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Operator: Thank you for standing by, and welcome to the IGO Half Year Financial Report. [Operator Instructions] I'd now like to hand the conference over to Mr. Ivan Vella, Managing Director and CEO. Please go ahead.
Ivan Vella: Thanks, Darcy. Good morning, good afternoon, everyone. Great to have you join us here for our half-year results. Welcome for that. With me on the line is Kathleen Bozanic, our CFO, as for usual. And I was joking with her earlier saying, "Well, this is your conference to talk to." But look, we'll probably keep the focus on financials pretty short and sweet. It's reasonably straightforward and then cover any other questions or things on your mind. Before we go into a, I did want to just note that Kath, as you know, she wraps up end of next week after -- over 5 years with IGO and in that time, made a huge contribution both as a director and as CFO; she leaves big boots and is in the process of handover, preparing a team, getting everything ready. Johan starts with us on the 1st of April. And obviously, he's going to have a lot to pick up and get into as you get settled. But just to call out to Kath to thank her for her significant contribution in that time. In terms of slides, we've got a couple on the financials in the half, but then dive into, as you've seen a few other areas around Greenbushes and the changes there. We'll cover what we can in that sense. But as usual, I wanted to just start on safety and also just talk a little bit to sustainability as well. Firstly, on safety performance and with the quarterly just passed, nothing particularly new other than continued trajectory of improvement, credit to the leadership at Nova and across the business. They've done a great job and the whole team out there continue to improve. And I think we're really starting to see that downshift in both leading -- well, upshift in leading results, the work that they're doing every day and a downshift in the impacts of the injuries and incidents across the business, which is fabulous. Never ends, there's still lots of work to do as we embed that culture and make it more mature, but I'm really pleased to see that continuation is something we'll keep talking about, keep elevating. A couple of other thoughts or points just on sustainability more broadly across the business. We have just launched our latest reconciliation action plan last year and got that moving. That was after the sort of inaugural one that we've done actually started before my time. And great to see, there's a really strong partnership there, and that goes certainly through our operational footprint with Nova and the sites in care maintenance but also across our exploration presence as well. So good to have that in place, and we've got a really strong Board there, that advisory board that guides us and helps support our work. And the other point I wanted to just call out on this first slide was our closure readiness at Nova. That work is continuing in earnest, making good progress. There's a lot to do, working through to get our feasibility ready, aiming for the midyear so that that's in hand, and we know where we stand as we bring the to a close in the back end of the year. So that's just a couple of quick highlights on safety and sustainability. With that, I'm going to turn it over to Kath to talk through the headlines from our first half '26 financials, and I'll add a couple of comments, and then we'll get into an operational update as well. Thanks, Kath.
Kathleen Bozanic: Thanks, Ivan. Our financial results showed our focus on costs and safe production at Nova and helped to deliver improved underlying result. Revenue was AUD 194 million compared to AUD 284 million in the corresponding period. The decline is a result of lower nickel and copper prices and volumes from Nova and no revenue for Forrestania, which was put in care and maintenance last year. This accounts for about AUD 64 million of the difference. Underlying EBITDA was AUD 49 million, driven by improved EBITDA, up 15% to AUD 67 million and lower spending exploration down from AUD 30 million to AUD 15 million, and this is demonstrating our focus on costs and safe production, as I noted earlier. IGO share of underlying net loss from TLEA improved to AUD 1 million compared to AUD 20 million in FY '25. This includes Greenbushes EBITDA of AUD 464 million on 100% basis and Kwinana a loss of AUD 71 million, also on a 100% basis. It's important to know, and we say in all our calls now that the Kwinana result includes AUD 33 million of capitalized items in accordance with the accounting standards following the full impairment of Kwinana by IGO. The underlying net loss after tax was AUD 39 million, and the statutory net loss after tax was AUD 34 million, and it includes the proceeds from the sale of the Stockman royalty. In the prior corresponding period, statutory losses were $782 million, reflecting impairments at Kwinana derecognition of deferred tax assets at Kwinana and also impairment of exploration assets. We've maintained our prudent capital management approach and as such, have not declared a dividend for this half. So if I move to the cash flow. Net cash flow from operating activities was AUD 28 million, which is a great result, up from AUD 7 million outflow in the first half of '25. Underlying free cash flow was AUD 29 million with a strong contribution from Nova, while some care and maintenance spend is ongoing at Forrestania and Cosmos. The Forrestania spend will face following the expected completion of its sale to Medallion Metals. Exploration and corporate spend continues to trend down, notwithstanding some lumpy corporate payments in the first half of the year. We ended the period with AUD 299 million in cash and have AUD 300 million of undrawn debt facility. So our balance sheet remains extremely strong. We will continue to maintain our cost discipline focus and our focus on safe production at Nova as we come to the closure of that mine. That covers the financial results. So I'll hand back to you now, Ivan.
Ivan Vella: Brilliant. Thanks, Kath. Look, maybe just a couple of points to reinforce, I guess, talking to the cash chart there, number four. You can see that we've continued to focus on cost discipline and managing that across the business. We are going to see, obviously, another step down again as far as Forrestania unwinds, and we're expecting that transaction to close with Medallion at the end of this month. And Cosmos, as we announced a little while back, having stopped dewatering, that was a big part of the cost, the energy cost of pumps and so on, sad situation, but just the right call, looking at the long-run economics of that resource. And that will step down as well. Exploration, as you've seen, has stepped down. And it's very targeted. I still believe very strongly in our role in exploration, our deep capability in the team and our focus. That does not mean to say that we won't apply a lot of rigor and scrutiny on our expenditure there and make sure it's very targeted. John and the team and I look forward at some point soon to get John on one of the quarterly, so you can hear from him more directly on our exploration activities, is doing a great job looking at generative and allocating our expenditure very carefully and the drilling. And I guess, the more substantial elements of the expenditure and cash you see in that half, have really related to lithium targets that we pursued in pretty prospective ground. Nothing that has got us jumping up down yet, but that's the work that we've got to keep doing to translate into value. And of course, our corporate costs, we continue to taper. And with Nova's close at the end of this year, naturally, that will adjust accordingly and taper with the business. So that work continues. I think you've seen that cost discipline over time and that there's no expectation that should change. If I move on to Slide 5 and the operations summary, and let me start bottom up because I really want to call out the performance at Nova. I think if you look back at the half and in the appendix of this slide pack, if you've got that handy, you can see Slide 13, 14 and 15, and they just give you a half-by-half comparison for Greenbushes for Kwinana and Nova. And if you look at Nova, I mean, it's really pleasing seeing a mine at this point in its life. So it gets really difficult in that last 12 months. And everything is pointing in the right direction. We're seeing better production, lower costs, much, much better safety, really stable operations. Yes, they have issues that from time to time, but the team will collectively working through those very well, I think demonstrating really, really professional operations under very difficult circumstances, and that's translated into cash generation and the performance overall. And so a set of numbers to really be proud of in this last part of the mine life. And as full expectation, the team will continue that good work right through to the end of this year. It's also fabulous, despite obviously nickel market starting to recover a little, but through a very difficult period in the cycle, it generated cash for the business and helped us to fund other activities across our portfolio. On Kwinana, I'm not going to dive in too much detail. Certainly, half-on-half comparison is better and you expect that to come through given some ramp-up and amortization of fixed costs and so on. But it's still ultimately underperforming. It's missed its plans and expectations and promises on all fronts and ultimately, no change in our outlook. And with [ Camden's ] news, we saw just last week, a very difficult situation. Our [ mill ] has been incredibly strong and committed to trying to make that work. You can see how difficult lithium processing and refining is in Australia in that context. Kwinana is only more challenged because of the nature of the asset and the challenges the team have to work through there. Look -- and Greenbushes, I'll talk forward-looking in a minute. But backward-looking, it's not a stellar half. And look back on the time and the work we've done at Nova to really focus in on the team on safety and on production stability, and they've made a really substantial difference. And I think, as I said, something to be very proud of. Greenbushes, we're not at that point yet. And that's not for lack of effort or energy or drive. Rob Telford and the team are working extremely hard to lift the performance, productivity, the safety performance, the cost performance across that business. It's a bigger job, there is more to do. There's more complexity. They probably aren't feeling the green shoots and the momentum that we all hope for at this point yet, but that will come. And just as we've seen that shift in gears in Nova and I've seen in other assets in my career, I know that's coming with Greenbushes. We've just got to keep out of doing the right work, and we'll see that significant lift in performance. But going through the specifics, still a very good EBITDA margin from a world-class asset. Sales volumes really just about timing, nothing more than that. And a big focus for us is, of course, on the optimization work on the life of mine and then the productivity program that's underway across the business. The next slide, I guess, just points to CGP3, and I thought I'd spend a minute there just talking to what we're seeing in the early days. That's an image of the asset as it's been built and delivered. It's in ramp-up now. And I think I flagged in the quarter that with a couple of early commissioning issues they had to work through, we certainly lost a little bit of time. I wanted to put some numbers to it to just try and give you some context. And the specifics of the numbers are meaningless. It's more about the direction that we see in the way it performs. We expected in January for it to deliver about 7,000 tonnes, 7 kilotonnes, and it delivered a fraction of that because of those delays, time offline, time remediating and fixing things. In February, the plan was that we would hit 11 kilotonnes. And this is the natural early ramp-up allowing for commissioning for checks for issues, et cetera. Halfway through the month, they've already passed that number. And so what we're seeing, and I was reluctant to share too much in the first update in the call because we just didn't have enough runway to see what was going on and see how the asset was going to perform, but we are starting to really get a better feel. Very early, and you've got to be super careful calling these things, but I'm just trying to give you a flavor that Certainly, the indicators are positive. We've seen a 24-hour period of 1,000 tonnes of production, 60% average recoveries, which at this stage ramp-up. Anyone who knows within would be going, "Wow, that's very impressive." And con grade above 5.5 up to 6. So we're hitting the grade there and hitting the recoveries already. So the team is getting all the right indicators and signals. That's not to say the job is done, but I think when we're sitting here in -- just after the half in February, that's certainly encouraging and gives some good clear data to work with and focus on the rest of the ramp-up as we continue this year. We'll provide more updates as they come, certainly through the quarterlies. And if there's more called for in between, we'll certainly do that, but the early indications are quite positive. The optimization update on Slide 7, look, gives you a little bit of color there on that work that's ongoing. You've all seen, I'm sure, now the resource and ore reserve estimate that we provided recently. We timed that to link up with Albemarle's SK-1300 report. As you know, they do that on [ net ] cycle as we do with the reserve resource report. Due to the timing, they picked up some of the changes in the pit shell and so on. And that's why we basically adjusted the timing of our report just to match that to make sure the market was updated consistently across the different investor groups. The work is not complete. So I think you could treat that as a mark in time. It shows you progress, shows you direction, shows you the magnitude or the nature of the changes that we're making through the optimization. There is still a lot to do. And as you can appreciate, our competent persons can only report or sign off on things that have sufficient confidence, which generally means a study and all of the backing and the data to support it. And so there is clearly a whole bunch of other work that's going on that we can't report on yet. I can't speak to it yet. When it's ready, we will certainly report and share that. We're proud to be able to share the changes. I'm very excited to see what's coming through. But what we have seen, obviously, is a snapshot partway of the things that we could talk to where we've done enough geotech assessments and other work on the ore body. Some big highlights there, of course, that new underground resource, which I think everyone talked to, thought about, reflected on, now we've put some shape to it, and we'll continue to refine that, develop that and draw it out. We expect that to be at the back end of the mine schedule based on what we're seeing. More on that to come as we go. But certainly nice to see that the team at Talison has done enough work to be able to define that resource. Obviously, that's also meant that we could really tighten up the open pit mine and with steeper wall angles, actually, the critical thing here is surface more metal. So just shy of 10% more metal that we surface with a much lower strip ratio. Those are the kind of structural changes that you want to see when you go and do these optimizations because you're really adding material slabs of value. There's still a lot of work to do around it in terms of our operating productivity, performance, cost, all of the support elements of water and tailings and so on, all still work in progress. But something as important as waste management, waste storage for all the ore waste or mine waste that comes off the ore body. That changes dramatically when you reduce your strip ratio to the level we have. And all of that requires a lot of rethinking and replanning. Of course, it changes our costs, our CapEx, et cetera, and that's work that we've still got to get through. So the point just to reinforce what we've shared in that resource reserve is a snapshot in time. It's far from complete. It's not something that you should delve into and assume that's the end of the work that we're doing, it's certainly not. The team has got a lot more in front of them. And as that work is -- reaches that level of certainty and clarity and studies are done, then we can come back and share more with you. I'll move on from there, and I wasn't going to talk in any more depth to Kwinana. We can touch base on that in Q&A, if need be. But just looking forward, I would put a slide in on growth, just to sort of refocus, nothing new here, doesn't change from where we've been since we refreshed the strategy. But coming back to that, a focus on that full life cycle, discover, develop and deliver across the battery materials that the world is depending on and a big focus on lithium and copper. And I think I've explained why we think those two are so complementary. Nickel, far from off the list, it's just much harder to see the return expectations that we have. But if we found another Nova, that would be delightful. In terms of delivery approach, those themes again continue, nothing new here. I think we continue to have conviction that our technical capabilities our approach and our operations capability embedded in the playbook and our willingness and ability to partner well with others is key to success here. They're all elements that will come together in anything we do in the growth. And at the core of it is being very disciplined with capital. We're conscious of the high returns that we receive from Greenbushes and the last thing we want to do is dilute the business by getting into or investing in a project an asset that doesn't offer approximate returns. That's hard, but that's a challenge we keep pushing for ourselves, and we continue to look through that lens. Naturally, that takes us to Greenbushes being a very important place to deploy capital and focus our reinvestment. And through the optimization work that's going on, we'll naturally surface what that looks like, what that growth is. CGP4 is naturally on the list. It will have its place in time. We'll figure out exactly where and how that looks. And that's the kind of very good capital that we can allocate in due course. Lastly, just an outlook on where we're focused on priorities this year and into next. Greenbushes, we've talked about, and unlocking that is getting huge attention. The team is very focused on partnering with the other JV members and with Talison to do what we can and contribute as we can to support them and unlock all that value. Kwinana, look, really no changes. There's nothing new there. We continue the discussions with Tianqi to find that pathway where we're in a place that our shareholders find acceptable. Nova, continue what we're doing, safe, stable operations to the end of mine life, which is the end of this year. Exploration. And as I said, I'll get John on the call for a broad update in the next quarter or 2 to talk to the work he's doing. He's working through the prospective targets that we've got, and there's more this year in the lithium space. Generation of new targets around predominantly copper, and it's mostly offshore, as you'd expect, in good jurisdictions. They're making some very good progress. And again, we can update as needed. A real shift in approach here on [ Failfast ], very targeted and really leveraging the capability to drive to near-term results rather than that very broad greenfield exploration that IGO had been pursuing for a long time. And I've talked to strategy and growth, which will continue to be highly disciplined, as we've shown over the last 2 years in the way that we approach those things. So that's all I really want to cover at this point. I think that sort of sets out the key points for the business. Let's open up for Q&A, and then we'll go from there.
Operator: [Operator Instructions] Your first question today comes from Levi Spry from UBS.
Levi Spry: Maybe if we can just spend a little more time on the reserve and resource update. I guess, can you maybe just step us through what the sequence of the next projects that will be addressed in the bigger plan that comes out later this year and how we think about that in relation to the prospect for dividends from TLEA? Obviously, the context here is prices recovering. We're talking about growth projects with all of your peers. You've got one that's turning on, but what's the next one?
Ivan Vella: Okay. Thanks, Levi. Yes, great way to place the focus. Let's talk -- and I'll separate two parts of the question, the dividend from the focus and the optimization work we're doing. The good news in Talison or Greenbushes is that you've got an asset base there that has never run at full potential, in fact, far from it. And so the very best capital or the very best projects you can ever hope for in mining is where you've got large plants or other assets that are running below full potential, below their capacity, and you've got a market that will take it. And we know the market is in a good place, and that's great news. Our customers have had strong pull for any tonnes we can produce. And in fact, we would love to have seen more already this year. So there's no issue there. And so it's -- you look back into the business and say, what can we do with CGP1 and 2? What can we do with that tailings retreatment facility and tech grade plant? How do you leverage those and drive them harder? And so that very basic run time, so getting the asset to perform better, getting it healthier, getting more consistent performance from it. Secondly is throughput and making sure that the tonnes per operating hour without losing recoveries is moving, and that's tuning, refining the ore feed, doing better on fragmentation, doing better on the blend, managing that across 3 plants, which do take slightly different feed grades. And then equally, running the plant well, I mean, there's a link there with the uptime and the general asset reliability, you'll get better throughput if it's running more consistently. And the last lever, of course, then is recoveries, and that -- it's a function of head grade for sure, but it's also a function of all of the good technical work the team is doing on improving recoveries through a whole range of strategies. They've got some very deep capability. They performed very well. A lot of it, they protect very closely for good reasons because I think the IP and experience built up there really is a standout. And there's a lot of work happening there to continue to lift recovery. So bringing those three levers, focusing on those existing plants and uplifting their output is key, and that doesn't cost a lot of capital. Don't get me wrong, there's pieces of capital along the way, but it's very different to something like CGP4, which is a fundamental change project. Now that doesn't mean to say that the tonnes that you receive there are just incremental tiny pieces. It can be quite substantive. And I think anyone who's been around the industry for a while will know that assets older assets that have not been pushed and run to their best can actually offer quite a lot. So that's the first goal. Supplementing that will be then other projects we can do that basically just give those assets an uplift supporting it. And I think the tailings retreatment is an example where as we work through the available tailings, which we think will extend out beyond what we've said, and I think we've pointed to some of that in the report, that will ultimately finish, when it does, then how do we repurpose that facility to maintain that capacity and continue processing fresh ore in front of it. And then, of course, you come -- if you've dealt with all of those elements, you come to CGP4, which would be the next logical plant to build. And we haven't finished the work to say, well, what is the natural run of mine? What's the pace at which that mine can run and feed and deliver? We certainly think there's scope for CGP4, but the team needs to finish that study work and really understand how that's going to fit, what the value equation is and then work out the timing. I don't think that's anything new. I've sort of shared those elements before. And I think as we get further into it, we get closer to the detail and what's required. That's the work that I'm really looking forward to be able to report back more specifics when the team is finished to give you a sense of what does that do for tonnes and for cost and so on across the asset. There's also a piece of work going on just general productivity. So running that mine in a better way, improving truck productivity, improving drill and blast fragmentation, generally making that mine perform better, gives us confidence, obviously, to run the asset, the plants harder, but it also lowers our costs net-net, both in terms of strip and in our normal mining process. Beyond that, there's, of course, a focus on productivity across the business, which is just managing our costs tightly, really improving our underlying systems and processes to make that business stronger. So that's the work that's underway. Now coming to your point on dividend, I don't see -- look, I don't have a crystal ball to start looking at what the market is going to do, but I don't think -- it's not going to be cyclical. It will be. It will be up and down, and that's fine. This is a mine that has demonstrated that through the cycle, it still generates cash. And I see no reason to think that we have to withhold large amounts of cash in Winfield, meaning no dividends out of Winfield due to the growth plans that we have there. I just don't think that makes sense. And so that's certainly not something that I'd be looking at. This is a business and probably one of the few, if not only, lithium operations in the world that actually produces cash through the cycle and pushes that cash out to its shareholders through the cycle. And that's what makes it such an attractive asset, such a powerful asset in this context. I think, through the current period that we're in now, some very favorable pricing, we're seeing that flow through. And obviously, the cash balance will build quickly, and we'll then look at that thoughtfully and take a view on the scale and timing of dividends. We've also talked on the quarterly, I think, about how we might think about paying down debt and that we would take into account. But there's certainly no intent sitting here that we would retain that cash inside Winfield that just doesn't fit with the way that we look at the business. Hopefully, that's covered at Levi and I've talked a bit around a few aspects there. Does that sort of hit your question?
Levi Spry: Of course. I guess, what about inventories? Like you mentioned specifics. Can you talk about inventory? So what are they at site? What's the plans to flush the sheds out empty through this calendar year? What are they now?
Ivan Vella: What are you talking about spodumene inventory?
Levi Spry: Yes. So you're talking about how the Tier 1 asset behaves through the cycle, hasn't necessarily been running it like a Tier 1 asset, might necessarily behaves -- holding back material. So where is it now?
Ivan Vella: I could look it up. I don't know off the top of my head what the inventory is. But I mean, there's no holdback. I think your comment is fair that it has not run as a Tier 1 asset or it hasn't run as well as it should, agreed, and we're working hard on that. And I expect quarter-on-quarter, we're going to demonstrate that. But when we're having inventory build up and down or shipments or sales and shipments that vary quarter-to-quarter, that's purely about shipment timing in the port facility. There's no intention to hold back or change there, no one's playing with the inventory. It's purely about a complex supply chain in the Southwest of WA that we need to manage. And when ships move and when they don't move. So look, they'll continue to refine that. Naturally, we try and move every tonne we can. There's no intent to hold inventory in spot. And sometimes that runs in our favor. And recently, we had a shipment that moved a quarter and moved across a quarter line, and that will pick up a much more favorable price, and that's nice. But that wasn't intentional. That's really just a function of how the port is running and the trucks and so on.
Operator: Your next question comes from Austin Yun from Macquarie.
Austin Yun: First one is on the discussion on Kwinana, like as you mentioned during the opening remarks, Kemerton has put on kind of maintenance. And your peer [indiscernible] Minerals also made a comment saying that Australia doesn't have an ecosystem to support the downstream. It seems like this issue is well known. I know you've been flagging this for quite a long time. Just keen to get more color on this, if you can could provide any commentary on the potential options that have been contemplated or discussed with your JV partner on the future of Kwinana.
Ivan Vella: Yes. Austin, look, I can't really speak to that. I mean it's ongoing discussion, something that's still private between us. I mean we've not been fixed on anything. I think I've said to our investors on several occasions. Our focus is on net cash. The last thing we want is more cash to be poured into an asset we don't believe has an economic future. We've impaired it fully. We've been clear about our position. And we've said to achieve that, there are various pathways. We're not fixed on one. What we are fixed on is as quickly as possible, reducing any cash that goes towards that asset on a net basis. And you can imagine there's different ways of achieving that. Tianqi has maintained a different view. I think we can all take that in and ask lots of questions, and I recommend that suggest that you continue to pursue that with them, ask them for the basis for their decision-making. I think the Albemarle decision just, in my mind, points to the challenges that we see in the sector in this region in Australia. And I don't think that was all that surprising, to be honest, given where we see costs and what it takes. And ultimately, it's a very, very competitive industry because China does this so well. They perform extremely well. They produce at a very low cost, and it's effectively a tolling business and you'll make a margin on that tolling business. You're not going to see some excess rents unless there was some massive shortage of capacity, which I guess no one sees coming. So I struggle to see how you would ever justify the materially higher costs in Australia for the same work against China and make that work in the global marketplace. That's not dissimilar with other commodities. And I think we've seen the same with something like aluminum. It's really, really difficult to compete unless you've got some other structural advantage like your power costs or something else that supports you. So yes, that's, I guess, just covering the points again, Austin. But unfortunately, I can't get into the specifics of the options or the pathways we're discussing with Tianqi in any more depth.
Austin Yun: No worries. And the second question is just on the reserve and resource update. In that document, there is a production or production profile of the last mine, and I think it's in calendar year view. And if I look at that number, it indicates that the current financial year production could be tracking below the previous guidance. Just want to get some update on that. And given the recent performance at CGP3, what's your latest view on the mining and the production performance from Greenbushes?
Ivan Vella: Yes. Thanks, Austin. Look, yes, the year is certainly running at the low end of guidance. No question, I called that out in the quarterly. It's good to see CGP3 starting to find its feet. Very early, so it's hard to draw that out too far. But I mean, certainly, if we were seeing other issues, more and more issues come up, that would really give me cause for concern. At this point, we're not changing our guidance. The team still got plenty of work to do in front of them. But -- and we talked about the grade factor through Q1 and partly in Q2 that, that naturally flows through, and that's what we're seeing. Those grades do move around based on where you are in the ore body, and we can reconcile back to the impact from that in our production so far this year. I think the piece that I'm looking forward to seeing is the productivity work that is going on, and we are seeing good effort and good progress there. I want to see that translate into hard production. And I know Rob is working very hard with his team to do that because that's the thing that will move the dial very quickly and as that starts to flow through. But the -- they're doing the work. It's partly a bit about being patient at this stage. CGP3, we took a view on what we thought that ramp-up would look like, obviously, when we set guidance before the financial year. And I've been open that we are starting that ramp up later, and it did have some early disruption that, of course, we didn't anticipate fully in our guidance. So that puts us at the bottom end. But we'll continue to work closely with the team and watch them deliver. We still are maintaining a focus that we will land around the end of -- around the bottom end of guidance.
Operator: Your next question comes from Kaan Peker from RBC Capital Markets.
Kaan Peker: On the recent Greenbushes resource and reserve update, it sounds like some of those initiatives of the optimization study work are being incorporated in reserves. On the life-of-mine strip ratio decreasing about 30-odd percent, how confident are you that these are sustainable through the deeper zones of the central load? And it sounds like ore sorting is being considered. What work has been done? And I think the resource and reserve suggests starting in 2027. Is that feasible?
Ivan Vella: Yes. Thanks, Kaan. Look, this is obviously, as I said, the first pass, and there's a lot of work going on across the mine in a lot more detail, looking at all characterization aspects further drilling, much better reconciliation processes. There's a lot of changes that Rob is driving through the mine. So all of those elements will be focused on being able to deliver and maintain a lower cost performance in the mine, better productivity, but also give us confidence that we can hit the mine plan as it's shaped up. So I don't think there's any reason for you to think, "Oh, well, that's an ambitious target." It's not. I think it's based on good geotech assessment, a good review of the mine plan that fundamentally, Talison had been running off a very old and long-dated approach. It hadn't been challenged, it didn't need to be challenged because the mine was so profitable and performed from a cash point of view so well. But it was just leaving value behind. And I think this is the first big example we've sort of pointed to of saying, hey, rethinking this bringing in some fresh eyes can really change the game. So that's coming. I think the broader performance of the asset as they ramp up, we'll also start to see a better sense of how those plants can perform. And coming to the ore sorting, we know that, that works technically. So it's a much simpler process than say, sorting copper ore feed. Lithium feed is largely black and white. So it's more straightforward. There's still a lot of questions around maintainability and performance at scale. One of our competitors has been focused on this for a while now and seeing some results. We're in study mode. So we're working through that and looking at how and what approach we would take to try and implement it, where it fits in the ore body, so how it manages some of the more complex sections of the mine, which we know are coming and the value uplift that we can get there, obviously, through that sorting process and how that improves the performance of the plant. So there's a few pieces that come together there. The mine plan as that's recut the plant performance, getting better feed and more consistent feed. And obviously, ore sorting is one of the tools that helps us do that. It needs to fit with very good mine planning, drill and blast to get your fragmentation more consistent. So there's a number of other pieces that plug together. But I guess to bring that answer to a close, I think ore sorting does have a place. We'll see what the studies tell us and the economics and how much of an uplift in performance we think we can get from it. And that's work that will come through this study process at the moment.
Kaan Peker: And then the second one is more around the TLEA net debt. It looks like net debt has increased by about $120 million half-on-half despite gross debt falling. Can you maybe please help us understand the cash outflows, working CapEx, pricing lag, sort of the key buckets that we should be thinking about?
Ivan Vella: Sure. I might throw to you, Kath. Do you want to just walk through some of the key movements in Winfield, please?
Kathleen Bozanic: Yes. Obviously, we're finishing CGP3. So that takes some cash as we go through that. But I think the core reason there is the timing of cash flows. So this half, we haven't seen the uptick in the pricing because we've got a 1-month lag. And then there also is a longer payment period with our shareholders who buy the stock. So it's about a 90-day period before they actually pay the bills, so -- or pay for the spodumene. So that's contributing to that. What I would say is we'll see a good second half based on current pricing, and you should see an improvement in that over the next sort of 6 months.
Operator: Your next question comes from Daniel Morgan from Barrenjoey.
Daniel Morgan: Just could you help me think about the cash flow implications from -- obviously, Nova is going to come to the end of its life. Can you just talk to what cash bills will be expected at the end of that? And then also, I guess, a related question is, obviously, you've got 3 corporate entities, the Greenbushes or Winfield corporate entity, TLEA and then the Nova one. Just how do you think about running your balance sheet, the IGO balance sheet and -- in light of cash that isn't necessarily assured to come through you through the corporate structures? How do you manage that going forward? Do you expect to have a net cash position as a management tool to insulate that risk of dividends?
Ivan Vella: Thanks, Daniel. Yes, look, all work in progress, and we have obviously a reasonable view on that and what the business will look like post Nova. The first point to note, which I think states the obvious is that its shape will change and has already changed, will continue to change to adjust to that world without the cash flows from Nova. And when you take that operating asset out, the relevant functional support and other activity that goes on, we will adjust accordingly. We're still going to maintain a focus on exploration, as we've talked about, and that will still be disciplined and targeted. But I think that's a key part of our growth strategy and the value that we believe we can bring. We'll maintain that core capability in our business. We likely be -- expect to be complete, obviously, with Forrestania and working on closure for Nova. So there will be some work to do as we progress that activity. And Cosmos, we're looking at some options there, certainly some very prospective ground and some value there that we're looking at how we best monetize that for our shareholders. Coming back to the JV, then, of course, through the cycle, we see some variability in the cash that, that JV pushes out. And we're probably -- we're coming into this next phase now where there's a bit of an uptick. The last part of your question, do we think that you're running some net cash in the business is useful as a tool to deal with some of the volatility? For sure. We'll look at how best to do that and how to make sure that we're allocating very carefully. But yes, the business will behave and look differently, obviously, when we don't have that internal cash generation from one of our operations.
Daniel Morgan: Just. To follow up on that, Ivan, so I imagine that Greenbushes does pay a reasonable dividend as one might expect in the next half year. That would then go to the TLEA joint venture. Can you just remind us of the influence you can have to kind of sweep that cash out of TLEA or might it be for JV purposes, might it be there partially elevated to fund some Kwinana cash outgoings?
Ivan Vella: Yes. Look, there is an order of events, let's say, or priority that we have inside TLEA, which is again not new. The first priority for any cash that we have from Winfield or otherwise is to fund the existing operation of the business, and that means Kwinana. It can only be Train 1 because that's all there is. We've obviously decided as a JV that we're not going to pursue Train 2. And so the net cash demand of Kwinana is the first call on cash that's available through Winfield as the generating asset. And having some liquidity there again and making sure we're covered is important. We've got some stability in that forward look. And naturally, I've said already on the call that the last thing I want to be doing is putting cash in. So we're desperately keen to find a plan with Tianqi where we're not continuing to put net cash in. But until that time, then that needs to be covered. After that, then the cash goes out to the shareholders. There isn't any other basis to or means to hold cash inside that JV or any other call on it, unless as shareholders, we decide as such, whether that's through a growth project or other investment or other decisions. But I mean, that's provided for in the structure of the JV. It literally runs in that priority order.
Operator: Your next question comes from Matthew Frydman from MST Financial.
Matthew Frydman: Can I ask a couple more on the Greenbushes reserve and resource statement? Firstly, on the underground resource, obviously, a pretty sizable underground resource there. And I'm sure the optimization study will consider exactly how that gets developed. So I don't mean to try and preempt any of that. But I guess just wondering, to what extent approvals and permitting are part of the consideration around an underground. I suppose I'm referring to weighing off the ability to get an underground mine approved compared to maybe expansion of the open pits or the waste dumps and so forth. Is that sort of element relevant or it's not particularly high up the list of considerations compared to, I suppose, the impact on incremental production or the impact on the pit shell and those sorts of things?
Ivan Vella: Yes, Matt's not -- good question, but not particularly relevant for us. We think that underground will be pretty long dated. I don't think the permitting and approvals and design and engineering of it is going to be an issue. It's a critical path. We've got plenty of time before that would come into play. There was some notion that these might run in parallel. I think that's probably unlikely. I mean it's early. I don't want you to bank that yet, but certainly, the initial views is that these would run in sequence underground following the open pit. So yes, that's not a big concern. And I think, look, with the change of the pit design that we've done so far, again, not finished, but good progress, change in strip, change in waste generation. Again, that's taking a lot of pressure off our permitting and approvals. So we're working through that, and the team have been really rigorous, a lot of close engagement and focus on the community. I think they're doing a great job to talk about the impacts and talk about the future of what this business looks like over time with the community. I think being particularly transparent, which I really like to see, it's great that they're building a stronger connection and level of trust there and being able to describe that future in a more meaningful way for the community. All of that permitting approvals will continue, but it's not something that I see huge pressure on our business as we look forward.
Matthew Frydman: Got it. That's helpful. And then secondly, on the cutoff grade, I guess, particularly the resource cutoff grade getting dropped to 0.3%, you referred to an improved metallurgical understanding that's driven that. So I think it added 42 million tonnes at 0.37% lithia. Understanding that, that material is not currently included in the reserves, obviously, which is still cut at 0.5% cutoff grade, yes, just whether you could shed a light on why the change in thinking there? What's driven that improved metallurgical understanding? And I suppose, ultimately, do you expect it will be feasible to recover and process that material over time?
Ivan Vella: Definitely. Yes. I mean, look, I was surprised, I guess, when that came through, Matt. It's a very good question because I queried it as well. And the team has done the testing, done the hard work on it and believe that there's value there that they think they can extract hence why we see what we see. Now as you said, there is another step to go in terms of working that right through to the endpoint, but it's not a case of just putting it in because it's a theoretical goal seek. They've genuinely done some work to understand what it would take to get at that metal. And this is also a good challenge in general for mining. When we open up an ore body, when we open up the impacts that we have, we should be trying to squeeze everything we can out of it, and we should be pushing ourselves to make that economic to find the ways to process and extract it and not be effectively wasteful when you leave potentially valuable material behind.
Operator: Your next question comes from Hugo Nicolaci from Goldman Sachs.
Hugo Nicolaci: And good to see the Greenbushes optimization is progressing well. Gather once that work is done, you've probably got a bit of flexibility to move quickly there, given that your CGP4 and ore sorting already have environmental approvals. But just given a number of my questions have been asked, maybe one for Kath on the JV financials picking up a bit from Kaan. It looks like there's some pretty lumpy cash flow movements in the JV beyond just the dividends coming out of Winfield. So Kath, can you maybe just talk us through any of the significant movements? Maybe is it inventory? Is there some drawn debt in the JV now? And then any updates on the outstanding ATO determination on tax for the JV, please?
Kathleen Bozanic: Yes, there's no updates on the ATO determination. I think that you'll see the contingency note, which is Note 11 in the financials that we've given an update on that. There's been submissions from TLC, remembering that this is a TLC issue, which we have indemnified a certain portion of. But that's got a little ways to run because it needs -- the ATO is now considering the responses that TLC has provided, and we're anticipating that progressing over the next 2 quarters. In respect of the lumpy cash flow, I don't think it's really that lumpy. It's more about the timing of money coming through from the revenue side of things. And there was a little bit of delay around one of the shipments during the quarter as well. So that could have had an impact there. During the period, and I'm just going to refer back to my notes, there was a bit of a paydown of debt at Greenbushes during the period. So that might be accounting for some of what you're seeing as well. I'm hoping that answers your question.
Ivan Vella: I think, Hugo, just to jump in, it was about $150 million down on drawn debt and about $200 million down on cash. So there's a little bit of differential there between the two, but there was a step down in debt in the period to 31 December.
Hugo Nicolaci: Just confirming, there's still no debt in that TLEA vehicle?
Ivan Vella: No, no, no, no. This is all Winfield debt, just to be absolutely clear.
Operator: Your next question comes from Lyndon Fagan from JPMorgan.
Lyndon Fagan: Yes, I just wanted to talk about the Greenbushes reserve and resource update. So in there, it talks about the optimized pit shell considering a fourth plant similar to CGP3 that lifts production up to 10 million tonnes per annum of throughput from 2032. I'm wondering if we can explore that a bit more. So is that CGP4? Is it CGP4 plus tailings retreatment plant sort of reconfigure? Is it a combination of both? And just, I guess, looking at your color on the deliverability of that, I know this is all part of the kind of optimization, but considering it's written in there, it'd be good to try and explore it a bit.
Ivan Vella: Sure, Lyndon. And there's plenty of work that's been done, nothing that's finished and definitive yet. But I think you're getting to the numbers that matter, right? That's a critical number. Is it 10? Or can you do more? Or is it a bit less? And that's -- what can that mine consistently feed at an appropriate cost that we really think is set and optimized appropriately and then you're obviously running the plants. You don't want to throw a lot of capital at something if you can't use it wisely. There's no point in having particularly with the capital intensity of building things in WA. So that actually does include an uplift in the other plants and some tailings retreatment as well. So net-net, we've got to then sort of scale and size what we think that additional capacity would be if we're building another plant and make sure that it's pushed. I'm a big fan of not putting excess capacity in plants on site because inevitably, you effectively are just running a lazy asset then. We need to be pushing the assets hard, and they haven't been yet. CGP1 and 2 have not outperformed and gone past the nameplate yet. So we've got to chase that out. And again, make sure CGP3 not just ramps up well, but also then outperforms. So all of that will be in focus. As I've said earlier on the call, we will go in order, which is work the existing assets hardest first, reconfigure and add CapEx around supplemental CapEx, things like ore sorting and other things, work on the tailings retreatment. And then the last point of allocation is a new plant, CGP4 in whatever shape that takes.
Lyndon Fagan: And would you say that 2032 date is something that we should work with for now?
Ivan Vella: Yes. I mean I haven't got one better. So I think this is a business where it's as quick as possible, right? There's going to be -- once you know the mine can deliver, it's going to be value accretive. We see that with everything we do at Greenbushes. What we've got to do is make it more stable and perform to its optimum or full potential. And I think then you've just got to be realistic about what it takes to design, engineer and deliver a plant. And certainly, my goal is to make sure the CapEx intensity is improved from where we've been in the past. So CGP3, for me, is a very expensive asset. Yes, it's still incredibly value accretive and delivers incredible returns, but what a high ordering price ticket given the costs associated with doing some of these things at this point in the cycle.
Operator: Your next question comes from Ben Lyons from Jarden Securities Limited.
Ben Lyons: I'll keep it quick and just one question given the time. And it's bringing it right back from 2032 to the immediate future, so the rest of calendar '26, let's just call it. I know you haven't changed guidance at Greenbushes, but I'm just trying to gain more comfort on those second half sales, particularly in light of Albemarle's decision over Kemerton, obviously taken into consideration their comments around no expected impact on their chemical sales and the potential to toll that material through Chinese refineries. But maybe you can just give us more comfort with how those annual nominations work at the Talison level, how compliance versus the nominations is enforced? And if tolling doesn't make sense, and it doesn't look like it does on the economics at present, just remind us whether there's any restrictions on third-party sales of that con into the merchant market.
Ivan Vella: Okay. Thanks, Ben. Great question. I'll try and keep it brief. The customers that we have, who are also shareholders, Tianqi Lithium and Albemarle are very hungry for tonnes. And that demand is strong. It's a quarterly nominations process. So we're always one quarter ahead in what's coming. So we have basically a view to the end of the financial year. I think we have a view beyond that and subject -- obviously, haven't got a crystal ball that the world can't change, but there's no sense that any tonne we can't produce, we can't sell. The sales that you've seen, as I've mentioned earlier on the call, has purely been about shipping and logistics. It's just a physical set of issues at times when we miss shipment windows and so on. And that the team continue to work on, but completely disconnected from customer demand, which is very strong. And without getting into the specifics of [ Camden ], I don't have all of their details in front of me, of course, I don't speak to it. But it's pretty immaterial in the scale of the overall production that Greenbushes has. So I don't think that's super relevant looking forward. It probably just changes the logistics patterns a little bit and means that we need to make sure that we're handling not just the extra tonnes from CGP3, but also some extra tonnes that don't just get trucked to their site rather they get trucked to the port and shipped out. So the biggest challenge in all of this is just making sure that Bunbury port is really performing.
Operator: There are no further questions at this time. I'll now hand the conference back to Mr. Vella for any closing remarks.
Ivan Vella: Thanks, Darcy. Look, we're right on time, so I'll keep it short. Thanks again for joining for our half year results. As I said, I think that looking back on the half, we've got a great set of results from our operation at Nova, safety, production performance and so on. And that's exactly where we've been focused to demonstrate our operating capabilities. The same focus continues at Greenbushes, and we're not there yet. There is plenty of good work happening. And just as you've seen that step-by-step improvement in safety and operating performance at Nova, I expect we're going to be able to share the same suite of results quarter-by-quarter as Talison works through the improvements at Greenbushes. With that, I'll leave it there and look forward to catching up in -- with this results period now behind us and talking further about our results. Thanks, everyone.
Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.