Good day, and welcome to the Allkem Limited September quarterly results briefing. 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. Finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Martín Pérez de Solay, Managing Director and Chief Executive Officer, to begin the conference. Martin, over to you. Thank you, Paulie, and welcome, everybody, and thank you for joining us for Allkem Limited September 2022 quarterly results briefing. As usual, I will be providing an update on our business, and Christian Barbier, our Chief Sales and Marketing Officer, will be providing us with a market update. Also joining us for the Q&A today is James Connolly, who has joined the Allkem Group three and a half months ago as Chief Project Development Officer, assisting us in the development of our significant growth pipeline. We will also have Keith Muller from Mt Cattlin and Christian Cortes, who is stepping in as Deputy CFO while Neil Kaplan is on medical leave to focus on his health. Firstly, the lithium market remains robust, and we continue to navigate through global challenges, while we remain fully committed to delivery and execution of our growth pipeline. At our operations, we continue to produce consistent and quality product at Olaroz. At Mt Cattlin, we successfully implemented mitigation actions to increase mining capacity. At our development and expansion projects, we have progressed construction at Sal de Vida, permitting at James Bay, resource extension drilling at Mt Cattlin, and commissioning activities at Naraha. At Olaroz Stage 2, we have successfully reached over 33% completion. However, we have been advised of some delays to manufacturing and delivery of some key final components, so we expect to commence pre-commissioning in the December quarter. Full commissioning will occur in the March quarter, and first production will be in the June quarter of 2023. We continue to be in an extremely strong financial position. This quarter, we generated group revenue of approximately AUD 299 million, and achieve a significant group cash operating margin of 82%. Group net cash at the end of the quarter was AUD 447 million, and our teams remain focused on advancing the development of our project pipeline, as we have clearly stated, to triple production by 2026. While being in a position of financial strength with significant growth assets that will also contribute to significant revenue generation, we are advancing two opportunities that are subject to due diligence and final approvals. The first is a strategic deal to acquire the Maria Victoria tenement located 10 km north from our Olaroz facilities while divesting in our Borax operations. The acquisition complements our existing extensive lithium holdings in the region and will allow more efficient development of the Olaroz salar. The second is a proposed $200 million project finance facility with the IFC for Sal de Vida Stage 1. We saw an opportunity to further improve the financing structure for Sal de Vida and partner with IFC, an institution with decades of experience providing finance and sustainable business solutions in the mining space. Sustainability, one of the core pillars of our business, we continue to be recognized for our leading practices and endeavor to increase our transparency and performance across our operations. Allkem recorded a 12-month moving average TRIFR of 1.9 at the end of the September quarter, a 27% improvement from the prior quarter, and a 12-month moving average lost time injury frequency rate of 0.5, representing an ongoing improvement trend in both metrics. Unfortunately, we did incur two recordable injuries, one at Mt Cattlin and one at Olaroz, but both have made full recovery and returned to work. Preventive actions have since then been implemented. COVID-19 cases at operations have significantly reduced as the impact of the pandemic across operating jurisdictions also reduces. Accordingly, we have minimized biosecurity protocols, and we will closely monitor the situation should we need to swiftly enforce them again. We continue to maintain regular and positive engagement with all the communities we work with as we develop our projects and the construction activities advance. Moving on to our operations in Mt Cattlin, not too long ago, we revised the full year 2023 production guidance at Mt Cattlin due to labor shortages in Western Australia, causing delays in exposing the main ore body coupled with temporary fine-grained mineralization. As mentioned, we have successfully implemented a number of improvement programs with the addition of magnetic separators, a larger mining fleet, and additional mining contractor, and implementation of retention programs. Mining capacity has successfully increased to 1 million BCM by the end of August, compared to 750,000 BCM in the prior month. In the prior month, in 2.1. Excuse me, 2.1 million BCMs of material was mined in the quarter and includes a record-breaking 872,000 BCM in the month of September. During the quarter, 70,606 dry metric tons of spodumene concentrate was produced at a 5.3% lithium oxide grade. While we do expect a softer first half of this financial year, we do expect production to pick up in the second half of the year. In terms of sales, we shipped 21,215 dry metric tons, and generated revenue of AUD 106.7 million, with a gross cash margin of 84% based on cost of production and average pricing of AUD 5,028 per dry metric ton CIF for SC 5.3%. An additional AUD 35 million of revenue was generated from sales of 59,326 dry metric tons of low-grade spodumene concentrate at approximately 1.3% grade. The resource extension drilling at Mt Cattlin progressed as well, and at the end of the quarter, we have achieved 92 holes with a total of 22,000 m. We intercepted high-grade zones with large thickness in the first phase of the drilling, which is targeting the conversion of resources to reserves. In the second phase, assay results demonstrated the extension potential to the north of the current pit. A consultant has also commenced work on the open pit cutback feasibility study, which will aim to restate the mineral resource estimate and ore reserve. Moving on to Olaroz, quarterly production of 3,289 tons of Lithium carbonate was achieved, 43% of which was battery-grade material. Production was up 17% from the prior corresponding period due to good plant performance from outstanding mechanical and reliability and asset utilization. Lithium carbonate sales were 3,721 tons, generating record revenue of AUD 150 million with a gross cash margin of 89%. Excluding shipments to Naraha, third party sales were completed at $43,237 per ton on an FOB basis. By the end of September, Olaroz Stage 2 expansion had reached overall physical progress of 93% completion. All evaporation ponds were complete and commissioned. Line 3 plant is now fully commissioned. Pre-commissioning and commissioning of Line 4 plant components is underway, and final construction activities are expected in the December quarter. Soda ash facilities' commissioning currently being undertaken. The carbonation plant has reached 77% completion. All activities in the carbonation plant are progressing to plan, other than the delayed piping and electrical equipment, which we have recently been advised about due to manufacturing and supply chain constraints. Pre-commissioning activities are still scheduled to start in Q4 calendar year 2022, with commissioning activities starting in Q1 calendar year 2023 and progressing to Q2 calendar year 2023. The start of production. There was a mistake in this paragraph, I'm sorry. We'll read it again. Pre-commissioning activities are still scheduled to start in Q4 calendar year 2022, with commissioning activities starting in Q1 calendar year 2023 and progressing through Q2 calendar year 2023. The start of production will now occur in Q2 calendar year 2023. As mentioned before, we are navigating through global challenges, including inflationary impacts and supply chain constraints. A recent review of Olaroz Stage 2 capital expenditure has been completed, taking into account the revised completion date and impact on logistics and freight. It is expected the capital expenditure will increase by around 12% to approximately AUD 425 million. This still represents very competitive capital intensity of AUD 17,000 per ton, and the increase will be funded through operating cash flow. Additionally, capital expenditures for James Bay and Sal de Vida remain subject to the same inflation and supply constraints as all projects experiencing globally. We will continue to review and monitor these projects as they progress. Moving on to our development assets that underpin significant growth. Allkem's commissioning activities at Naraha continue, including kiln heating, and technical-grade Lithium carbonate from Olaroz has been introduced in the main processing area. We remain on track for first production in the December quarter. At Sal de Vida, we have made strong progress since construction commenced in January this year. We have focused on commissioning the first string of operation ponds and commenced the construction of the carbonation pond for stage one by the end of this calendar year. Construction of the two strings of ponds has reached 65% completion, with the first four ponds completed and filled with brine. The main brine pipeline is complete, and the first three wells have been commissioned. The procurement process has advanced to the final stage for the process plant, and earthworks have commenced. We have also advanced detailed engineering for stage two, an additional 30,000 tons per annum to allow development to occur sequentially after stage one. At James Bay, we are advancing the project on a number of fronts in anticipation for construction commencement early next year. Hydro-Québec has completed detailed engineering of the power lines and substations and have commenced preliminary site works. Detailed engineering continues alongside procurement activities, including awarding key equipment packages. JAC, the Joint Assessment Committee, a committee of Cree Nation and federal government representatives, published the draft environmental assessment report for the project and will commence the final consultation period that will conclude in November. The clarification process with the Cree Nation and provincial government has also advanced, and positive engagement continues with community stakeholders. Additionally, we are targeting commencement of a 15,000 m drilling program to test extensions of the ore body. I will now hand over to Christian Barbier, who will provide us the sales and marketing update. Thank you, Martín, and good morning, everyone. We continue to see a very strong lithium market, with both customer and market demand significantly outpacing supply. Supportive government policy for the EV battery supply chain continues to be further enhanced with significant U.S. tax incentives on offer as part of the Inflation Reduction Act recently passed by U.S. Congress. The stakeholders have progressively taken measure of its very significant potential and implications over the last few weeks. Several large investments have been announced following the bill. On top of this week, an unprecedented amount of $2.8 billion worth of government grants awarded by the U.S. Department of Energy to critical raw material and EV battery supply chain projects. Further funds are expected to be deployed in the future, which will continue to drive demand and localization of critical battery raw materials, including lithium. Despite global challenges and fears of recession, EV sales in all major regions continued to be robust. Chinese EV sales figures in September reached 675,000 units, up 7% month-on-month, marking a historic record high. EV sales in China for the quarter were estimated at one point nine million units, representing a 107% increase from the previous corresponding period. Both U.S. and European EV sales for the quarter also registered a positive strong growth, up 44% and 3% respectively from the previous corresponding period. Despite increased exports of spodumene concentrate to China during the quarter, at a modest increase in Chinese lithium chemical production, lithium supply continues to fall short of demand growth, resulting in a noticeable decline in inventory levels across the supply chain. Spot prices for lithium carbonate, lithium hydroxide, and spodumene concentrate all rose during the quarter, with new record high prices set for each. Allkem's weighted average selling prices during the quarter, both for spodumene and lithium carbonate, reflect this environment of higher spot prices, combined with the inertia built in from our contract book and the lag between price setting and invoicing. Thank you. I will now hand back to Martín. Thank you, Christian, and I will now hand back to the operator to commence the Q&A. Thank you, gentlemen, for the presentation. As we are at Q&A, I would like to remind everyone in order to ask a question, press star then the number one on your telephone keypad. In the interest of time and allowing as many of our participants the opportunity to ask questions, we kindly request a firm limit of three questions per person. Again, to ask a question, please press star one on your telephone keypad. Our first question comes from the line of Rahul Anand from Morgan Stanley. Your line is open. Thank you very much. Good morning and good evening, Martín, Neil, Christian, and Andrew. First question. Look, the production was indeed very strong, so congratulations on that, especially year-on-year, given seasonality. My question on that was really around the cost side and the sourcing of brine. Was there any stage two brine used in the production process this period? And then if we look at the cost, what kind of cost pressures are you seeing on the ground in terms of fixed and variable costs? That's my first question. I'll come back with the second. Thanks. Thank you, Rahul. Brine mostly for the period was coming from stage one. Stage two brine, as we have been explaining throughout the different calls, the ponds have completed to be filled in for stage two in the previous quarter. We are still cooking the brine for stage two. That shall be available for stage two in the first quarter of next calendar year. With regards to costs, and I will ask Christian to answer to your question, that he's more into the details of fixed and variables. Hi, Rahul. The cost pressure that we've seen on the variables is fairly consistent and remains at the similar level that we saw last quarter. That is with regards to key raw materials that we use in the processing stage. I guess high pressure there remains relatively the same. With regards to fixed costs, that's probably the main problem at the moment, since inflation in country continues to exceed the depreciation of the local currency. That means that we're seeing an increase in labor costs in US dollar real terms. Christian, in terms of the split, between fixed and variable now at site. Well, we've usually talked about something like 60% variable, 40% fixed. Now, considering the element around devaluation and inflation, you're probably seeing a swing of two or three basis points the other way around. Understood. Okay. Second question. Look, in terms of the Stage 2, firstly, thank you for giving the clarity around CapEx and also including the working capital within that estimate that you provided today. Looking at the estimate itself, obviously an additional AUD 45 million, and then the previous update was in December 2021, which was an additional about AUD 50 million. We're looking at roughly around a 30% CapEx inflation from the start. My question really is about the rest of the portfolio. Should we expect a roughly 30% level of inflation in the rest of the portfolio? In terms of the funding of that, anything above AUD 330 million, will that be funded by you through shareholder loans, as you previously indicated a while back? Couple of things. Thank you, Rahul, for your question. Many answers to a long question. Number one is the number on the same basis as the previous one, excluding VAT and working capital. Number two is yes, you can calculate that 30% number of capital increase that you refer to. However, you have to take into consideration that that number includes an almost 24-month impact of COVID, during which the operations were limited on the expansion, not many works could be completed, and the costs escalated significantly as a consequence of all the COVID situation. When I look at the total CapEx for the project, taking into consideration that it took a lot longer given COVID and that there was a new global inflationary period that impacted the last 12-month figures quite significantly and disruptions in the supply chain as we are seeing. I still consider that a $17,000 per ton capital intensity is quite a competitive cost for putting together a project in such difficult conditions. The 30% number that you mentioned is correct, but if you look at it, you have to consider that it includes all of the COVID disruptions that all the projects have suffered. I think that if you look at the number based on the 12% that we are announcing from the previous update, mostly reflecting what Christian was mentioning of local inflation being higher, larger, longer commissioning periods and longer camp costs and other costs that James can provide you with more detail on. James, please, if you can complement what I have just said on that. 100%, Martín. Rahul, good question. The latest 12%, yes, 30% of that is associated with the delays, and we can speak to those delays in terms of supply chain issues we faced. 25% of this latest increase is across inflationary and the Argentine context around FX. Because we've been driving schedule, it's obviously quite beneficial for us to move this project quickly. We did see about an AUD 3-4 million increase in freight and then 40% on bill of quantities. That goes back to our original estimate in the early days, and maybe that addresses your question. AUD 20 million of this cost was around just the engineering estimates and the bill of quantities that we had initially. No, I don't believe 30% is correct across the entire portfolio. Are there lessons we can learn in the supply chain crisis? Yes. Can we reduce this number going forward? Of course we can. We'll be looking to manage that strongly going forward. No, look, given circumstances. Rahul? I think you guys have done a great job in terms of getting it up and running. Sorry, Martín. Please go ahead. No, the last part of your question, regarding the funding. The funding of these additional costs is from the operational cash generation, which is from all of stage one. We have positive cash flow generation there that has been devoted into the expansion project. Perfect. Look, last question is just on battery-grade splits. 43% battery-grade split in terms of production. Are you able to provide a sales split as well? I'll defer that question to Christian Barbier. Christian, if you could, talk through that, please. Yes, Rahul, we sold 40% of our carbonate during the past quarter in battery-grade carbonate. The rest 60% was technical grade. Is that your question? Sorry. Yes, it was. Yes. I was just trying to arrive at sort of how I should be thinking about pricing. I was just trying to get a range of how the pricing is going. Appreciate it. Mm-hmm. Okay, perfect. I've asked my C. Thank you very much. I'll pass it on. Thank you, Rahul. Your next question comes from the line of Lachlan Shaw of UBS. Your line is open. Lachlan, your line is open. Lachlan, you might be on mute. Hello. Hi. Your line is open. Sorry. It's actually Kate McCutcheon at Citi. I think you've- Hmm. Introduced me incorrectly. Right. Hi, Martín and team. Mt Cattlin recovery of 25%, is this for all the ore? I think last quarter you'd said 53%, 57% recovery expectations for the FY. Did the material not perform to expectations, and what is the recovery expectations for the rest of the financial year for guidance? Thank you very much for your question. I will ask our expert in Mt Cattlin, Keith Muller, to answer that. Morning, Kate. Thanks for your question. No, this recovery we experienced in the quarter relates to the quality of the feedstock we are processing at the moment. The feedstock has a very high level of contamination in the form of basalt. Our expectations is that as we pre-strip the northwest pit and get into the bulk of the ore body, that these recoveries of 25% will go away and will revert back to the sort of approximately 55%-56% metal recovery once we're in clean ore. This is just a temporary inconvenience we're suffering at the moment. Okay. Just to confirm I've got this right, September quarter annualized is half your guidance, and it's about to make up 30%, 40% of the guidance in 3Q, 4Q, which would imply two record quarters, I think. That would imply a huge volume of ore milled at that 0.9-ish grades. What milling rates are you looking in those last two quarters or perhaps for the next three quarters to hit that guidance? Sure. Just a correction on production per quarter. The record production was in the March quarter, 2021 of just over 60,000 for the quarter. What we are looking to do in the second half is 50,000 in each quarter. Still short of record production of previous years. What we are looking to mill for that period in H2 is approximately 900,000 tons of clean ore, which will produce approximately 100,000 tons of spodumene concentrate for the half. Okay, that's helpful. Thank you. Is there still more low-grade stockpiles to process there? Is there another 60 to go? There is more low-grade stockpiles, but it is not our preference to process the low-grade stockpiles. Our preference is to process ex-pit, clean ore. As this ore presents to the ROM, we transitioning as quick as possible and delaying that low-grade processing and just focusing on the ex-pit ore. Okay. Should we assume any revenues next quarter from that low-grade stockpile? The quarter we are in, yes. As regards to last quarter, we're looking for 100,000 tons of low-grade sales, of which we've done just over half now. When we haven't made any firm commitments for the second half of low-grade material just yet. I think we just wanna stress that this is a temporary measure to supply lithium units to our customer. This is not a long-term strategy. The minute we can go back on spodumene of high volumes, we'll do that immediately. Okay. Final question, perhaps for Christian. Battery grade production a bit over 40% at Olaroz. Can you talk to what you're seeing from customers? Is the demand for technical grade reflective of the LFP cathode manufacturing? Is the plan still to produce mainly battery grade? Any kind of color or commentary you can give? Yeah. Thanks for your question, Kate. The production of carbonates and hydroxide, I think in the market in China, which by far is the largest producer, has been affected in August with the power rationing in Sichuan. It has recovered in September. Despite the pickup in production, inventories have continued to decrease for both carbonates and hydroxide, and both for technical and battery grade. Obviously, it is for battery production, most of the demand, but people are upgrading technical grade into battery grade. Our increase in technical grade shipments during the past quarter was really due to the requirements to feed Naraha for the commissioning. This is obviously material that will be On which added value will be added, as hydroxide is produced, and we will be capturing that value going forward, probably more next year. Yeah. I can see you've got the separate split of pricing there. What were the tons that went to Naraha? Look, for the 60% was technical grade, and probably about two-thirds of it was going to Naraha during the September quarter. Okay. Thank you. Thank you, Kate. Your next question comes from the line of Alistair Harvey from JP Morgan. Your line is open. Morning, Martin and team. Just want a bit more clarification around the low-grade spod sales. Is the additional 60,000 tons you mentioned in the release on top of the 130,000 tons you guided in FY 2023, or is that still part of it? And just is that $500 a ton price you mentioned last quarter still kind of the working assumption we should model on? Yes, this is Christian speaking. Yeah. Yeah. Sorry. Thanks, Martín. Yes. Well, look, again, I think we mentioned this, and as Keith indicated, this is a campaign initiated to supply additional lithium units to our spodumene customers. We have supplied about 60,000 tons of this low grade during the September quarter. We'll be supplying another 60,000 tons during the December quarter. In terms of price, look, we had a slightly higher price than what you mentioned during the September quarter because the grade was a bit higher. The price we will obtain during the December quarter will depend on the grades that we ship. It is likely to be a little bit lower than what we had in the September quarter, but certainly in line with what you're saying. Thanks, Christian. I guess just following up on the finer spod grades, finer spod distribution, has there been anything in the recent resource drilling that's kind of given you indications of whether that's going to persist? Then what options do you have if it is a bit more prevalent than you expect? Is there any options for a float or fine circuit down the track? Thanks, Al, for your question. The fine grain spodumene we intersected towards the end of the last financial year in the first month or two of this quarter has now disappeared. All the ore that we've processed in the last 9 weeks or so didn't contain any fine grain spodumene. It would appear that we won't be intersecting any more of that. In terms of the resource drilling we've done to date, the 22,000-odd meters we've completed has all been RC drilling. We've now in the process of mobilizing a diamond rig to site to do further core holes and do met test work on that, but we don't anticipate for that to continue. To answer your question, is there an option or ability for us to be in a position to process fine grain in the future? Absolutely. We are considering many options of beneficiation of finer grain material as well as tailings. We are in the process of conducting some test work on the number of beneficiation options to upgrade both potential fine grain material should we intersect it in the future, but also to process historic tailings that we have in stock. Great. Maybe just to round it out, I guess just thinking about those longer term options for Mt Cattlin, are you able to provide the timing for the feasibility study on the open pit cut back? You know, is there any options around underground still there? You've already mentioned that tailings is still on the potentially an option there too. Sure, Al. In terms of timing, our mineral resource update will be done by December following the completion of the diamond drilling, just to make sure that conversion to reserves are solid. The feasibility study will be completed in March. If we have FID on that, we're looking to start doing the pre-strip of that open cut expansion in April next year. In terms of underground, this is within the $900 shell as we reported before. We are evaluating as part of this feasibility a $1,200- and $1,500-dollar revenue shell as well. Unlikely that that will be an open cut. What our intention is once we finish the feasibility study for the immediate expansion of the stage 4 pit, we will immediately commence a feasibility work to look at underground options and then do that trade-off analysis towards the end of the next calendar year to enable us to make decisions on what we will do beyond stage 4. Great. Thanks very much. Thanks much. Thank you, Al. The next question comes from the line of Reg Spencer from Canaccord. Your line is open. Thank you. Good morning, everyone. Just one question from me today. What does the delay at Olaroz 2 mean for the provision of volumes to Naraha and your overall pricing? You can help me out on that one, please? Well, as we have discussed in the previous quarter, Reg, and thank you for your question. We have not guided any production for Olaroz Stage 2 because it was going to be part of the ramp-up process, so it doesn't mean significant changes to our forecast of product volume to Naraha, nor to dramatic changes in the pricing that we will face due to this delay. Okay. What you're doing now is providing some share of volumes to Naraha that will just continue until such time as Olaroz two is up and running. Exactly. Okay, excellent. Thank you. I'll pass it on. Thank you, Reg. Your next question comes from the line of Joel Jackson from BMO Capital Markets. Your line is open. Hi, good morning, team. This is actually Alex Long for Joel Jackson. My first question is, it looks like spodumene concentrate 6% is trading around $7,000 a ton. But it looks like, in the quarter that just passed, you guys were getting $5,000 a ton for 5.4% spodumene concentrate. The drop seems a lot more than linear. Could you maybe provide some color on the gap in pricing? Does this maybe have to do with the contracts being locked in earlier? Christian Yes, Alex. Thanks, everyone. Alex, yeah, this is Christian. Look, the prices that you mentioned are prices that come from auctions on online platforms, which are excellent discovery prices. They reflect the pure spot situation for marginal volumes and at marginal prices and with limited size parcels. This is not representative of the overall market for spodumene concentrates. Average selling price during the September quarter was slightly above $5,000 for 5.4% Li2O, which corresponds to about $5,600 on an SC6 basis. So that was marginally above our June quarter prices. And as you said, it's mostly because we have a lag in pricing. We negotiate prices from one quarter to the other, and also because we had some tons from the June quarter that rolled over into the September quarter. We expect the December quarter to be in line with the September quarter with probably a slight improvement on prices. As you hinted, all our volumes are contracted and do not follow the reference of very small spot parcels that are coming to the market. If you look at the weighted average price that we extract for our spodumene concentrates, you probably would see that it compares quite favorably to that of other peers that publish their data. Perfect. I appreciate that, the color. Just a second question. What does the ramp look like for Olaroz Stage 2? How long would the ramp up be to get to full production or full capacity? Thank you for the question. We are maintaining what we have said before. We're expecting a ramp-up period in Olaroz, so it would take approximately 18 months. We're starting from a much better plant than stage one. We have assembled a commissioning team about a year ago, so we expected things would go better. We are being conservative as to ramp up and we are not changing what we said, what we have been saying regarding the project for quite some time. Okay. Appreciate you answering the question. Thank you. Thank you, Alex. Your next question comes from the line of Kaan Peker from Royal Bank of Canada. Your line is open. Hi, Martín. Can you hear me? Yes, Kaan. Yes. Yeah, thanks for taking the questions. Just on Mt Cattlin, just wondering how the pre-stripping was going and, should we expect further pre-stripping in FY 2024? Keith, can you please answer that question? Sure, Martín. Thank you. Thanks for your question, Kaan. Pre-stripping is progressing well. We had a record mining volume in the September month of 870,000. That beats our previous best, which we achieved in November 2021 of 760,000 BCMs, which was just before the WA border closures with the rest of Australia. For the quarter, we will be mining approximately 2.7 million BCMs. Again, on the same quarter last year, this time we mined 1.9 million, so that's a 40% increase in mining volume on a quarter-by-quarter basis. We do expect the pre-strip to continue into 2023, especially as we do the feasibility work on stage four expansion. We envisage that this volume of material will continue to be moved for the foreseeable future as we potentially go into a further cutback situation. Thank you. The second question, on initial production from Olaroz Stage 2, the brine. I think Martín said you're currently cooking. Just wondering if there's sampling conducted and how, sort of brine chemistry, lithium concentrations stack up to your expectations. Should we expect commercial production quality at the expected start date? Thanks. We will see product commercial production coming through the ramp-up. Brine is according to what we expected, the cooking of a brine and the concentrations being achieved. Liming of the brines with the completion of lime plant number 4 will enable us to have brine ready to process through the plant. We are comfortable that as we start to ramp up the plant, we will see commercial production coming out of it. With regards to production from Stage 2 is mostly technical grade, so we don't foresee a significant quality challenge at this stage. Again, as I said before, ramp-ups are always difficult in the industry. I want to be pretty conservative with regards to expectations in that regard. Well, thank you. Understood. Final question. Just on the study work on the separate purification facility. I think the announcement mentioned a Class 3 study. Any ballpark figures on CapEx you can share? Thanks. I will let James answer that, but I think until we get more studies completed, it's difficult to share figures. James can give you some more color. We look forward to giving you those figures pretty soon at the Class 3 estimate. It's pretty much in keeping with benchmarks out there. No surprises in that regard. We should be releasing to that shortly. Maybe timing around that then, please? I think we're with our previous guidance still holds, and if I'm not mistaken, that would be Q1, Q2 next, 2023. Yeah. We said about a year when we made the strategy presentation back in April. That's what we said. That will remain. Sure. Thank you very much. Thank you, Kaan. Your next question comes from the line of Matthew Frydman from MST Financial. Your line is open. Sure. Thanks. Morning, Martín and team. Firstly, I just wanted to follow up on Reg's question. Christian mentioned that two-thirds of the technical grade product that you sold during the quarter went to Naraha, or that would be around 40% of your total sales. Just trying to understand how or if that impacts your contracted volumes that go into your third party contracts. You know, as Reg suggested, you pushed back stage two by about six months. Does that affect your ability to both adequately feed Naraha and also deliver to your existing customers and contracts? Or do you need to make some kind of trade-off there into where those volumes go? A couple of things on that. I think Christian said one third of the technical grade production, not two thirds. It's just one third. Okay. My mistake. I misheard that. of the technical grade production in our quarter. Second point is, as I said before, as we start to ramp up stage two, we will get product with reasonable quality to be fed into the Naraha process. So we do not expect to have any problem with our long-term contracts from Olaroz. We have been very conservative in forecasting contracts, taking into consideration you know the volatility that you have through ramp up period. I do not expect impacts in that regard. Okay. Thanks, Martín, and thanks for the clarity around the one-third there. I must have misheard. Secondly, you've called out the piping and electrical equipment that have driven the delays in terms of your critical path on stage two. Can you comment on where you're sourcing those components in terms of geographies and suppliers and, you know, what gives you confidence now that the delivery schedule for those pieces of equipment are now on track? Well, basically, with regards to piping equipment, it is starting to be processed and spooled. We have certainty on the equipment arriving at site at the required dates now. It had suffered some transportation delays in the process. With regards to electrical equipment, it's mostly affected by the supply chain issues that have popped up in Eastern Europe as a consequence of the war in Europe and that is creating the impact and the delay. Those equipment will arrive committed by suppliers during the first quarter of next year. That will enable us to complete the commissioning. James, if you could please add some more color. You got the schedules in more detail in your head than I. Yeah. To maybe just give a little bit more context around that. If we took that, an MCC package per se, we'd have all the deliveries by the end of the year, but there might be certain components that are missing out of that, and those could be mid tension cells with high altitude ratings. It's small pieces of equipment like that that really are being a pain and that we're having to work with our suppliers to really get on site within that January, February timeframe so that we can get the plant in operation and put things under load. On piping, other examples would be the availability of resin during the supply chain crisis. Given the fact that we've got a lot of FRP, these were key issues to us. Continually working with the suppliers to try and find ways and means to accelerate these. The FRP in that instance was Chile. We have found other regional suppliers so that we can expedite these. It has been an interesting time in the market trying to manage these critical parts. Understand. Thank you for the detail there. That's quite helpful. I might just finish with a hopefully quite simple one. The revised CapEx number, $425 million. Can you tell us how much of that spend is remaining before first production in the middle of next year? Also maybe, you know, how much you spent in the September quarter? Thanks. Christian Cortes, or James, would you have the exact numbers on expenditures to date and yet to be expended on the stage two CapEx? Martín, I can talk to that, if you wish. Yes. To date, in the first quarter, the CapEx for Stage 2 was in the order of AUD 41 million. Factoring in the incremental costs that were flagged in today's quarterly, the estimated spend for the remainder of the year is approximately AUD 80 million. Got it. Thank you. The remaining spend for the rest of the financial year is AUD 80 million. Thank you very much. Yeah, that's right. Thank you. Thank you. Thank you, Matthew. Your next question comes from the line of Glyn Lawcock from Barrenjoey. Your line is open. Hi, Martín and team. Just firstly on Mt Cattlin, just could you confirm that you've got mining capacity now for 1 million BCM at the end of August. Is that sufficient based on what you're seeing now to achieve the pre-strip you need, so we get the outcome we're looking for in fiscal 2023? On the costs in the quarter, I mean, production was down almost 30% sequentially, yet your unit costs were flat and you're guiding to $900. Just curious, is that 'cause you capitalized a lot of the strip in the quarter, or is there currency benefits? Just trying to understand how the costs fell out when volume was down 30%. Thanks. Yeah. Keith, can you please answer the mining question? Christian, you can answer the cost one afterwards. Certainly. So yes, in terms of mining capacity and whether that is sufficient to mine the volumes required, for us to have continuous ore supply, in the foreseeable future, the requirement is 900,000 BCMs. However, we have right-sized the fleet to enable us to do about 1 million BCMs just to have a bit of buffer, to ensure that we can deliver on that targets. The fleet we have on site at the moment, as we reported last quarter, we've mobilized a 350-ton fleet, as well as an additional mining contractor. In addition to that, this month, we've also mobilized an extra backup machine, a 200-ton excavator from one of our contracting partners, again, just to allow us to have that contingency in place. The mining fleet on site and operational is definitely sufficient to sustain the pre-strip volumes required. Okay, thanks. Christian, if you wanna take the question on the cost. Yeah. Thank you, Keith. Look, the first half of this financial year, we expect to have a higher cost base, particularly in this quarter, we had a high capitalization of pre-stripping. In addition to that, some of the costs associated with production or the production activity were partially allocated to some of the low-grade product that we sold during the quarter. Yeah. Also the devaluation of the Australian dollar or the appreciation of the US dollar against the Aussie dollar have helped on the cost side in CapEx. Okay. The 900 guidance you think may prove to be a bit elevated given if currency stays where we are now then? Yeah. Look, we think we're gonna come in on the guidance. At this stage, the estimate is not significant, so we left guidance unchanged for the time being. Okay. Could you tell me what currency you assumed when you assumed that guidance? Well, when we were using budget for the period, we were using around a 0.75 rate. As you would have seen this quarter, we ended up around 0.62 by the end of the quarter. Yeah. I mean, obviously if you've used 75 and it's now 63, that's a massive, you know, almost what, 15% reduction, but I assume there's some inflation offset compared to what you thought as well. Yeah, that's right, Glyn. Okay. Just a third question, thanks. Just extending the Olaroz-2 discussion. I mean, I understand you talked through a little bit more detail on the delays, et cetera, but how confident are you really? I mean, you've had suppliers slip and slip again. I mean, have you built quite a bit of fat now into the schedule with your second quarter calendar 2023 first production? Or, you know, if we don't get delivery in January, February of some of those minor components you talked about, you know, this thing could delay again, I guess. I will ask James to give you more color on that, but we feel pretty comfortable with the schedule that we've put together. The team have developed certain alternatives for those minor components. James can, you know, explain those in more detail now. We've taken an approach of working off a P90. We're being conservative because we do not want to disappoint in the future. There are opportunities for us to improve. At the moment we'll go for that Q2. That makes sense for us. We're right on the border and we know we can hit the schedule. Okay. Thanks very much for your time. Thank you, Glyn. We now have Lachlan Shaw from UBS. Your line is open. Good morning, evening, Martín, Christian and team. Apologies for the technical issues before. Just to extend Glyn's question on timing around Olaroz Stage 2. Just in terms of your other projects, yeah, Sal de Vida, James Bay, can you just talk to the learnings that you're taking from this further delay? You know, do you see that you might wanna take a more conservative approach at those projects as well? As we said in the release, we're in the process of constantly reviewing the forecast on our projects. We have been working with James and the team in delivering and working on preparing P50s, P75s and P90 scenarios for all our projects. We're constantly reviewing how we are performing against those scenarios. The objective is to keep the market updated. The factoring into the learnings is to assume that within those differences between a P50 and a P90, sometimes the components in this case or the deliveries from the equipment may be delayed even if the contractors commit to a certain date. James, can you add some more color on that? Yeah, I think one of the other lessons that we've learned is definitely we'll benefit from a little bit more engineering detail than the industry's used to. We have really good value projects, and we can take a little bit more risk in terms of pre-FID funding to get the engineering so that we can debottleneck procurement challenges in the market. We'll be learning those lessons to try and keep our schedules intact. But as Martín says, with each study, we'll be very disciplined in terms of what is our P50, what is our P75 and P90, and guide the market accordingly. Okay, thanks. Next one. Just a quick reminder, hopefully. Just remind us on the marketing strategy for Naraha hydroxide sales, please. Yes, I will ask, Christian Barbier to answer that one, please. Yeah, Lachlan, thank you very much for your question. Look, we are this quarter gonna start the production of the first tons of Naraha to complete the commissioning. We've been in conversations with a number of customers. As TTC is our partner in this project, there will be a Japanese bias in the customer portfolio, but we're also talking to a number of other customers to market this product. It will be, as is the custom in this industry, mostly contracted. You know, be mindful that we're talking about 10,000 tons of lithium hydroxide per annum. It's not a huge quantity, so we're also not looking at having an extremely large number of customers. I'd say probably between three and five main customers. Okay. In terms of contracted tons, terms and conditions for realization, so how should we think about that? What's the strategy on realization? Are you looking for spot or floor ceilings? How should we think about that? Yeah. Well, look, we're not into locking in floors and ceilings at this stage. The current level of pricing is very attractive, and we intend to have our sales price reflecting the upside of the current market price. Okay, great. Last question, again, hopefully a quick one. Recoveries at Mt Cattlin in the quarter, low because of fines. Is that the expectation for December quarter two, quite a low recovery because there's still fines coming through the plant? Lachlan, it is more associated with the quality of feedstock in terms of contamination with basalt. The fine grain spodumene we processed in July is now depleted. There's none left. We envisage that for the second quarter, we'll see similar, slightly better recoveries, and that is associated with the contamination, not with the fine grain ore. Understood. Thank you very much. Thanks again, everyone. Thank you, Lachlan. There are no further questions at this time. I would like to turn the call back over to Martín for closing remarks. Thank you very much, Paulie, and thank you all for your questions and comments. As said, we are committed to delivering scale and product flexibility required by our customers as the world transitions to a net zero economy. In achieving this, we must remain focused on strong operational performance, project execution, and managing costs in this environment. Thank you for joining our quarterly results briefing today. If you have any further queries, please do not hesitate to contact our investor relations team. This concludes today's conference call. You may now disconnect.