation depreciation going through there. So when you look at IGO, there's another layer of depreciation. Depreciation is at a standard rate that you'd expect for mines in terms of their life. In terms of interest, it's at commercial rates. They achieved a really good interest rate there. So I think that there'll be a little bit more detail on that in the Annual Report.

Lyndon Fagan: And is there any other items we need to think about or is it really just those?

Kathleen Bozanic: I think it's those two. I can't think of anything else out of unusual in there.

Lyndon Fagan: Okay. Thanks.

Operator: Thank you. Your next question comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.

Hugo Nicolaci: Thanks for the opportunity for a follow-up. I just wanted to come back to the comments around preparing for growth, noting in the slides, reshaping the business and improving your capability. What areas do you feel you need to improve your capability? And I guess, what are some of those growth focus areas that you're looking to? Thanks.

Ivan Vella: Hugo, you want an early cut of the strategy. Look, I think I'll give you a couple of examples. Brett is a great example, bringing in someone with a much deeper set of sales and marketing commercial expertise. His experience in China I think is very important as we look forward. Those are capabilities that we've really not had any focus on as a nickel business selling to one customer for a long time in a very stable model. We produce contracts and manage contracts, so thinking about how lithium grows as an industry and as a market and how we want to best position that. There's a lot to do. I think all of the industry players are looking at that. You probably saw the announcement around Ganfeng and their positioning just the other day. It's a very mature commodity and market and I think a lot of upside. So that's one example. Our depth around lithium is obviously in focus more broadly. And in terms of the understanding we've developed and we've grown that in the last year or so. I think there's still plenty more to do there as we learn and understand that industry both in terms of the raw material supply, understanding our competitors in brands. But also then the processing and the value chain as well. Beyond that exploration, I think we've got a fantastic team and capability. We are reshaping and rethinking that and looking to drive a lot more from our investments in exploration looking forward. And there's key areas there that I know Suzanne's focusing on lifting and changing as well. There's a couple of examples. I'm sort of giving a couple of headlines. But we will certainly talk more to that in depth in the strategy refresh when we present that.

Hugo Nicolaci: Thanks for that extra color. I look forward to that strategy refresh. And then just another one for Kath, appreciate a few different ways of asking this question so far. But I guess from a Greenbushes perspective, would you categorize the deferred stripping for FY2025 as a material part of that CapEx guidance?

Kathleen Bozanic: Yes. As we've directed in the past, stripping has gone up and I think Ivan's touched base on that. Yes, it is a reasonable portion of that CapEx.

Hugo Nicolaci: Great. Thanks a lot guys. That's awesome.

Operator: Thank you. Your next question comes from Rob Stein from Macquarie. Please go ahead.

Robert Stein: Hi, guys. Thanks for the update. Just in terms of the immaturity of the market, how you think about your position in the market. When you look towards growth, how are you using I guess the collective experience of the team in iron ore and the like to really think about value over volume and production targets and growth as you look to bring on CGP, potentially CGP4 or repurpose a tailing of treatment plan? How you sort of thinking about signaling of that? How are you thinking about bringing that on? Because we've seen some of your competitors quite aggressive in talking about volumes. And I've got follow up. Thanks.

Ivan Vella: Thanks, Rob. Yes, big question. There's a lot in that. Probably, I won't try and cover it all now. It's sort of thing we can talk through more as we get into the strategy. But I think we're very unique in the part of Greenbushes that we hold. And I guess that overall asset in its cost position, it's just so strong. It gives you a very different outlook. That said, of course, the off-take is then shipped to two major players in the industry and how they manage it. There's still a level of uncertainty around that forward demand and how that plays out with all of the other political pressures on it. So we've got to be thoughtful about that forward market. But I guess, as you all know the tons that we produced out of Greenbushes are always going to win on a like-for-like basis against spodumene from anywhere else in the world. Even some of the best deposits out there that are being considered for development just don't have the same cost potential. So if you look at the forward market and you said you need to roughly double the number of producing lithium assets in the world over the next eight to 10 years to meet demand give or take and that's going to take a significant amount of capital flow to do it. Greenbushes should be at the forefront there. It's got the best margins and the best positioning to keep up with that new demand. I think I might leave it there and I don't want to be cryptic, but it's probably a broader conversation we have as part of the strategy talk through our perspectives. We're also really humble about that. We've done a lot of work and just try and understand this lithium market first principles ground up a lot of direct information, a lot of analysis. And as I know you are all doing, it's difficult. There's a number of factors there or things that no one can really know for sure. And that's what creates this degree of uncertainty in the market of lithium. What I point to though is the rate of growth that's still ahead of us on any scenario and how that supply comes online. Mining is harder than probably people realize. Bringing on new mines and growing mines and keeping up with all of that in a responsible, sustainable and thoughtful manner is actually quite challenging. So there's a lot to think about.

Robert Stein: Well maybe just a quick follow-on. How do you think about buy versus build in that context, obviously, you're sort of faced with the future in this quarterly with one of your operations shutting down the next, is a few years away. Do you look at buy versus build with a immediate sort of one to two-year sort of outlook to say, hey look, we've got some capabilities here, we can actually help deploy them in some emerging operations. We don't need to necessarily add volume growth to Greenbushes. We can go and acquire something when the markets suppress that value that way. Is that something that you're considering as part of the strategy update?

Ivan Vella: Look, we're looking at what's going to give us the best capital returns. And as I said, Greenbushes is pretty hard to beat you. You go through any scenario and any list and it's just such an attractive asset. There's so much upside as it grows. There's a lot of prospectivity in the area as well, which our exploration team are working on to get access and to better understand. I think of course that's the question of the moment Rob, buy versus build. And everyone's going to look through that with different eyes depending on where they're starting from. And as I said, we're in a very privileged place with an asset that at the bottom of the cycle is generating a mid-60s EBITDA margin.

Robert Stein: Yes. No problem. Thanks. I really appreciate the opportunity.

Operator: Thank you. There are no further questions at this time. I'll now hand back to Mr. Vella.

Ivan Vella: All right. Look, thank you. Great questions. Good list. Look overall it was a good quarter. It was nice to see Nova finish well. They had some challenges in the prior quarter and they turned that around. So all credit to the team. The other highlight of guess is seeing Greenbushes back at full rate and really starting to move. There is a lot more we can do there, but we've got to also celebrate the work that Greenbushes is doing. It's a big complex operation now. There's a lot to it and they're going through some change obviously with leadership. I do want to recognize Laurie who's been the CEO there for nine years and I think over 20 in tenure. He's done a lot as that business has built up from being a very, very modest little lithium mine now to being the preeminent and global example of a spodumene mine in the world. The other call out I wanted to make was just to our team. They're going through quite a lot of change with the corporate review, the exploration business review and broader changes and the strategy, is not just hotly awaited by you, but equally by our team within IGO. Everyone is wanting that sense of direction. Of course there's no silver bullet there or it's not that easy. But a lot of things underway at the moment and the team has been really constructive and caring through this whole process. And I look forward to by the end of this next quarter, having that clear picture of where we're headed, being able to share that more broadly and start to get some momentum up to deliver on those outcomes. With that, I'll leave it there. Hope you all have a good day. Thank you.

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