Good day, and welcome to Allkem June quarterly results conference. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press Star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the Star one again. For operator assistance throughout the call, please press Star zero, and finally, I would like to advise all participants that this call is being recorded. Thank you. With that, I now welcome Martín Pérez de Solay, Managing Director and CEO to begin the conference. Martín, over to you. Thank you, Paul, and welcome everybody and thank you for joining us for Allkem Limited June 2022 quarterly results briefing. I am pleased to provide an update on our operations and development assets overall. Despite a lot of noise in the lithium market and increasing global challenges this quarter, we have concluded the 2022 financial year with record revenues and production volumes generated from our two lithium operations. This demonstrates the strength and resilience of our assets, team and the business. During the quarter, our cash balance increased by over AUD 213 million, and we achieved record revenue of AUD 337 million from Mount Cattlin and Olaroz, with a gross operating margin of approximately AUD 292 million. Strong projected cash flow and the AUD 663 million we have in group cash is expected to fund delivery of our aggressive growth strategy to increase production threefold by 2026. Our teams continue to advance the development of our project pipeline, and we're on the cusp of significant growth with Olaroz stage two and Naraha to begin production later this year. Sal de Vida in 2023 and James Bay in 2024. This growth strategy is underpinned by the transition to net zero emissions through the electrification of transportation that will require a significant increase of global production of lithium chemicals. This quarter, I am pleased to welcome a number of new members to our executive team who will enhance the delivery of our growth strategy. Karen Vizental has joined as Chief Sustainability and External Affairs Officer. Karen has extensive experience in multinational organizations such as Unilever and within corporate sustainability activities, including Allkem's journey to net zero emissions by 2035. James Connolly has joined as Chief Project Development Officer. James brings extensive operating and project development experience and has previously held senior positions with Vale Base Metals and Barrick Gold Corporation. He will assist us on delivering our growth assets. After successfully heading the sales and marketing function, Christian Cortes has taken up the role of Chief of Staff, working closely with me. Christian will utilize his vast knowledge of the business and the lithium industry to support each business function within Allkem's executive growth strategy. Christian Barbier also joined the organization as Chief Sales and Marketing Officer. Christian has a long history in sales and marketing of industrial minerals, having held positions with Iluka and Sibelco. He will be assisting us in enhancing our sales and marketing strategy, and he's also joining me on the call today and will provide us with a market update. Firstly, starting with sustainability, the core pillar of our business, we continue to be recognized for our leading practices and endeavor to increase our transparency and performance. In June, Allkem became a constituent company of the FTSE4Good Index Series, which is designed to identify companies that demonstrate strong ESG practice measured against globally recognized standards. We also achieved the highest available comprehensive rating in the Australian Council of Superannuation Investors' annual detailed assessment of ESG reporting in ASX 200 companies. Having a closer look at our sustainability performance across our operations. Recently, we have achieved our best safety results since becoming a merged entity with a total recordable injury frequency rate of 2.6 at the end of the quarter. This reflects a 23% improvement from the prior quarter and a lost time injury rate of 1.0 for the rolling 12 months. Unfortunately, we incurred two recordable injuries on Mount Cattlin, one more severe than the other, but both contractors have made a full recovery and returned to work. Preventive actions have since been implemented. Mount Cattlin was impacted by COVID-19 cases on site over the quarter, with peak caseload of the Omicron variant in Western Australia occurring in May. Contractors and personnel followed site biosecurity protocols. Remaining global operations continue to follow biosecurity protocols and the impact of the new virus diminished proportionally to those countries' case numbers. We continue to maintain regular and positive engagement with the communities we work. Some of our initiatives this quarter include education on the construction of Sal de Vida project and technical and leadership training in both textiles and plumbing. Moving to our operations. As previously stated, Mount Cattlin was impacted by COVID-19 and the tight labor market in Western Australia. However, we still reach record annual production of approximately 194,000 tons of spodumene concentrate in financial year 2022. Li recovery guidance of 56% and achieve record revenue of approximately AUD 181 million in one quarter from shipments totaling approximately 38,000 tons. We achieved a gross margin of 84% for the quarter, and we expect margins to remain high with robust demand in the spodumene market and the September quarter pricing that is expected to be better than the June quarter. Looking into financial 2023, the September quarter, a number of improvement programs will be completed, including the addition of magnetic separators. A larger mining fleet will be deployed to site, and addition of third-party contractor services will provide further flexibility. This initiative will assist in transitioning to the 2 Northwest Pit and enable a ramp-up in ore production from the end of the quarter in line with full-year guidance. This quarter, we also commenced a three-phase resource extension drilling program to test immediate mine life extensions. As of 30 June, we completed 37 holes and 8,690 meters of drilling. An update of results will be provided later in the September quarter. The current drilling program is expected to be completed towards the end of calendar year 2022. Moving on to Olaroz. Annual production reached a new record of 12,863 tons of lithium carbonate for financial year 2022, 47% of which was battery-grade material. During the quarter, 3,445 tons of lithium carbonate were produced and 3,440 tons were sold, generating record revenue of $141 million with average pricing of $41,033 per ton FOB. Sales of battery-grade lithium carbonate represented 45% of the total. Gross cash margin for the quarter was 90% of $36,732 per ton. Margins are expected to remain strong with lithium carbonate contract pricing for the September quarter remaining stable. By the end of June, Olaroz stage 2 expansion had reached overall physical progress of 88% completion, with commencement of ramp-up expected in late second half of calendar year 2022. Evaporation ponds are completed and commissioned. The majority of the wells are now operating and the remaining three are scheduled for completion in July. The third line plant is at final stages of commissioning and startup is scheduled for the end of July. By September, we expect the fourth line plant to be complete and the solar ash facilities to be commissioned. Carbonation plant activities also progress, and it is expected to be completed in the December quarter. Moving on to our development assets that will underpin significant growth. Allkem in Naraha, the construction of the Naraha lithium hydroxide plant in Japan has been successfully completed. Commissioning activities including water tested have been undertaken and first production is expected late September, with an expected ramp-up period of approximately 12 months. At Sal de Vida, we made strong progress since construction commencement in January. Construction of the first two strings of ponds for stage 1 has reached over 32% completion, with the first pond now filled with brine. For the remainder of the calendar year, efforts will focus on commissioning the first string of operational ponds and commencing the construction of the carbonation plants. This quarter, we also successfully expanded the camp facilities and have progressed procurement from long -lead items and the tendering process for our targeted 30% photovoltaic energy solution on site. The stage 1 schedule is targeting first production in second half of calendar 2023, with brine evaporation occurring during plant construction, allowing evaporated brine to feed the plant once it is commissioned. At James Bay, our project in Quebec, Canada, detailed engineering progress alongside procurement during the quarter, including awarding key equipment packages. Budgets have been allocated to allow detailed planning and construction to commence on time. The clarification process of the environmental and social impact approval continues with both provincial and federal levels in conjunction with the Cree Nation Government, and the meetings are planned in July to review information provided. We are now targeting construction activities to commence in the first quarter of calendar year 2023, with commissioning in late first half of calendar year 2024. I will now hand over to Christian Barbier, who will provide us a sales and marketing update. Christian, welcome to Allkem and please talk to our shareholders. Thank you, Martín, and good morning, everyone. Markets and customer demand for both lithium carbonate and spodumene concentrates have remained robust during the quarter, despite a soft start due to COVID-related lockdown that occurred in China. Sales and production rebounded strongly from May onwards as the lockdowns were lifted, and total EV sales in China for the June quarter were estimated at 1.3 million units, is up 50% from the prior corresponding period, and up 20% quarter -on -quarter. With 2.5 million units sold in China in the first half of 2022, EV sales are forecast to increase to a total of 5.5 million units, according to CAAM, the China Automobile Association, and up to 6 million units for some observers by the end of this 2022 calendar year. Further EV battery installation volumes were estimated at 52 GWh during the quarter, which is in line with the March quarter and up 80% from the prior corresponding period. In Europe and in North America, overall car sales have remained weak due to the economic and political environment, but positively, EV sales and EV market share have continued to increase in both regions. The market share of EVs passed 6% in the U.S. since May, with 400,000 vehicles sold in the first half of 2022 versus 600,000 for the whole of 2021. The EV market share remains over 20% in the EU and is expected to increase further as growth is endorsed by government stimulus and policies in support of net zero economies. We continue to see strong demand for a range of lithium chemicals, which supports Allkem's diverse product offering. Demand for LFP battery formats, lithium -ion phosphate, continues to dominate in China, representing about 55% of battery chemistries. Outside of China, we continue to see high -nickel cathodes as the preferred chemistry, with a number of new gigafactories announced in North America year over. Moving to the supply side, we're starting to see increased supply in response to high prices and strong demand. However, we expect demand to still outstrip supply side responses in the coming quarters. The lithium chemical production in China during the June quarter is estimated to have increased by more than 20% quarter-on-quarter, thanks to a higher supply of mineral feedstock, first from local sources as weather conditions improved, and second, from higher spodumene concentrate imports from Australia. Indeed, there was a strong increase during the June quarter of spodumene concentrate shipment from Australia to China, 50% higher quarter-on-quarter. The incremental volume originated from brownfield expansion and from restarts of idle capacity. Shipments in the June quarter will mostly be consumed during the second half of this calendar year, and we expect utilization rates of conversion facilities in China to be boosted but still not reach full capacity. Supply security remains a concern for OEMs who have all mostly committed to electrifying their fleets. As a result, relationships between OEMs and junior miners continue to be reinforced through direct investments in lithium assets. What's clear is that the race to secure key critical materials has intensified further across the EV battery supply chain. Now, for prices, during the June quarter, spot prices for lithium carbonate and hydroxide in China reduced by 8% and 5% respectively from the all-time high prices registered in March 2022. This easing is reflective of reduced EV and battery production activities as a result of the lockdown in China in April. Outside China, on the other hand, spot prices for lithium chemicals continued to rally during the June quarter and reached parity with Chinese prices, demonstrating strength in the Japanese and Korean cathode and battery manufacturers. As far as spodumene concentrate is concerned, spot prices registered record highs during the quarter, with prices increasing more than 50% quarter-on-quarter. Despite increased supply volumes from Western Australia during the quarter, supply-side tightness is still prevalent as there's strong demand from converters who need to source feedstock for their lithium chemical production. Everywhere, contracted prices for lithium carbonate and spodumene have gradually adjusted up to reflect the tight market conditions, and we expect the gap between contract pricing and spot pricing to narrow over time. For the September quarter, we expect to see relatively stable prices in lithium chemicals, carbonates, and hydroxide, and a continued increase in spodumene prices, although not as much as what was experienced last quarter. Thank you. I will now hand back to Martín. Thank you, Christian. I will now hand back to the operator to commence the Q&A session. Thank you. At this time, I would like to remind everyone, in order to ask a question, press Star then the number one on your telephone keypad, and we will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Joel Jackson from BMO. Joel, your line is now open. Hi, good morning, and good evening. A few questions. Maybe I'll go one by one. You're guiding to similar lithium pricing for Olaroz in the September quarter versus the June quarter, so let's say around $41,000 a ton. That seems from the outside to be a very low realization. Considering what lagged prices might actually be in September, can you help us figure out what's going on from a mix perspective? Have you locked any pricing on fixed now? Are you being conservative? Thank you, Joel, for your question. Christian, if you could please, answer that one. Yeah. Thank you very much, Joel. The first thing is we have a variety of different lithium carbonate pricing of specifications. The spot price that you see is the price for battery grades, and technical grade is a lower price. We have been selling in the last quarter about 50% technical grade and 50% battery grade. The second part of the answer is that we are selling on contract price indices, which have not yet caught up with these spot price indices. Now, having said this, I think you may remember some of the announcement that we made earlier in the year. We haven't revealed the fixed price contract that we had at the beginning of this year, and this is why you've seen pricing increase in the first and the second quarter. If spot prices all stay flat from here, let's just call it $70,000 a ton for battery grade, okay? In China and whatever else, then what should December quarter pricing look like? Well, at the moment, we do not see any reason for prices to come down. There is strong demand from OEMs and from cathodes and from battery producers. We see most people very interested in securing supply and not particularly concerned about the increase in prices that have happened over the last few months. I can't make any prediction on future prices, but at the moment we see strong demand definitely. Sorry. No reason in- Sorry. ..any decrease. What I'm asking is, I'm giving you the forecast. I'm saying that spot prices stay exactly the same today as they are for many, many, many months. Should you see a much higher outcome price realization in the December quarter versus the September quarter? We will see a continued gradual increase in our weighted average price. Again, Joel, please bear in mind that half of our sales are made in technical grade, so at a lower price. Now the $70 that you quote for battery grade are related to the Chinese spot market. Most of our products we sell on contract prices. You can expect to see a continued, provided that spot prices remain at the same level, a continual annual increase of our weighted average price. Sorry, there's a lot of background noise. My next question would be, if we think about fiscal 2023 production, with all the moving parts, I appreciate there are a lot, what would you say would be expected fiscal 2023 production for battery -grade carbonate, technical grade carbonate, hydroxide, and spodumene? We are not giving guidance at this stage on our overall production for calendar 2023, as we did not give in the previous year, particularly because we will be ramping up on stage 2 in the second half of this financial year. For stage 1, we're thinking it's going to be along the same lines what we saw in financial year 2022. Okay, that's helpful. My last question would be the inventory situation in China, what is it like? Like, we know that we had very little inventory of lithium in the inventory in the system. Is it now a bit better? I also ask the question which is, if lithium inventory is just a little bit better, but it goes up from being basically zero, does that take some of the pricing power away from the suppliers? Like just having a little bit of inventory in the system versus having none in, you know, 'cause we have outstanding pricing now. Does that make a big difference in the pricing power producers like yourself might have? Christian, could you please take that one? Yeah, I'll take this. Well, Joel, I think the lockdowns that occurred in China around Shanghai and Eastern China in April give part of the answer. There was a softening of the price of the carbonate and hydroxide price in China, fairly relative, during the month of April, but demand has picked up in May and June to previous levels. Stocks in China are still pretty tight. Demand also in Korea and in Japan is very strong at the moment. Again, the buying power, I'm not sure I would measure it like this. The end demand from OEMs remains quite strong and everybody in the supply chain, and we've seen that at the end of June. That's the first conference where everybody gathered since the end of COVID. Everyone was there, and across the supply chain, the production of lithium was being consulted by everybody 3x over in the supply chain, from the cathodes, the battery, and the OEM producers. Basically, what is driving the demand is the growth in EV registrations, EV sales, and this will continue. The lithium industry is trying to catch up with demand. The demand is so strong that all the projects that are coming out are necessary to meet demand. Thank you very much. Thank you. Your next question comes from the line of Reg Spencer from Canaccord Genuity. Reg, your line is now open. Thanks. Good morning, Martín, and guys. Thanks for the presentation today. I just wanted to follow on, excuse me, from Joel's question on pricing. If I look at, say, Asian Metal, FOB Chile prices are being reported at $60,000 a ton. China spot pricing, you know, whether it's technical grade or battery grade, somewhere between $60,000-$70,000. You guys are guiding to highest realized prices again in the September quarter. Is this, again, I don't mean to labor the point, but is this really just a product mix issue, that difference between what you're suggesting is flat pricing Q-on-Q and where the rest of the market seems to be trending to? Thank you, Reg. I'll let Christian explain more in detail on that. My quick answer to that is it's a mix of product mix and contract duration and, you know, on contract terms of battery. Christian, please expand on that one. Yeah. Absolutely, Martín. Reg, I would add to this that there's some inertia in our contract. When prices increase, there's a lag for us to see the increase in our contracts. Again, you know, I mean, I can't really comment on the FOB Chile price. The spot prices that you see in China, like for all these statistics, they are not representative of the whole of the whole market, of, you know, the weighted average price of all transactions in the market. Thanks very much, guys. I might just shoot across to maybe one for Neil, if he's there. We can see that Argentine inflation is running quite high. I think the last time I looked, it was annualizing, like, 75%, and that does appear to be outpacing the rate of depreciation in the peso. Can you remind me how much of your cost to dollarize are denominated in peso? Does this disconnect between inflation and peso depreciation mean we can expect some upward lift on costs over the next little while? Reg, yes. I mean, just in terms of the split, for all intents and purposes, about 50/50 split, U.S. dollar versus peso. In terms of increased costs, that's why you're seeing our costs are remaining, which we're keeping under control to the best extent that we can, with a big focus on them in the low $4,000s. We are seeing energy, labor, et cetera, and other reagents increasing. While there is a focus to keep a lid on cost to the best extent possible, there are certain things that are out of hand, you know, as I mentioned, energy, labor, gas. As you mentioned, inflation is outrunning devaluation. When that's... Over time, we've seen devaluation catching up with inflation, but we haven't seen that for the last 18 months to two years. Thanks, Neil. To add on your point, and I think it's. Sorry, Martín. You go. Oh, sorry, Reg. No, I was going to tell that in spite of the significant spike in inflation that we've seen and some of energy and reagent costs going up, we've seen all our costs being able to keep a stable production and, you know, pretty reasonable cost evolution throughout this difficult situation in the market. Yeah. Yeah. Understood. I presume it's too early to say how long this situation is going to persist. Well, obviously there's some global macroeconomic factors at play here, which are obviously outside of your control. Needless to say, you know, costs are probably gonna be a little bit higher over at least the short term. Yeah. That's how we see it. Okay Reg, exactly. One last question from me, if I may. At Mount Cattlin, are you able to provide a yearly strip ratio profile for us over the next couple of years? If I look at your cash cost guidance at Cattlin next year, obviously you've got some disruptions from COVID, labor availability issues, energy costs are higher. Just wondering if you could help me out in connecting the dots and with some strip ratio guidance. Sure. Morning, Reg. Yes, Reg. I will ask Keith Muller. Yes, Keith. My apologies. Yeah, Keith, you go ahead. I jumped the gun. Sorry. Yes, Reg. For FY 2023, stripping ratio is 12.7. We compared that to FY 2022, where the stripping ratio was about 1 in 6. Quite a significant increase as we bring that Northwest Pit down. As we move into FY 2024, the stripping ratio reduces to a 1 in 2 again. Really over the next 12 months is when we see a very significant effort in pre-strip, and that almost diminished to nothing in the following year as we then have opened the entire ore body in the Northwest Pit. Okay. Excellent. In terms of your mining unit rates there, I guess it doesn't really matter given the margins at Cattlin are so strong, given where current spodumene prices are. You are seeing some upward pressure on those unit rates at Cattlin at a time when you're going through such a high strip period, and do you expect that to normalize as we move beyond FY 2023 and into 2024? The unit rate for mining as a single activity is actually reducing due to the increase in mining volume. The unit cost on a dollar per dry metric ton produced associated with the mining activity, absolutely yes, there's a significant increase in that. Largely, the bulk of the increase in operating costs we're seeing in FY 2023 is purely associated with this increase in stripping ratio. As the stripping ratio reduces to one in two in FY 2024, we anticipate the unit operating cost to follow suit, and that will come back down to about $300-$380 a ton in FY 2024. That's very useful, guys. Thank you very much. I'll pass it on. Thank you. Again, if you would like to ask a question, press Star, then the number one on your telephone keypad. A reminder to please keep questions to a maximum of two to three to allow all participants an opportunity to address our speakers today. Thank you. Your next question comes from the line of David Deckelbaum from Cowen. Your line is now open. Good morning, Martín. Thanks, everyone, for the time today. Perhaps if I could just go into the weeds a little bit on Mount Cattlin. I understand the guidance, and that was quite helpful around cost per ton coming down in 2024. Curious just as you guide the fiscal year volumes for next year of about 165,000 dry metric tons, that's assuming a lower ore grade obviously of 0.93%-0.94%. The guidance for 2024 is at a 1.17% rate. You also mentioned in the release that you've increased your mining capacity there. Should we be assuming that there's greater dry metric tonnage in fiscal 2024 relative to 2023? Keith, please, if you could answer that one. Certainly. Thanks for the question, David. Yes, there's a direct correlation between head grade and final spodumene production. In both fiscal year 2023 and 2024, the mill is running at full capacity, so we're processing 1.8 million tons of ore in both those financial years. With a higher head grade in FY 2024 of 1.17 compared to the 0.94 in 2023, we do expect to see that incremental increase in spodumene production. It's a twofold win for us. Not only do we get better metal recoveries at a higher head grade, but there's also more metal in the feedstock that we can then beneficiate. Yes, we do expect the 2024 spodumene production to increase in relation to the higher head grade. I get. That's quite helpful. Thank you for that guidance. Just to understand more around the extension of mine -life programs at Cattlin, you'll have data from the drilling program at the end of this calendar year. When would we expect results from that program to be implemented into the mining process? Is that the reality for a fiscal 2025 program? Or how do we think about the program beyond 2024 at this point? Martín, you're okay if I take that? Yes, please. Yes. That's right. We'll have the results from the current resource infill drilling by the end of this calendar year. That will enable us to finalize and formulate a feasibility study to get to a FID very early next calendar year. Around March, we would be looking to guide on whether an expansion beyond the current life of mine, which is towards the end of 2025, whether that's gonna push out. What we anticipate, and as we released in our strategy day in April, is that this current infill drilling we're doing will push the mine life out to 2028. Then over and above that, we're also looking at brownfields areas around the existing facility for a potential underground operation post 2028. Got it. Then just the last one for me, just so I understand from an operational perspective. The addition of mining equipment, you know, loading facilities and the like, is that merely to help with the strip ratio going into 2023? Look, if we didn't lose this mining volume in the last six months as we worked through COVID restrictions and a tight labor market, we probably wouldn't have increased the mining fleet. What we are doing with the increase in mining fleet and also adding an additional mining contractor to diversify our risk profile, that's just to catch up on some of the lost volume, so we have a continuous ore supply through this coming financial year. Thanks for the clarification and the time today. Thank you. Your next question comes from the line of Hayden Bairstow from Macquarie. Hayden, your line is now open. Yeah. Hi, guys. Just a question on Argentina. I mean, it's obviously the inflation and the FX is moving around. Just keen to understand what you're seeing on broader inflation, given there's a lot of increased activity in Argentina, and, you know, how you're tracking the CapEx, and have you got any concerns going forward as activity in that country steps up, whether you can, you know, complete these expansions sort of as you're traveling. Also, can you provide any comments just on the government's capacity to continue to push through all these approvals given, you know, as I say, activity and the amount of projects that are sort of arriving and being planned are starting to increase? Thanks. Well, thank you, Hayden, for your question. With regards to the overall inflation situation in Argentina, it's currently stable at a number Reg was mentioning. It looked like market is forecasting 60%-70% inflation in the year, and the catch-up of the conversion of the FX rate is going slowly. As Neil was mentioning, we are being able to continue with our investment profile, and we are hedged from an investment perspective because our exports are being used to pay the imports of on the CapEx programs and the local expenditures, in peso terms are somehow matching the inflation with the devaluation of the local currency. In terms of approvals, we do have all approvals in place to continue with our expansion projects in Olaroz and the construction of Sal de Vida. I'm not sure whether that answers the second part of your question, but I'm sure that was the point where the government was going to be able to issue all required approvals. Neil, if you wanna comment on the local FX currency and inflation situation. No, the only thing I'll add is, look, we manage that very carefully on the ground, as Martín knows better than anyone. Martín's based in Buenos Aires. Just in terms of our CapEx, yeah, we're locking in a lot of the items in US dollars, and as early as possible as well. A lot of the longer lead items have been locked in earlier, and everything's USD-based. Given we're a USD-based company with all our sales in USD, we are protected from that perspective. Just the peso costs, which we've got to manage, which there's an extreme focus on by the entire team. Okay, great. Just on James Bay, can you just provide an update on how, you know, the process is going there. Are we seeing any sort of headwinds within Canada in terms of pushing through all the required approvals and everything? Well, more than that, I'd say we had some headwinds in the last few months with the strike of engineers in Quebec that somehow delayed the preparation of COMEX meetings. Now, meetings with the COMEX is a joint body between the Cree Nation and the provincial government of Quebec are scheduled to happen during the month of July and we expect to start to see some tailwinds as the strike of engineers in Quebec has terminated and things are returning back to normal on that front. In the meantime, we've been able to continue to progress on engineering and the progress in the purchase orders for long lead items and securing contractors for everything that we need to start the construction in the first quarter of the next calendar year. Okay, great. I'll leave it there. Thanks for that, guys. Thank you. Your next question comes from the line of Matthew Frydman from MST Financial. Your line is now open. Sure. Thanks very much. Hello, Martín and team. Just wanted to follow on Hayden's question about the project construction environment in Argentina. Obviously a huge number of projects in various stages of development and completion. Really just wondering what sort of challenges, if any, you're having, particularly sourcing, you know, construction workforce, technical expertise, you know, rigs for drilling wells, pumping equipment, any other specialized equipment. You know, presumably all of those things are in pretty high demand and then probably compounded by, you know, COVID and supply chain issues. Just wondering if you can expand on, you know, where, if anywhere you're having challenges and how you're managing the critical path timelines for the projects you're undertaking. Well, I think this is not new for you. It's you know, constructing in this industry is challenging across the board. To split the program in various parts, I'll tell you what we are doing and how we are managing it. First of all, we announced this quarter, we significantly strengthened our management team with three new positions, particularly with regards to project we've got in James Connolly with a wide experience in the project engineering and development coming from very senior positions in Vale Base Metals. James is helping us to improve our engineering designs and our readiness to construct. In terms of construction itself, two fronts. We're constructing currently in Argentina and getting ready for construction in Canada. In Japan, plant is already constructed, and we're already starting the commissioning, finalizing testing and starting commissioning phase. In Argentina, we are 88%+ progress in Olaroz and we're about 30% progress in the construction of the ponds in Sal de Vida and close to 15% overall project. We are shifting some contractors and experience from Olaroz into Sal de Vida, and that's enabling us to continue to manage the experience that we acquire in Olaroz and deploy that in Sal de Vida. Also, as we said before, we're bringing in an injection into the lithium industries from other industries that are compatible to ours. Particularly, the chemical industry and oil and gas industries that have been quite large industries in Argentina somehow have reduced their level of activity and are supplying very good professionals into this industry. In Canada, we teamed up with a local engineering contracting firm in Quebec that is helping putting together all the necessary contractual arrangements with our team in the office of Quebec. The way we are managing the risks of construction project is by localizing our workforce and taking advantage of the local capabilities and also taking advantage of the knowledge that we get in the different projects. With regards to particular situations or challenges to construction in Argentina, I will tell you that they don't go beyond what we just discussed and the fact that we are very well progressed in Olaroz and, you know, helping to leverage construction in Sal de Vida from the experience and the contractors in Olaroz, it is being very helpful. I think that puts us ahead of other projects in the region. Yeah. Thanks very much, Martín. Your last comment there picked up on what my follow-up question was gonna be, which is that, you know, have you heard or, you know, is there anecdotal evidence of some of the other projects in the region being particularly challenged by some of these issues? And, you know, is conversely Allkem in your view better positioned because of some of those factors that, you know, you've highlighted? Yeah. In addition to that, I think we're better positioned than other competitors in the region to be able to construct basically because we've been building, constructing and delivering projects for quite some years by now. Yeah. Yeah. Great. Thanks. My only other follow-up question was on Mount Cattlin and particularly on recoveries. Clearly in the June quarter, you know, part of the drop in production and also the step up in unit costs was because of that step down in recovery. You highlighted basalt in the stockpiles as a contributor there. Can you talk a little bit about the impact of lower head grades also, and, you know, particularly as we look into FY 2023 guidance, you know, if I run some rough numbers, guidance seems to reflect an improvement in recoveries back to that sort of 55%-60% range. But clearly you're also guiding to a lower head grade. I guess the question is, you know, are you confident that recovery, you know, will improve back into that range? You know, are you confident that you can solve the basalt issues also, despite the impact of a lower head grade? Keith, can you please comment on that one? Yes, certainly. Thanks. Matt, I think one of the biggest things that we realized this quarter was that low -grade stockpiles that contains the basalt is something that we probably wouldn't have processed until the end of life. The reasons we reverted to processing that feedstock is to keep the mill full and capitalize on the current pricing mechanisms that we have in the market. With the delay we've had in stripping, we were forced to go and process that lower grade basalt containing stockpile. To answer your question is, as we recover and we enable a pre-stripping to take place in Northwest, we will divert away from processing that lower stockpile. Yes, we expect recoveries to return to that 55% as we start processing clean, uncontaminated ore. Got it. Thanks, Keith. Obviously with the lower head grade forecast in FY 2023, I'm assuming that some of that is still a component of that, those lower grade stockpiles, and really the benefit of stripping probably doesn't help- No. ... ntil FY 2024 or late FY 2023. Yes. That's right. If I can just give you two data points to sort of draw a correlation between recovery and head grade. If we look at, say, a 6% SC final product grade, at a 1.4% head grade, you're looking at a recovery around 62%, whereas at a 1% head grade, that material will only recover at about a 56% recovery. Yes, some of the lower recoveries is associated with the lower head grade, just due to the grade recovery curve. Okay. That's helpful. Thanks very much, Keith. Thank you. Your next question comes from the line of Lachlan Shaw of UBS. Lachlan, your line is now open. Thanks very much, team. Great updates. Just to stick with Mount Cattlin for a moment. June quarter costs are just touch over $800 per ton, almost double FY 2022 average, but you're guiding for FY 2023 costs to be up a fair bit. Is the June quarter data point a good starting point for sort of early FY 2023 in terms of costs, or should we be thinking about a little bit less than that? Yes, I think that's a good starting point to estimate the cost going forward. In the June quarter next year, 2023 is when we'll see the cost reduce again. I think before I mentioned in FY 2024, we expect the unit operating costs are back at the free-80 levels. It is just the stripping that we are doing in the next nine months, that's pushing that cost up. All other costs related to the operation has had very minor increases that relates to inflation. It's really the mining cost that's seen this significant increase, as you mentioned, almost double in unit operating cost. It's a bit of a, it's the perfect time to do this. You know, we wouldn't have been able to do this 18 months ago. We're just capitalizing on the current market prices to get pre-stripping and to get the higher stripping ratio pits out of the way. Got it. Understood. Just onto Olaroz. No guidance for FY 2023 in terms of production, I think pointed out earlier because of the ramp-up of stage 2. You know, how should we be thinking about that? Last time you guided on that, you were signaling a 12-18 month ramp-up to 25,000 tons nameplate from first production end of 2022. Is that still how you're thinking about it? I guess, you know, just wondering why the guidance has been removed. Indeed, it is. That's how we are thinking about it. It's keeping the same guidance in terms of ramp up that we gave before, and it's very similar from what we saw this year for stage 1. Okay. Understood. Thank you. My final question, if I may. We talked before about carbon pricing, the spread between technical grade and battery grade, noting sales split of roughly 50/50. You know, what's your observation on that spread? Is it a constant dollars per ton amount? Is it a percentage of the battery price? I guess, you know, is that spread changing given all of the shifts in broader pricing and market dynamics recently? Christian, I'll let you answer that one, please. Yes. Yes, Lachlan. Look, it's a fair question. The spread is not a fixed premium. It fluctuates as per demand. Generally, you probably would be well versed to say it would be about $15,000 a ton. But it really depends on the supply and demand. Ultimately, most of the demand comes from the battery. So people upgrade carbonates into either hydroxide or into battery grade carbonates. Ultimately, when the market stabilizes over the next few quarters and months, we expect to see battery grade significantly or consistently higher than technical grade. Again, month-on-month, it depends on the supply and demand, and especially in China. That makes sense. All right. Thanks, thanks again very much, team. Thank you. Thank you. Your next question comes from the line of Kate McCutcheon from Citi. Kate, your line is now open. Hi, good morning, Martín and team. At Olaroz, stage 2 production in the back end of this FY. I guess at the Investor Day in April and even last quarter you'd said first production in this current half that we're in now. What are the key reasons for the delay here? What's happened between the last quarter and this one that first production from stage 2 has been delayed? We are continuing to progress with the construction of Olaroz. As we highlighted in the report, there are some disruptions in the transportation industry that created some delay in some equipment arriving. We're being a bit more conservative in terms of the time it will take us to complete the project, but we're still maintaining our guidance that we were going to get some production in the thing at the end of the second half of this year, which is what we are doing. Right. Okay. To clarify, first production, the end of CY to CY. Yes, we said CY. Okay. Right. Understand. Just on Cattlin guidance, two questions. Is all of that waste stripping that you're doing sitting in OpEx? And secondly, can you give me an idea of how much of June quarter costs and guidance for next year is cost inflation? Any metrics you can point to there? Neil, can you please update on that one? Yeah. I mean, on the first point that you asked, it's not all sitting in CapEx. What we're doing is capitalizing the boron, and that'll be released as we produce. It's not all in CapEx. There is a portion of it that's in OpEx, I should say. But the rest is being capitalized and will be released as production occurs. It's in quite a short period because of the mine life. It's not that it's over a very long period that it occurs. It's capitalized upfront and then released fairly quickly. Keith, I don't know. There was a second question. I think you can pick up. About the cost inflation. Of that $800 a ton- Yeah. Do you have an idea of what dollar per ton is, like a diesel increase or labor? Yeah, sure. Yep. Look, I will pick up that, Keith. Go ahead if you've got it. I mean, sorry, I just missed the question. I can pick that up as well, unless you wanna go. I mean, Sorry, Keith, I've cut across you, but it's, you know, there's been lower production volume and lower recovery services we've mentioned. There's the strip ratio, to an extent, as well as the skilled labor issue in WA. Keith, I don't know, you know, you'll be close to being at the mine to add anything that I haven't covered there. Sure. Kate, I think if I can get back to you with an exact number, but I take your question as you're trying to get a feel for what is related to the increased mining volume and what is related to general inflation. If I can just give you a bit of a flavor of that. I'd suggest that almost 80% of the cost is associated with an increased mining activity, and a very small portion is associated with the increase and inflation due to general higher cost of consumables like fuel, ammonium nitrate, and other reagents that you use. Very small component is associated with general inflation. Okay. Why are you faring better than peers? Have you got diesel hedged or, I mean, you're moving a lot of tons or is it the contracts? Sorry, can you clarify that question, Kate? I don't understand what you're asking. Well, a lot of our peers, you know, even today, have come out citing huge increases just in diesel alone in terms of dollar -per -ton numbers and also for labor. It seems like you're faring a bit better. Is this the way your contracts are written? Do you have some diesel hedged there or you're just not seeing? Sure. No, we don't have any diesel hedged. I can't compare with our peers. I haven't done a proper evaluation of why they are citing much higher inflated costs. To give you again a feel of diesel, we consume about 12,000 liters of diesel a month. There's about an AUD 80 million increase due to diesel over AUD 180 million-AUD 190 million spend over the financial year. That's probably the most significant consumable increase that we've experienced because we also use diesel for our power generation. Okay. Yeah, thanks for the color. Thank you. Your next question comes from the line of Glyn Lawcock from Barrenjoey. Glyn, your line is now open. Morning, Martín. Just going back to Mount Cattlin, just on a couple of aspects. Back in June, you guided to $5,000 a ton for the spodumene on an SC 6 grade, but you received it on SC 5.4. That's effectively a 10% lift. Was that just better pricing in the month of June that you got or are discounts narrowing? Then just while we're on Mount Cattlin, just the guidance for 2023, does the spod grade production, you know, you produced SC5.3 product in the June quarter. Given you're going through the stockpiles, et cetera, should we expect a low grade spod in fiscal 2023 and then it bounces back in 2024? And just what FX rate is assumed in your cost guidance as well? Thanks. For Mount Cattlin. Thank you, Glyn, for your questions. I'll ask Christian to answer you on the pricing. With regards to recovery rate, Keith will amplify the question, but the recovery rates are basically associated with the head grade that we strike in the mine. Christian and Keith afterwards, quickly. We're running out of time. Yeah. Thanks, Martín. Well, Glyn, yeah, we did achieve a bit better price than what we expected. As you mentioned earlier, spot prices for spodumene have increased, and we've managed to take advantage of it despite it being a lower than 6% grade. Okay, thanks. Glyn, if I can just address that last question you had that relates to product grade and whether we're expecting to see the same SC5.3, SC5.4 for the financial year coming. No, we don't. For the next quarter, we'll see a lower grade as we are moving through those lower grade stockpiles. From the December quarter onwards, we can return to any grade we wish to produce from SC5.5 up to 6% at our customers' demand. It's not a long-term situation we find ourselves in. Okay, thanks, Keith. The FX rate you assumed for this year, maybe that's one for Neil. FX rate for the year we've assumed is $0.70 to the U.S. All right. If I could just, in order of time. Neil, while you've got the floor, the export tax, you left it out of the release. Do you have that handy, what the export tax was in the quarter for Olaroz? Per ton, I might have to ask Andrew if he has that. I don't have that at hand. Glyn, I can come back to you afterwards. If you just leave that with me, I'll come back to you on what the export duty was per ton. All right. Thank you very much. Thank you. Due to time constraints, we will be closing question and answer there, and I would like to hand back over to Martín for closing remarks. Thank you very much, Paul. At the end of our financial year, I am very happy to report that the integration of Orocobre with Galaxy has done very well. Significant value has been delivered by combining the two businesses and set of assets, such that Allkem is in a unique and robust position to capitalize on the growth in the lithium market. We have outlined an exciting strategy to deliver the scale and product flexibility required by the customers as the world transitions to an electric economy. In achieving this, we must also continue strong operational performance, investing in our people, developing our assets in a sustainable manner, and managing costs in this inflationary environment. Further, we retain a robust financial position with strong positive cash flow over the quarter and financial year that will fund the tripling of our production by 2026. Thank you for joining our quarterly results briefing today. If you have any further queries, please don't hesitate to contact our investor relations team. Thank you. Thank you for joining. You may now disconnect.