Good day, ladies and gentlemen, and welcome to the quarterly conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to the Chief Executive Officer, Martín Pérez de Solay. Please go ahead, sir. Thank you very much, Laura, and welcome everybody, and thank you for joining us for the Allkem Limited December 2021 quarterly results. I am pleased to provide an update on our operations and development assets around the globe. Joining me on the call is Chief Sales and Marketing Officer, Christian Cortés, who will provide a market update, and CFO, Neil Kaplan. It has been a remarkable December quarter for the lithium industry and Allkem in particular, and it is pleasing to see strong market conditions persisting into the new year. It is not surprising that we are seeing a very strong cash flow from our operating lithium assets at Olaroz and Mt Cattlin. Total December quarter group revenue was AUD 107 million, and group gross operating margin was over AUD 70 million. These figures will only increase as our second half lithium carbonate prices are expected to grow by around 80% on the first half to approximately AUD 20,000 per ton, and spodumene prices increased to approximately AUD 2,500 per ton in the March quarter. We have also now obtained environmental approvals and signed a royalty agreement for the Sal de Vida, so our next development project is now underway. Looking at our operations, I would like to start with sustainability, where activities during the quarter remain focused on health and well-being of our workforce and local communities. Safety remains our number one priority, and performance improved through the quarter as we continue to undertake a number of health and safety initiatives. Post-merger, we have also embarked on the rollout of a single standardized health safety and environment reporting platform to unify all operations and projects into the Intellect system. With the escalation of global COVID-19 cases due to the Omicron variant, work teams in Canada, Argentina, and Australia have all continued to level off biosecurity protocol relative to their jurisdictions. We are cooperating with local authorities undertaking the relevant testing and have seen positive momentum in vaccination programs for our workforces. While the company continues to actively plan for and manage COVID-19 impacts across all its operations, it is likely that steep increases in Omicron-related cases globally will continue to impact the group's operations and the development activity in the near term. We will monitor and manage this closely. Engagement and briefings continue with local communities and our shared value team in Argentina continue to undertake various development initiatives. Successful community consultation meetings were also conducted in Catamarca during the quarter as part of the Sal de Vida environmental approval process. Moving on to our operations, Mt Cattlin exceeds its full-year production target and achieved just over 230,000 dry metric tons of product in the year. 52,225 dry metric tons of spodumene concentrate was produced in the December quarter at 5.7% lithium oxide grade. This was predominantly due to a 10% increase in head grade and a slight increase to throughput. This also enabled us to achieve a very competitive operating cost of AUD 324 per ton for the quarter. 38,071 dry metric tons of spodumene concentrate was shipped at an average grade of 5.7% lithium oxide, generating revenue of AUD 60.7 million at an average sales price of AUD 1,595 per dry metric ton CIF. As previously advised, an additional shipment of 23,000 tons of calendar year 2021 production will be made in January 2022 at a similar pricing. In order to align with Allkem's 30 June financial year end, forecast spodumene production for the twelve-month period ending 30 June 2022 is anticipated to be approximately 200,000-210,000 tons, as detailed in the quarterly report. The next stage of pre-stripping activities at the Two North West pit are underway, and during financial year 2022, the operation will transition from mining the current Two North East pit to the Two North West pit. Head grade is expected to return to the life of mine average and pre-stripping cost for the Two North West pit will be expensed, resulting in higher cash costs, higher unit cash costs. In addition to the 23,000 tons January shipment just mentioned, contracting arrangement for additional 45,000 tons of spodumene concentrate in Q1 calendar year 2022 are well advanced with indicative pricing of AUD 2,500 per ton for a 6% lithium oxide grade. We also intend to commence a resource extension drilling program in March with the aim of extending the life of the Mt Cattlin operations. At Olaroz, as we continue to deliver the desired product quality to our customers, we are realizing the best prices we have seen for over three years. 3,644.44 tons of lithium carbonate was produced during the quarter, representing a 30% increase from the previous quarter. 51% of this production volume was battery grade in line with previous guidance. Sales for the quarter was 3,293 tons of lithium carbonate, up 26% from the previous quarter. 65% of this volume was battery grade. Total sales revenue of AUD 41.1 million was up 68% from the prior quarter and up 149% from the previous corresponding period. The average price received was up 34% from the previous quarter to AUD 12,491 per ton on a free on board basis, which is 4% higher than the previous guidance. Pricing for this June half is anticipated to be approximately AUD 20,000 per ton FOB, which is 80% higher than the first half of the financial year. The lithium market clearly remains very robust and pricing momentum continues, which Christian will discuss further. Cash costs of goods sold for the quarter were AUD 4,336 per ton, representing a 9% reduction from previous quarter. Gross cash margin for the quarter increased by 78% to AUD 8,155 per ton, and it is expected to increase further with higher prices anticipated for the June half. Moving on to our development assets, we are targeting the delivery of Olaroz Stage 2, Naraha, plus the commencement of the construction of Sal de Vida. By the end of December 2021, overall project construction at Olaroz reached 68% completion, with 91% of pond construction activity completed, and with the soda ash and carbonation plants being 37% and 43% complete respectively. Commissioning of ponds, brine distribution infrastructure, and lime plant is occurring as individual project components are completed. The workforce is expected to reach peak levels during the next six weeks, subject to any restriction resulting from the current Omicron wave being experienced in Argentina. A recent review of Olaroz expansion project capital expenditures, excluding VAT and working capital, indicates an expected 10%-15% increase to between AUD 365 million-AUD 380 million. This is mainly due to refinement of the project scope, including additional sustainability initiatives, Argentina inflation substantially exceeding the devaluation of the Argentine peso, global construction cost inflation, increase in international freight rates, and COVID-19 related costs. Over the preceding two years, the pandemic has necessitated significant changes to the operating protocols, which have slowed activities and increased costs. The capital expenditure increase will be funded from guaranteed funds that can be specifically used for overruns. The major areas of cost impact in the lime plant, carbonation plant, soda ash facilities, costs related to drilling brine, production wells, and construction of additional camp facilities are related to COVID-19 restrictions. First production is currently anticipated in the second half of calendar year 2022, subject to any further COVID-19 related delays. Construction of the Naraha lithium hydroxide plant in Japan is largely complete, with pre-commissioning works well underway. Commissioning activities continue to be influenced by the availability of international equipment commissioning experts, given COVID-19 related border closures in Japan. However, commissioning is still expected in the first half of calendar year 2022. At Sal de Vida, all production wells have been completed and general infrastructure and early works progress alongside piloting activities. Materials have arrived to site for the construction camp and the laydown areas have been completed. With final environmental permits now received for the first 10.7 thousand tons of production from provincial government, construction of ponds and the brine distribution network will commence this month. A royalty agreement with the Catamarca provincial government has also now been executed, which confirms a life of project royalty rate at 3.5% of net sales revenue. Due to permitting and COVID-19 related delays, the stage 1 construction schedule has been impacted and commissioning and first production is now expected by the second half of calendar year 2023. We're also progressing studies into the expansion of stage 1 production capacity to 15,000 tons per annum with the same execution timeframe. Learnings from the pilot program continue to be utilized to refine battery grade production capabilities of stage 1. At James Bay project, we reached a significant milestone with the release of the feasibility study and made an ore reserve. The study demonstrates lowest quartile development cost and unit operating costs. The operation is also projected to generate a pre-tax net present value of AUD 1.4 billion using a long-term spodumene price of around AUD 1,000 per ton. The study details a 321,000 tons per annum operation utilizing hydropower, conventional mining methods, and a process flow sheet and a 2 million tons per annum plant design, similar to the one we have in Mt Cattlin. Allkem expects construction activity at the James Bay project to commence on Q3 calendar year 2022, with commissioning to follow in the first half of calendar year 2024. Basic engineering has commenced alongside the procurement process and preparation of construction permits for early works is underway. In early January, the first drill rig mobilized to site and the first hole has commenced as part of this sterilization and resource extension drilling program. Stakeholder engagement continues positively and completion and release of the feasibility study will allow environmental and First Nations negotiations to be completed. I will now pass over to Christian to discuss the market. Thanks, Martín, and good morning. I will begin by discussing the market dynamics in the lithium battery value chain and its impact on demand for lithium products over the quarter. The strong demand for lithium chemicals and spodumene concentrate experienced throughout the course of the year accelerated further during the December quarter in response to record production volumes of lithium-ion batteries in China. Electric vehicle sales in 2021 were estimated at approximately 6.2 million units, up 100% compared to the prior year. Approximately 2 million EVs were sold in the December quarter, which represents a 40% increase compared to the December 2020 quarter. EV sales in China alone were estimated at 3.3 million units in 2021, representing a 150% increase compared to the prior year. China also achieved a new EV sales record for the December quarter of approximately 1.3 million units, which equals to total sales in 2020. With EV sales anticipated to increase substantially in 2022, production volumes of lithium-ion batteries ramped up in China to a new record level of approximately 85 GW hours during the December quarter, up by approximately 40% quarter-on-quarter and more than double from last year's December quarter. Demand for lithium carbonate in China continued to grow in response to a strong preference for LFP battery formats. Due to the limited availability of additional lithium carbonate and mineral feedstock, domestic spot lithium carbonate prices reached new records at the end of December, exceeding AUD 40,000 a ton and reestablishing a premium over lithium hydroxide spot prices. Spodumene concentrate spot prices also registered records during the quarter, approximately double the prices of the September quarter. Contracted prices were gradually adjusted up across all key geographies to reflect tightening market conditions across the supply chain. Lithium chemicals and spodumene concentrate have historically been largely sold under annual and long-term contracts. Reported spot prices reflect marginal volumes rather than prices in the high volume contract market. As such, spot prices may be considered leading indicators for the trend of future contract prices. Allkem sales volumes of lithium carbonate and spodumene concentrate throughout calendar year 2021 have been mostly to customers with supply contracts between one and three year tenure. Pricing for spodumene concentrate are negotiated on a per shipment basis with long-term customers. Pricing for lithium carbonate contracts during 2021 were approximately one-third linked to average monthly spot prices, one-third with annual fixed price agreed in late 2020, and one-third linked to contract indices which adjusted on a quarterly basis. In 2022, annual contracts that previously had a fixed price will be linked to contract indices with an average of bimonthly adjustments. Moving on to supply. Estimated lithium chemical production in China during the December quarter increased by approximately 5% compared to the prior quarter, mainly from spodumene source as higher volumes of mineral feedstock were shipped from Australia. The market dynamics resulting from an accelerated demand for lithium chemicals in China, in contrast to limited incremental supply, resulted in a supply deficit during the quarter, which in turn pushed spot prices of lithium chemicals and spodumene concentrate to new records. Competition for securing lithium resources intensified also during the quarter as new investors enter the sector, resulting in upstream acquisitions at record resource multiples. It's anticipated that lithium-ion battery producers and EV manufacturers will continue to play a more active role in sourcing lithium chemicals and spodumene concentrate in 2022. This could be either through a direct investment or as we have seen recently, through long-term purchase agreements. I will now hand back to Martín. Thank you, Christian, and I will now hand back to the operator for questions. Hello, is your operator there? Hello, Laura? Hello? I'm here. Thank you. Sorry. Please pardon me. It was. Yes. Sorry. We've got Reg Spencer. Please go ahead. Thank you. Morning, Martín. Congrats on a great quarter. There's probably a bit to run through, but I'll try to keep my questions limited. I might start with pricing if I can. Can you remind me how much of your product from Olaroz is exposed to spot pricing? And what proportion of your overall supply contracts would be up for renewal over the course of this calendar year? Thank you, Reg. As I said before, most of our production from Olaroz today is covered by contracts. Contracts have different repricing mechanisms. Some of them reprice monthly, some others are quarterly or six months. Maybe, Christian, you can give him some more color on the average time for repricing on the contracts. Sure, Martín. Hi, Reg. So the percentage of volumes that in the 2021 period were linked to spot indices was about 30%-33%. Those contracts really don't have much of a change for 2022. With regards to the rest of the volumes, we did have some fixed prices agreed last year that are mostly being delivered and completed. There will be a little bit of carryover on some small volumes on this specific quarter due to the fact that Japanese fiscal year finishes in March. As we move to 2022, the rest of the contracts, including anything that had a fixed price, gets reset, and we are effectively moving to variable pricing linked to indices. Okay. That's very useful. Thanks. Thanks, Christian. My next question relates to Sal de Vida. I guess that's not an insignificant delay to commissioning from the prior development plan. How much of that delay can you actually put down to availability of people skills and COVID impacts relative to other impact issues? Thank you, Reg. Most of the delay is the delay in securing the environmental permits that Right delayed the initiation of construction, and to a large extent that's a consequence of COVID having closed government offices for most of the time during last year. The inability to, you know, move forward with the local government and the inability to complete the public hearings that have happened in Catamarca back in December delayed the project significantly. That's actually number one reason for this delay. Okay. Understood. I note you're now looking at some studies to potentially take Stage 1 up to 15,000 tons per annum of capacity. Could we perhaps take this as a change to the overall development plan for the project that now sees two stages of 15,000 tons per annum or can we expect something a little bit different than that? Well, we are planning on this first stage, bringing this first stage to 15,000 tons and on the back of it, the second stage can be larger than 15,000. The resource is there. As we said before, it's, you know, it's a classic salar. It's quite similar to what we see in Olaroz, where we're only seeing the tip of the iceberg in terms of total resources. So there are plenty of resources there. We just have to confirm them, confirm the process flow sheet and move on. The intention is to move production as quickly as we can in two stages rather than in three. You know, second stage may be larger than this first one. That's what we're going to do, obviously subject to- Okay. Completing all necessary studies and reports and else. Excellent. Thank you. Thanks, Martín. Finally, based on your current development plans for your various growth projects, what is your planned CapEx spend for calendar 2022 and 2023, if you're able to divulge that to me? The plan for this first set of projects that we've launched with Sal de Vida and the completion of Olaroz-Nuestra and the construction of James Bay, considering the current cash position of the company, the cash generation, we just generated AUD 70 million of operating profit in this quarter. Considering the ability to project finance these projects at the asset level, the development plan for the company is funded. We don't foresee any problem in there. We're looking forward to putting together a market strategy so as to tell the market what we think of further projects going beyond this initial launches and how we do the company CapEx and cash flow generation would look like over time. Okay. Yeah, that was something that we, I guess, were expecting previously. The growth project execution is in some ways going to be dictated by your availability of funding as opposed to a set, you know, delivery timeline to the projects individually. Is that accurate or fair? No. The objective is to deliver, you know, our ability to deliver the projects on time and the funding would be put in place to meet those requirements. The way we see the market is moving production as quickly as we can is the name of the game, and that's what we have to do, making sure that we have the necessary teams and capability of executing the assets as we plan to develop them. The current capital situation of the company is very strong. Financial position is strong. I've said before, cash flow generating assets, ability to leverage the projects at the asset level, will enable us to further develop the company beyond this initial layer of projects that we kicked off with Olaroz 2, Naraha, Sal de Vida and James Bay. Okay. Excellent. Excellent. Thanks Martín. I'll pass it on. Thank you. Thank you. We'll now take our next question from Jack Gabb. Your line is open. Please go ahead. Thanks, and thanks Martín and team. A couple of questions from me. I guess starting with Olaroz, with nameplate capacity I guess is 17,500 tons per annum. I think you previously said you're aiming to ramp up production to sort of 15,000-16,000 tons per annum run rate this year. I'm just curious what's the hold up with getting to that sort of 15,000-16,000 tons per annum run rate? Is it fair to still assume that nameplate capacity of 17,500 tons of carbonate is still feasible? Thanks. Well, with regards to that, as we said before, until we got stage 2 on production, stage 1 is producing technical grade and battery grade. As we said before, we would be able to produce 17,500 tons at technical grade product. However, producing battery grade puts a burden on the recovery of the plant. Until we have stage 2 ramped up and we're able to make certain investments on stage 1 to debottleneck it and bring it to 17,500 tons as the nameplate capacity was, we will continue to see similar production rates over the next year and probably part of the following. As we undertake certain investments on Stage 1 of Olaroz after ramping up Stage 2, we will start seeing the bottlenecking of the production capacity in Olaroz Stage 1. That's great. Thanks. Just on your sales and pricing, I guess firstly on sales, I think this is the fourth consecutive quarter that you've built carbonate inventory. Is that mostly down to the PPES deferrals? I'm just curious, why hasn't that inventory been released given the strength of the spot market? As I said before, Christian can comment on this more, but almost all of our production in Olaroz is contracted, so we are targeting the production to the better possible recovery in the plant and also making sure that we have enough product to supply our customers whenever they need the product according to the shipment schedule. During some quarters we produce some more battery grade and we make up a little bit of inventory to be able to meet the customer orders in the next quarter, particularly in quarters like this one in which we will see a bit more technical than battery grade because it's, you know, seasonally, it's when the recovery of the plant due to the lower operation season is impacted. At the same time, we always target a maintenance stoppage during the months of February and August. That's why we balance inventories back and forth. It's just to meet the demand sets. We're mostly contracted in all of our production from Olaroz today. Okay, thanks. Last one, probably for Christian, is just on pricing, I guess for the AUD 20,000 a ton guidance for this half, I guess. Can you give us a sense of just how much or what percentage of volume is that deferred PPES sales from December 2020 price pricing? I guess more broadly, can you give us a sense of the split between pricing, I guess, from a high point to a low point? What's the spread of pricing that you'll sell or you're expecting to sell this half that gets you to that blended average of AUD 20,000? Thanks. Christian, go ahead. Hi, Jack. Sure, Martín. In response to your first question, the percentage of volume associated with last year's business that we are delivering this quarter, we are really talking about small percentages. It's roughly between 15%-20%. The majority of volumes associated with 2021 have been dealt with in the results that we just reported, and we are now effectively adjusting pricing to reflect 2022. Your second question, can you please repeat that? Yeah, no problem. I'm just curious, when you come to your blended average of AUD 20,000 for this half, can you give us any sense of the spread between or the spread of pricing that you're getting between your various contracts? You know, are we talking a range of sort of AUD 15,000-AUD 25,000, or is it tighter than that? Just curious. Yeah. No, it's a good question, and the spread is quite significant. It really depends what product and what geography are we selling into. I did talk a little bit about moving away from fixed prices and effectively pulling contracts through the 2022 period on variable pricing linked to indices. As you very well know, Jack, prices for spot in China are at the top end of the spectrum or the range. Whereas prices on carbonate delivered in Asia contracts are significantly lower than that. It's probably about 50% lower than that. It is a significant spread. In CIF terms, I would probably say it's somewhere between AUD 15,000-AUD 35,000, given the average that we have in the contracts. Perfect. That's a really helpful question. Thanks very much, Martín, as well. I'll pass it on. Thank you. Thank you. Once again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. We'll now move on to our next question. At the tone, please state your name and company before posing a question. Your line is open. Please go ahead. Thanks, gents. Saul Kavonic from Credit Suisse here. I had two quick questions for Martín. The first one's just on the Mt. Cattlin production outlook. If my quick math is correct, for the 200-210 KTPA FY 2022 guidance, we've already had about 120 K in the December half. I mean, does this mean we're looking at a drop essentially to about 80 K-90 K in the June half, which is a pretty big drop? Can you just give us how we should think about recovery and production rates post the June half? Thank you for your question. Keith, I think you're in a better position to answer that one, please. Keith Muller is the- Sure. -manager of, uh, Mt Cattlin. Thank you, Martín. Yes, your quick math is correct. We are forecasting to produce 90,000 tons in this half, mainly related to head grade. The head grade we've seen in the December quarter was 1.23. We're reverting to average head grade of 1-1.1 in this half, hence why we're seeing the reduction in production. Thanks. I guess the follow-up is, should we be looking at then 90,000 per half on a forward-looking basis, or should we see grades improving to bring us back to, above 100,000, post FY 2022? The long-term forecast is for the head grade to remain at the life of mine average, which is between 1.1 and 1.2. 90-95 is probably where we'll hit the mark at a 5.7% product grade. Thank you very much. My second question, regarding capital management, getting well-worn, but again, just given where prices are and the cash flow that's coming in, can you give us kind of the color on your thinking about returns to shareholders and dividends or buybacks or other means, and when you might considering implementing a policy on that front? The key priority now is building the projects that will enlarge our sales base, our revenue base, I'm sorry. That will generate additional return for shareholders. As we see those returns coming, we will put forward a dividend policy. However, for the time being, most of the cash generated by the assets is being used to develop the assets further and increase production. Thank you very much. That's all from me. Thank you. We'll now take our next question. At the tone, please state your name and company before posing a question. The line is open. Please go ahead. Hi, Martín. It's Kate McCutcheon at Citi. Costs at Olaroz. There's obviously some currency inflation, rate, COVID costs. Do you expect the costs to come back down? I'm trying to understand how we think about costs from here and what's transient and what's not. Yeah. A couple of things to take into consideration on the costs at Olaroz. They improved from the previous quarter based on a larger production. Argentina inflation is higher than the devaluation rate, so the costs are impacted by a higher than devaluation impact. And also some of the reagents which are have international dollar-based pricing are being impacted by the global inflation. So all those three factors will influence on the cost going forward for Olaroz. I would tell you the most important one is going to be capacity, the amount of total throughput from the plant. Because as we bring in Olaroz Stage 2 on stream, we will be able to further reduce fixed costs and that will impact on the pricing on the costing. On Argentine inflation, we'll see it moving up and down, and some quarters will have higher inflation than devaluation, as we had in this one, and some others, when there's a devaluation, costs will be benefited. That will move back and forth. They should be considering our Stage 1, we forecasted in the range of AUD 4,000 for this year. If the devaluation catches up with inflation, we should be able to put them there in the year. Costs should come down as we bring in Stage 2 into production. Yeah. Understood. Just on the CapEx increase that you put through, can you just remind me how much you've spent so far and what the profile of that remaining spend will look like? I'm sure Neil would be able to give you a proper answer in that regard. Neil, please. Yeah. No problem. Hi. In terms of what's been spent so far, we've spent in terms of CapEx through the end of December about AUD 266 million. There obviously will be some advanced payments that are included in that number. That obviously excludes VAT working capital, and there are some finance costs related to that facility related specifically to stage 2. Was there a second part to the question just in terms of the increase? The CapEx that's left to spend, what will that profile kind of look like? Will it be kind of flat over the next period, or? No. It will. The CapEx now. Yeah. From now on in for the next six months, there would be a heavy spend because we're sitting at, actually spent at 31 December, AUD 266 million of pure CapEx. That number's gonna end up about AUD 100 million more. That spend's gonna occur between now and mid-year. Perfect. Thank you. Calendar year, 42. Just final Yeah. Yeah. Got it. Thank you. Just a final question on James Bay. Next catalyst, when do you think we might get an FID or what's next with that one? We're working on the FID as we're also progressing on the environmental approvals with the Québec government and the benefit agreement with the Cree Nation. All that is working. We're targeting to re-discuss this with all environmental approvals and else at our board meeting of April, I'm sorry. April. Yeah. Perfect. Thank you. Thank you. We'll move on to our next question. As a turn, please state your name and company before posing a question. The line is open. Please go ahead. Oh, hi, Rahul Anand, Morgan Stanley. Hi, Martin, Neil, and team. Look, first one's on that royalty change. Seems to be a bit of a good outcome there. I mean, my thoughts were around 4.5%-5.5%. I guess what the question here is there any other change to the agreements in terms of any revenue credits that you get, re the Puna, revenue credits and whether there's any change to VAT refunds for CapEx? That's the first one. Perhaps for Neil. Well, I can kick off with that one. I was involved in the discussion with the province. There are no further changes to the agreement. That one we mentioned, that's a definitive agreement for the life of the project, for Catamarca. Puna refund and VAT recovers are federal agreements. They are not agreements with the province, so they run through a separate line. Neil, you can comment on that, please. The Puna refund, and that should be in terms of what we've been receiving. We would expect it would be very similar to what we've been receiving at Olaroz. But we still gotta get into the detail of that, Rahul. I would be looking at it on the same basis that Olaroz is looked at. Perfect. Okay. That's helpful. Martín, one for you perhaps in terms of brine concentration levels. How are they currently at site? I mean, are you able to produce at that 50% level despite perhaps the delay in integrating stage 2 to February? If you can, I mean, perhaps talk around some numbers as to how it's tracked year-on-year, perhaps. It is as we expected for this time of the year. This is the lowest evaporation, and we're just coming out with very intense rains in the last week of December, so it is within our forecast. It enables us to produce as much as we want. I've said before, production this quarter will be shifted a bit more to primary than we produced in the previous quarter for two reasons. One is because, as I said, brine concentration is lower in this time of the year. Number two, because we have a maintenance stoppage plan at Olaroz for February. We will take advantage of this stoppage to put together some tie-ins for the equipment of stage 2 that should be somehow linked to stage 1. That maintenance stoppage added to the lower brine, so lower evaporation will create a larger primary product outcome in this quarter. That's why previous question was why we've been producing a bit more battery grade over the last period. We're keeping that for continuing the delivery on the contracts we have. Okay, sure. Perhaps one on Mt. Cattlin and perhaps Keith. Keith, can we talk about recoveries, perhaps 57% of 1.23% grade. You've talked about grades reverting to the reserve grade. I mean, obviously, previous targets were 60% recovery at 6% grade. We are far from it at the moment. How should we think about recoveries going forward at 1%? Sure. Thanks for the question. We're anticipating recoveries going forward at that that sort of head grade to sit around 55%-59%. The reason we've seen lower recoveries in this last quarter compared to previous quarters in this quarter, about 41% of the material that we processed was from historic contaminated ore stockpiles. We've made a lot of progress with our optical sorter and ore sorter units, but they still produce a little bit of basalt that goes into our feed. As a result, recoveries are slightly lower. That is gonna run out in the near future, which means all the ore that we're gonna be processing from the second half of this calendar year will come straight out of the pit, which would be much cleaner, it is, and that's why we'll see a slight impact and increase in recoveries. Perfect. Okay, last question for me. CapEx increase. You mentioned that guarantee that exists within the loan. I think that number used to sit at about AUD 135 million. So you're definitely below that number at the moment. How does the whole VAT situation work out? I mean, you obviously get delayed refunds and, I mean, I just wanted to touch on sort of how much flexibility you still have in the debt and whether that's enough for you to complete commissioning. Too detailed for me. I will pass it on to Neil, please. Rahul, in terms of funding it, yes, there are guarantee funds which are sufficient to fund the increase in the CapEx, VAT, as well. There've been certain submissions that have gone in to recover some of the earlier VAT that was paid, which we are hoping to recover rather sooner than later. But generally, with VAT, you've got to wait till the operation comes online. There is a VAT spend, obviously. There's certain items that have VAT on them, others that don't. I mean, obviously, salaries and wages, that sort of thing, doesn't. Then you've got different rates for different things. We normally work on a 15% or 16% average on the CapEx amount, whilst most VAT variable items are at 21%. Yes, there... We do have sufficient cash in terms of the guarantees that are in place, which were specifically prepared for overruns, VAT and working capital. Okay, perfect. Thank you everyone. I will pass it on. Thank you. We'll now take our next question. At the tone, please state your name and company before posing a question. Your line is open. Please go ahead. Oh, Happy New Year, Martin. It's Glyn Lawcock at Barrenjoey. Martin, a few questions just on pricing and the market, if I could first. Just you've mentioned today that you're gonna be selling against indices. I mean, the indices are quite numerous now, and the spread between them is quite large. Can you help me understand a little bit about what indices you will be selling against? Is it equal weighting across them and et cetera? And then the second question is just on the market. It would appear on face value that battery production is increasing faster than EV production and sales. Just wondering if you've got any insight into your customers, like battery inventory levels. You know, is there any risk in the supply chain? I mean, we're all watching prices go up, you know, almost straight up, you know, wondering what's gonna stop it. Just wondering if you had any insights into the supply chain, whether that's batteries, lithium in the supply chain, et cetera. Thanks. Thank you for your question. Christian, if you could please go into the detail of the indexes and your comments on the battery, I'll comment after that. Certainly, Martín. Hi, Glenn. The question regarding indices, we basically use about four different pricing reporting agencies, and you end up selecting an index based on the conversation with your customer and the relevance to the territory as well as, you know, we often or always, if it's a battery-grade product, we're dealing with a customer that is buying from other parties as well. You know, part of that conversation is getting an understanding as to what level of... Sorry, what type of reference are they taking. To provide you a few examples, if we're dealing with Chinese customers. The large preference for Chinese customers is to look at Shanghai Metals Market and Asian Metal. If we are looking at customers outside China in Japan and South Korea, we tend to select between Benchmark Minerals and Fastmarkets. Those four are really the bulk of them. I would say if I had to put a weighting to them, probably the Chinese would be one-third and the Asian customers outside China would be a third and a third with those indexes. With regards to your question on our views on what's occurring in the value chain, look, I think it's been a phenomenal acceleration that we've witnessed in the past quarter, particularly. The expectation on numerous sources that I've come across with regards to the demand and expected sales for electric vehicles in 2022 is around 9 million units. That a sizable step up from the 6.2 to 6.5 million units that we read on 2021. The activity associated with battery production in China, which makes about 80% of the market, in the December quarter was phenomenal. You know, it was 40% above the previous quarter and more than doubles in the same quarter last year. In terms of the activity and the demand, I think we'll see a very strong market in 2022. You know, the variable around pricing, and particularly with the spot, that is a sensible one. I would prefer not to comment too much on that because you have, you know, buying behaviors that are specific to seasonality in China. I just think at the moment it's a very, very tight supply market. As a result of this, we're seeing this very, very rapid increase in pricing. Hopefully that gives you a view of what we're looking at when we're speaking to customers and going through- So- different sets of data. Christian, does that mean you don't get a sense that there's a buildup of batteries in the system? Because that's obviously one area where we could end up with pushback on pricing if battery inventory exceeds automobile production. Based on the battery tracker installations that I had a look at, I believe that the production is to meet the growth in demand. As I said, you know, the 2021 year was a Chinese story. We know that outside China, some of the OEMs have been impacted by different supply chain related matters. The production outside China is expected to increase in 2022, which will take some of this incremental production of batteries. I don't think that at this stage, we are heading into that issue. It's something to keep an eye, no doubt. Okay, thanks. Along the same line Christian mentioned. Martín, can I switch. Sorry, Glyn. Sorry, Martín, you please go. Oh, no. I was saying along the same line Christian mentioned, we keep on seeing the OEMs announcing more and more electric vehicle production. So we're not aware of a battery stock being built up. Okay, that's great. Martín, if I could just ask one further question, please. Obviously next month the border to Western Australia is gonna open, and obviously COVID will get in. On the east coast of Australia, you've probably been aware a number of industries have lost up to 40% of their workforce, you know, as they contract COVID and obviously can't work. What's your expectation? I mean, you know, your guidance you're giving us, I mean, do you allow for, you know, 10%, 20% loss of your workforce when COVID gets into WA? Just how are you thinking about that? Thanks. Well, we are doing the same planning we did in Argentina when COVID impacted us and we lost a significant part of our workforce. The objective has been to prioritize operating activities, particularly in this market. That's where the priority is. That's what we have done in Argentina, and we expect to manage it in the same way in Western Australia when the borders are open. There is enough workforce in the area, and most of the people working at Mt. Cattlin are from that particular area. We don't expect significant difficulties in terms of operation from moving people around should the borders close again. We have been operating on a closed border situation. As COVID comes in, what we have proven in Argentina is that a proper vaccination program, along with a good biosecurity protocol, enabled us to keep the production up and running and we're aiming to repeat the case in Western Australia. Keith, Okay. Unfortunately, I haven't been able to travel there in the last period, but you can comment on this. You are in Ravensthorpe. Sure, certainly. Glyn, just quickly as we've only have five minutes left, but one thing that is in our advantage is at the moment, the pre-stripping activities in northwest- Is to supply ore later in the year. We do have the option if we are impacted by COVID, and we can't rule anything out, that we focus on the current pit horizons where there is ore accessible immediately. The impact we won't feel in the near future. It is an impact we'll feel in 2023, likely or towards the end of the calendar year 2022, which buys us time to make up any deficit if we were to be impacted by mining volumes. That's great. Thanks very much, Martín. Thank you. We'll move on to our next question. At the tone, please state your name and company before posing your question. The line is open. Please go ahead. Good morning, guys. It's Hayden Bairstow from Macquarie. Just a couple of quick ones. Just interested in, given the outlook for spodumene, what work you're starting to do at Mt Cattlin to potentially look at either a pit expansion or even moving underground. With the hydroxide plants that are almost ready to go, just given the variance in pricing between carbonate and hydroxide, keen to understand what optionality you have to just sell the carbonate rather than push everything through the hydroxide plant in Asia. Thanks. Well, thank you. On those two questions, in Cattlin, I said before, we are conducting this exploration program to confirm some targets that we have to expand the life of the mine. We're targeting, as you mentioned, deeper horizons and some objectives to the sides of the current operating pits. With regards to the plant in Naraha, the plant will start in the first half of this calendar year, and production of the lithium hydroxide from Naraha plant will go into the battery-grade market in Japan. Part of that production is contractually agreed, and we'll see how the plant ramps up in order to maximize the revenue from carbonate and hydroxide at the same time. Great. Thanks. Thank you. We'll take our next question. At the tone, please state your name and company before posing your question. Your line is open. Please go ahead. Yeah. Good day, Martín. It's Al Harvey from- Al Harvey. Just following up on Hayden's question about Mt. Cattlin. I know you've said you're gonna look at, you know, more exploration drilling, but what does just running higher prices to your pit shells do? Does that bring any additional material? What other opportunities do you have out at Mt. Cattlin? I think you've mentioned previously there might be some scope for tailings retreatment. I mean, if you brought these in, how long do you think it could extend life for? Thank you. Keith is a much more expert on hard rock than I am, so I'll ask Keith to please answer this question. Certainly. It's perhaps a little bit early, Hayden, to comment on what we think the extension of life of mine would be, but I can tell you a bit about the scale of the drilling and what we're looking to do and our objectives for the drilling. We have a 33,000-meter campaign that we are targeting to start in March this year. Out of that 33,000 meters, 30,000 will be employed for current and immediate expansion of the operation, which is adjacent to the current open pit. That 30,000 meters, we're looking to convert up to 4 million tons from resource to reserve. We've also commenced the underground scoping study, and that's just to enable us to do a trade-off between expanding the current shell or going underground for that section. There's also 3,000 meters we are putting into an exploration lease immediately south of the operation to make the decision whether we wanna drill further to the south or there's further targets that we have on our exploration lease to the north. We haven't decided what we're gonna do with the exploration leases yet. This is just for an immediate expansion. That's great. Maybe just could you touch on the sensitivity of, you know, potential for cutbacks if you did run a higher price like you are at James Bay, for example? Certainly. At the current price, we can immediately start with an expansion, and that would be feasible. What we wanna do is do the trade-off analysis to see whether underground operation would not yield higher NPV. Open cut would work now. We wanna investigate if underground can do better. Yeah. Great. Just one more from me. I just wanna clarify the timing for major study updates. I think we're expecting it this quarter, but if we have any view on exact timing and exactly what's in scope, that'd be helpful. Is that referring to the exploration at Mt Cattlin or any other study you're referring to? Sorry. The major study update across Sal de Vida there and Olaroz and perhaps expansions at Naraha maybe down the track. We are working on an investor presentation for this quarter that would cover our views not only on these projects that are already in construction but put out the outlook of growth for the company, and we're targeting to complete this presentation during this quarter. Great. Maybe just if I can sneak one more in. Would that include any information on the potential hydroxide downstream option at James Bay? Very preliminary. We still have to conduct a lot of engineering analysis and study on that, but we have an idea. As we said before, our intention is to convert that spodumene into lithium hydroxide to supply the U.S. market. We'll have to fine-tune the engineering, timing for construction and also we'll give you a broad idea of what we are thinking in that regard. We'll now take our last question. At the tone, please state your name and company before posing your question. Your line is open. Please go ahead. Hi, this is Bria Murphy with BMO Capital Markets on for Joel Jackson. Thanks for taking my question. Just one for me. I just wanted to clarify my understanding of the contract pricing mechanisms in 2022. So am I correct in saying that one-third will be linked to spot pricing, one-third to quarterly adjustments, and then one-third that was previously fixed will now be linked to bi-monthly index? Just, I guess, what drove that change in the pricing mechanism of the fixed piece? Are you seeing industry peers and customers looking for more adjustable pricing rather than fixed pricing? Oh, thank you. Christian, you have answered that before. Can you please clarify on it? Certainly, Martín. Hi, Bria. Let me try to go back to your questions. Sorry, Bria, can you repeat them again? Sure. Just on the contract pricing mechanism. I think you said a third is gonna be linked to spot, and then is a third linked to quarterly adjustments and then another third that will be linked to bi-monthly pricing adjustments. Okay. Well, when we say spot is just effectively indices, i.e., pricing agencies that follow the development of the market and put an assessment out. Effectively, we are moving the entire portfolio of the contracts into that arrangement. The key difference then becomes to where are you selling the product and what is the most relevant index to that specific segment. I gave an indicative percentage based on volumes, and it is effectively around a third linked to the activities in China. The rest of them, which is really two-thirds, are then linked to contract Asia prices that are reported by a couple of pricing agencies. Okay, thank you. That's helpful. No problem. Thank you. It appears there are no further question at this time. The Allkem Limited IR team will address all webcast questions directly after the conference call. I'd now like to turn the conference back to you, Martín, for your concluding remarks. Thank you. Thank you very much. As said, we are focused on delivering sustainable operations and developing our growth pipeline, which provides us with unique product flexibility and scale to meet current and future demand. We retain a robust financial position with strongly positive cash flow operations and a number of project finance opportunities. In addition, pricing outcomes for our products are going to materially improve over the next quarter and half year. We also look forward to delivering our strategic review of the development projects later in the quarter. I hope to deliver this in person and provide further detail around how we are planning to deliver our growth assets. If you have any further questions, please feel free to contact our Investor Relations team. Thank you very much for joining us, and we'll see you in the next update. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.