Thank you for standing by and welcome to the IGO Limited Q4 FY 2025 results call. All participants are in a listen-only mode. There will be a presentation followed by a question- and- answer session. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. In the interest of time, we do ask that phone participants limit themselves to asking two questions at a time, and to ask further questions, you may rejoin the queue. If you do wish to ask a question via the webcast, please enter it into the ask a question box and click submit. I would now like to hand the conference over to Mr. Ivan Vella, Managing Director and CEO. Please go ahead.
Thank you. Good morning, everyone. Thanks for joining the call. Welcome. As per usual, Kathleen Bozanic, our CFO, is joining me for the call. There's a bit to cover in the update. I guess we'll start by just recognizing some really strong operational performance with both Nova and Greenbushes, and we can dive into that. I think most pleasing for me personally at the top of this call is really calling out the safety improvement across the operations in IGO. As you know, this has been a significant focus since I started in my role. The team's done tremendous work. Naturally, there's always more to do, but I'm really pleased to see the step change and continued improvement in our safety culture and the results that are flowing through.
What's also been a big feature in this quarter is the volatility in the lithium market, which I don't think is new to anyone or a surprise to anyone. I'm sure we'll talk a bit about it, get a range of views. I think that's probably the most interesting thing to me, just the diversity of views across the industry, analysts, commentators, and otherwise on the subject. It shows you just how difficult it is to pick what's still an immature market growing very rapidly with lots of different forces pushing on it. It's been a cold few weeks here in Perth. For those of you who are visiting for Diggers next week, you probably had a bit of a sense of that. Certainly, you would say unseasonably cold, and I think we actually had a day the other week, which was a record for 15 odd years or something.
Some people are calling this the end of the lithium winter. We'll see. I suspect it'll warm up in Perth a lot before we see a real shift in the lithium markets, but that's something we can certainly dig into. Overall, I've said a strong operational quarter across Greenbushes and Nova, and we'll explore both, obviously for different reasons and different drivers. If we jump into the results summary, just touch on the headlines first. The key point I wanted to make, as I said, on safety, I'm going to talk to in the next slide, so I won't spend too long, but you know, a real step in improvement there. We've seen that right through the FY 2025 period as the team's done their work quarter on quarter, and we've lifted performance. For Greenbushes, look, the key headlines, solid production. There was some impact from some unseasonably wet weather.
In fact, June was as wet as it's been in a long time, and I guess this is the world we live in. It is volatile. We had a couple of dry winters the last few years, and this looks like it's going to be a very wet one. They had some lower grades, a few other challenges, but still ultimately delivered well production-wise and a very strong margin. You can see in the chart there 60% EBITDA for the quarter, which is just outstanding given where we are in the cycle. Sales was a big catch-up, and I think I've said this in the last couple of quarters. That'll go up and down with the Bunbury port and just the movement of material.
There's really not much more to see than just a logistics flow and trying to get the volumes out and managing that with shipments and other congestion at the port. It's good to see that the team closed out the year moving a bunch of that inventory on. I guess we'll dig into the rest of it a bit further. At Nova, a whole range of operational improvements and focus on how we manage the extremities of the ore body has paid off through the second half of the financial year, and obviously, particularly in the last quarter. It's great to see the team meet guidance. They had a very, very tough start, as you know, in the first two quarters, and I think got their arms around some of the challenge, changed a number of things in the way they were operating and have delivered.
That gives us obviously more confidence with our guidance and the focus looking forward to the end of the mine, closing out the end of 2026. We've also really ramped up our focus on closure planning. As I mentioned in the last quarterly, that's something that we expect to go straight into. We don't see any period of care and maintenance ideally. That means there's a lot of work to do to get the feasibility done, understand all of the work, and have that ready and approved so that we can step into that straight after we close up the operations. Kwinana, key headlines is they had a better quarter, but still a long way short of expectation and a number of issues again with equipment, which has affected their production costs.
Proportionately were lower on a unit basis based on that increase in production, but still obviously make it very, very difficult to generate any real value given the market. What I guess is a standout there is we have indicated that we expect to take on a further impairment, taking out the full value of train one. That's being assessed and we'll finalize that through our annual results. A couple of other bits and pieces we'll pick up at the end from a corporate point of view. Look, let's dive into safety in a bit more depth. As I said, it's something we've been working on. I obviously had a personal focus on this since I arrived 18 months ago. The team's had a focus of improvement here regardless to drive a sustained improvement in our safety performance.
What's so pleasing is now really starting to see that come through quarter on quarter. You can see in the chart that we put in that step down in the quantum of injuries and obviously trailing that, the three-month and 12-month TRIFR. That 12-month will taper off, obviously, based on our work to sustain that performance. You can see that shift down. I think the other big standout here is the severity of injuries. Clearly, we want no injuries, we want less injuries, but we also want low severity injuries if they do happen so there's less impact on people, less lost days. That's certainly a very positive trend there you see in the orange lines as that declines.
The other point I wanted to call out on this slide was just the update to our ESG framework, which you'll see play out in more depth in our sustainability report that'll be issued soon. I think that captures or frames the way we think about the major pillars: valuing and protecting our people, which obviously speaks to safety, health, and wellbeing and our people; partnering to create shared value, our socioeconomic contributions, mine closure, working with traditional owners and communities; transitioning to a low-carbon future, so thinking about climate and decarbonisation and the impact of our operations. The fourth is driving our environmental stewardship through biodiversity, water, tailings, waste, and non-GHG emissions, and operating with integrity, business integrity, cybersecurity, and the responsible supply chain.
I just wanted to call that out, something that's fundamental in our purpose, a big part of who we are as IGO and how we do mining and how we operate in this industry is important to us. This framework, I think, reflects or captures the key elements there that you'll see play through in the way that we make decisions and think about our presence in those operations. Moving on to Greenbushes, I've covered some of the headlines, but just to touch on a couple of additional points. As I said, the teams managed through some unusually high rainfall, particularly in June, which certainly affected them. That was compounded, I guess, or compounded with some lower grade ore that was available affecting mill recoveries, throughput, so on, all resulting in less production than we probably anticipated, but still a pretty solid quarter.
You can say to see in line with Q3. We still came in very close to the top of guidance for the year. I think credit to the team there managing issues that will come up from time to time through the mine, but still delivering a very good outcome. There's a significant amount of improvement work going on across the board. I'm sure there'll be some questions on that. Key areas of focus, you know, naturally things like asset management and asset health, work that the team's stepping through, and mine productivity is the other big area, of course, we've also talked about. We're thinking about this holistically and the business under Rob Telford's leadership are thinking about that life of mine or life of asset optimization and how these threads come to bear. He's not waiting till all of that work's finished.
He's getting on with the obvious streams of work and I think delivering good outcomes. The last comment I'd make here is just on costs. Teams did a great job, came in, you know, for the full year with a great cost result. It is an amazing orebody and it does make that, you know, easier than most to deliver those outcomes. You'll see a reduction in our guidance indicating a step down. I think, you know, based on the ramp-up of CGB3, which is still to come, and that really, you know, we're expecting that first ore right at the end of the year with a ramp-up into 2026. Based on the rate of ramp-up, we've obviously stitched our guidance around the financial year, even though Greenbushes plans on a calendar year. We've taken a view on that.
We're not being aggressive with our guidance, but the team naturally, there's some uncertainties when you ramp up any plan. It's, you know, certainly got a lot of capability wrapped around it. Given that it's similar to CGB1 and CGB2, we've got parallels that we can draw from. All that aside, we need to let the team get on and do that work. As you can imagine, based on that ramp-up, we'll see some of the fixed costs diluted further. That may then give us confidence to see those costs come down further just on the rate of production. We are also going to see the team continuing to put downward pressure on costs through all the productivity programs and improvement programs across the business through the calendar year 2026.
Capital guidance, look, I think again, we are stitching guidance. We are trying to take in what we see in terms of completion of CGB3 and then various other projects across the business, tailings, other non-process infrastructure, and of course, stripping, which is a continuation. I will not be able to go into intricate detail there. As you know, it is not something that we share in any specific detail, but that gives you a range of where we are thinking things will look. As I said, we are stitching, trying to pick timing of CapEx across a financial year, which is difficult. We do our best at this point to take a perspective on that second half or even without a plan. We will obviously update if as appropriate and as we did through FY 2025. Onto Nova, great outcome. Great to see the team.
They really lifted and I was so pleased for them to tip over the bottom end of guidance. Obviously, I am sure everyone was nervous and watching and we were too. We had confidence. The team had a good plan and they are executing and we could just see them delivering day after day. It is certainly challenging and I think anyone who has been through the work getting to the end of life or the edges of an ore body knows how much variability and extra challenge comes in. They had some really tough moments in the first half. They have turned that around and delivered two quarters in a row, really good performance.
That, of course, turns out in nickel production and obviously the unit costs as well. Copper has also been up and that is largely grade driven, but it is nice to see that we are recovering that and feeding that back into the market at these times. We have just updated our guidance there, which we have already sort of signposted last quarter, 15,18 for nickel production. That is through to the end of 2026. We can get into it further, but through that quarter, we expect production to stop. It is a reasonably flat profile through to the end. I think rather than trying to pick it too tightly or separate this year, we thought it is better just to maintain that guidance given it is only a few months past the end of the financial year. The cash cost guidance obviously ties in with that.
I've also mentioned closure planning, so that's really ramped up in earnest. We've got a very strong team focused on that now. One of our key processing managers is Rob, and he's now full-time in that role, working through the efforts to have that plan and all of the estimates in place. That's something that's as important as how we run the mine as well. We really want to be proud of setting a great example in taking the business through to closure. On the lithium downstream and Kwinana, I think maybe my first comment would be that that part of the industry is certainly under enormous pressure. I don't think there's anyone globally making much in the way of margins there or enjoying the period we're in. The operational challenges at Kwinana, of course, just compound this massively.
While we did see a lift in performance and production from Q3 to Q4, and that was signposted to the team, they still just missed guidance that we'd put down, which we thought was reasonably conservative. They continue to have issues with equipment failure, outages, downtime, etc. We have been clear about it, our low level of confidence in the plan actually achieving sustained operational improvement and cost improvement given the context that they're working in. I want to be clear though, the team, there's no shortage of effort going in. They're all in. They are working night and day. They're so dedicated to it, and it is a very, very challenging situation for them to work through those issues. I think beyond that, we've given you some guidance for next year. Again, it's a stitch. We think that's good for now given what we see.
Naturally, we're continuing to discuss and look at the future for the refinery and what's the best decisions we can take. On the financials, I might throw it to Kath to just give you a few key reflections.
We've had solid results delivered in the quarter in what is a challenging market. Operational improvements have been implemented as well as catch-up sales at Nova, which contributed to higher EBITDA of $59 million. There's also a positive contribution in our EBITDA from our listed investment portfolio this quarter. Our underlying free cash flow remained positive, albeit down from last quarter when we had the inclusion of a final tax refund during the period. This reflects the quality of Nova operations, even as it comes to the end of its life. The balance sheet remains strong with $280 million cash, with $300 million available from debt facilities, which we resized and extended during the quarter.
As part of our year-end procedures, we've earmarked that we're still working on impairments and rehabilitation provision, and we've provided some information in our quarterly to help you with the estimate of the impact of this. Based on, as Ivan has said, based on IGO's assessment of the Kwinana refinery, we anticipate impairing the full amount of this asset. The change from last or the half year is mainly about the forward look on commodity prices and the like. I think that's the financial summary, Ivan.
Thanks, Kath. Yeah, we can dive into it more in the Q&A as we get into it. Look, on corporate updates, I won't spend long on this slide. We can pick up anything in questions. There's a note on our debt facility and capital management framework. I think what you'll see there, without going into the details, is just some real prudence. Congratulations to the team for stepping through that change and resetting our debt facility on a forward-looking basis. It's not drawn. It's not something that we depend on, but it's really just prudence to have that in place and give us that liquidity and flexibility. The price change transaction, I've got a couple of comments. That's a work in progress, working really well with Medallion to finalize things there. I think the teams, as I said, they're working well together. There's lots to think through.
It's a complex transaction given the history in that site and just making sure that we've gone through all the elements. On exploration, there's a bit of an update in our quarterly. Again, I won't run through all the details. I think summary points is obviously we've made the transformation and change in the organization, and that's now stabilizing and the team's really finding their feet, which is great to see. Secondly, the rationalization of the portfolio is well progressed. We've actually completed rehab in the Fraser Range region, which is fabulous. Again, all credit to the team that have just done such a great job there. The Paterson, we're pretty much wound down as well and wound out of a number of JVs, as you've seen. We are focused on a forward-looking basis on several areas which have lithium potential, and we're very excited about those.
We think we've got very prospective ground, but that's all work to come. The generative team are out looking for the next areas to focus, and their primary orientation is copper. As you have signposted, I guess you've understood, we think that that's more likely to be outside of Australia than inside Australia. Just a couple of points on exploration. With that, I might stop and we can jump into some Q&A and then come back and pick up any other points.
Thank you. If you wish to ask a question via the phones, you'll need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please enter it into the ask a question box. A reminder for phone participants to please limit themselves to asking two questions at a time. To ask further questions, you may rejoin the queue. Your first question comes from Tim Hoff from Canaccord. Please go ahead.
Hey Tim, thanks for the question. Just around CGB3 and the ramp-up there, March quarter, I guess you pointed to first concentrate at the end of the year. This quarterly report, you're saying first ore, is concentrate still expected this year or is that likely to be a first quarter next year, Tim?
Look. Yeah. Tim, I haven't got a detailed plan in terms of that early stage. I think what we're pointing to or sort of relying on is that they'll get all through it by the end of the year. It's going to be a question of how long that first stage processing when we move from wet to dry commissioning, that's from dry to wet at least, and start to ramp up.
What we can do is once we've got more detail and worked that through with our JV partners is give you an indication of what we think that ramp-up looks like in the first half of next year.
Okay. Is it fair to say that the guidance doesn't really include too much contribution from CGB3 then?
No, it doesn't. I mean, we think there's some, and as I said, we're stitching our guidance. Obviously, the plan is done for the calendar year. We have to take a view on that period, even though that's not complete. We like to make sure our guidance is set with the appropriate risk in mind, and we'll update accordingly.
Okay. Yep. Perhaps my last question there is just around the guidance.
If we're having a look at the grade profile, does it kind of imply that the grade profile was going to be flattish from where we are today or what was delivered in the last quarter?
No, I wouldn't say that. I mean, we actually had a step down in grade you probably have picked up in Q4. It was down a little bit from the first two quarters in Q3, and it will come back up again. It is a bit about where we are in the ore body. As you know, that strip or pushback on that western wall of the main pit is progressing. As you get down to the floor, you open up higher grade again. Overall, I wouldn't try and read through and draw that straight line across at the current grades for the year.
We do expect that through FY 2026, we will have periods of lower grade, which I think we've allowed for in our plan, but I wouldn't suggest that's the life of mine or that's where we're headed.
Yep. Okay. Excellent. Thanks to our partner.
Thanks, Tim.
Thank you. Your next question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Hi. Just first question is just on CapEx and what's embedded in guidance for Greenbushes. How is that set? What is behind that? I think it's fair to say it was a little bit higher than some of the market were thinking. What can you say about how we think about the go-forward capital costs or sustaining CapEx or spend on the business? It would strike me that this is a lumpy year. Is it more than just CGB3? Thank you.
Yeah, thanks, Daniel. I sort of shared a few comments in my opening remarks. I can't get into specifics in terms of giving you a detailed breakdown, but naturally, CGB3 is, you know, got to be finished in that period. Tailings, TSF4 as an example, is there are some large pieces of non-process infrastructure that we've got to deal with. I guess in terms of the profile, we're moving into another stage of expansion of the mine, and you've obviously seen some of the media and commentary around approvals for that. As you can imagine, as we expand and grow the mine, which is obviously very exciting and healthy to do, that also comes with work around our infrastructure and associated support capital. That plays into the work that's ahead of us. That's probably my first point.
Second point is I think Rob has worked through the capital portfolio and continues to improve the rationalization and the justification for capital. You'll remember that we actually revised their guidance downwards for FY 2025, and that was, I guess, the first signpost of that healthy focus on capital. I think that work will continue as we refine that justification and focus. I think the other piece is capital intensity as well, what we get in terms of outcomes, scope for the dollar spent as another area of improvement that I know he's targeting. I realize that you would all like me to give you much clearer guidance here. It's not something I can do at this point.
We'll continue to work that through, and maybe as part of the broader optimization, we can get to a place where the JV is comfortable to talk about a longer forward view on CapEx that would allow you to model that more accurately. At this point, I just can't give you the specifics.
Okay. Thank you. Second question is just relating to debt both in the vehicle that's the Greenbushes vehicle and then at the IGO level. On the Greenbushes debt, obviously the cash flow is lower than everybody would have liked at this point. Is there any covenants regarding that debt and do you need to, you know, might there be a capital contribution required from the JV partners? Somewhat related, you've changed your debt facility, your revolver, and the tenor is lower. Can you just talk about how that process worked with regard to the fact that you can't have surety of dividends coming out of your lithium business and your nickel business is winding down? Thank you.
All right. Let me cover the first part and then I'll throw to Kath for the second part on our IGO space because I think what you can see is, you know, cash obviously at Greenbushes, their net debt position is pretty, you know, it's pretty healthy. We want that business geared. The business is generating cash. It will continue to generate cash, you know, through the cycle. I think we've got a pretty good track record there. There's nothing more to see there. I mean, that business is in control and doing a good job. I think they're well and truly on top of their debt. The flow of dividends through TLEA, TIGO is obviously a different story. Naturally, Kwinana is a drawer on any dividends that come out of Greenbushes, which again, I think everyone's modeled and recognized.
Obviously, the last step then is for money to come out to IGO. Do you want to maybe talk, Kath, to the change in the facilities, the update there?
Yeah. From the facility perspective, we're about 12 months coming, heading out to auctions and various things. We're a very different business now than we were when we originally had that debt facility. If you recall, we converted some of the fixed term to revolver at the time. We stepped back, had a look at everything from our business perspective and our strategy. We determined from a balance that having a facility of $300 million was more appropriate for the nature of our business right now. Obviously, there's a balancing act between the cost of a facility and having it there versus the size of the facility. We're very comfortable with what liquidity that gives us.
We also revisited our capital management program and reset our liquidity targets, which is again an indication of the shape of our business today versus when we set those things two to three years ago.
To summarize, I don't, you know, there's nothing there that we've got concern about. There's no sort of watchpoints for us. Of course, you know, the flow of dividends out of TLEA is of interest to us as it is to all of our shareholders. We're working on that, obviously, you know, as we continue to focus on the performance of Greenbushes and reducing and minimizing and, you know, obviously targeting that cash burn on Kwinana. That's all in focus, but we've taken all that into account. We've run the scenarios. We've got, I think, a very good forward view on what the world looks like under a range of scenarios. We're very comfortable with our balance sheet and our cash or general liquidity, I guess, but certainly our cash holding as well.
Thanks for your perspectives, Ivan and Kathleen.
Thanks, Daniel.
Thank you. Your next question comes from Austin Yun from Macquarie. Please go ahead.
Morning, Ivan and Tim. Just a quick question on the capital management. I can see that the threshold has been lowered from $1 billion to $0.5 billion. Just trying to understand, does that, you know, indicate the company's thinking in terms of balancing growth and returns? There will be more pivot to shareholder returns going forward. Also, the second part of the question is, is that new threshold applicable for the past six months? Thank you.
Let me just cover the first bit of that, and then I'll throw to Kath for a bit more detail. Look, I think we're not pivoted to shareholder returns. That's where we've been and always have and always will be. I think our capital management framework sets that out, and that's a clear priority for me. I think the board, I'm speaking for them, I mean, they're right behind that. We have, as you know, paid out significant dividends in the last five years or so as a business, and we see some good recovery in the markets. That's going to flow straight through as well. That's not what this was about. I'll let Kath speak again to the change in our debt facility.
No, it was really looking at our business as it is today versus what it was two to three years ago. If you think about IGO today, we've got Nova, it's generating good cash for the next 18 months or so. A $1 billion liquidity for what we are today with a right-sized and discovery-focused exploration team, a mining operation that's coming to the end of its life. Therefore, we brought the liquidity threshold down to match what our business is. I don't think it's any more complicated than that, to be perfectly honest. Just, you know, backing up Ivan's comment there, it was 20%- 40% when under $1 billion. It still stayed at 20%- 40% under $500 million. We haven't actually changed the shareholder return section of that apart from that threshold.
Okay, thank you. I'll pass it over.
Thank you. Your next question comes from Matthew Frydman from MST Financial Services Please go ahead.
Sure. Thanks. Morning, Ivan and Kath. A couple from me. Can I ask the first question again on CGB3 production? Sorry, Greenbushes production guidance with respect to CGB3 ramp-up in particular, and understanding there's some apparent conservatism in there, I guess, as you've alluded to, because you just haven't set the numbers yet within the JV for the first half of next year. I'm wondering if there's any degree in that to which it's reflective of the JV's current thinking on how aggressively that you want to actually ramp up that asset, particularly a new asset in the current market. You know, clearly, we've got a precedent there in terms of how CGB2 ramp-up was handled. The question is, is there a desire there in sort of setting that Greenbushes guidance for next year? Is there any desire in there to manage the market conditions? Thanks.
Yeah. Thanks, Matt.
Great question. Quick answer is no, that's not reflected in that. That is just our view on a risk-weighted, prudent view on how that asset would ramp up. I'm not one for over-promising, and I think the guidance reflects that. It's a judgment. Obviously, there's a lot of things that go into that production guidance when we're stitching a year that we don't have a full plan for. We are naturally cautious. I think we showed in FY 2025 that we got it pretty right. I know there were calls for us to upgrade guidance, and we said, no, we can see through. We think we're going to land just at the top end, and that's where we did. We wanted to continue to build trust and confidence that when we give guidance, that it can be relied on.
If we see a real case to change that, ideally upwards, of course, we'll let people know as soon as possible. I think that's where we come from. In terms of the heart of your question, in terms of pushing more supply into an oversupplied market, I think we're all aware of that. Naturally, the tons are value created in this business. It is such a high-quality mine and ore body and delivers such great returns on every ton we produce. I can't speak for that. In terms of the whole JV, my view and my experience tells me that we should focus on a clean, stable ramp-up, do that safely, do that professionally, and get the very best in the asset. I'm pretty sure that's where Rob's head's at. That's how you get the best long-term out of it.
If we look at CGB2, which went through obviously a very difficult startup on and off, it doesn't help your asset long-term. The value loss from an overall point of view is magnified, and it's not just the missed tons. You actually ultimately impact your business more broadly. I certainly don't look at the business that way. I think you have to start in such a high-quality ore body asset first, production first, and make sure that you're managing that in an optimal manner and not trying to feather or play the market.
That's pretty clear. Thanks for that, Ivan. Second question, and apologies in advance if this comes off maybe as a little pointed, but it's obviously pretty frustrating to keep having to talk about the poor performance at Kwinana. If I understand it right, there's five board members on the TLEA board.
That includes yourself and Brett and an independent member as well. As of today, the IGO view at the very least is now that Kwinana is worth nothing. I guess the question is that, as a director of TLEA, how can you continue extending shareholder loans out to the Kwinana subsidiary when at least internally your view is that that asset is worth nothing? How does that meet your duties as a director of TLEA? Thanks.
Good question, Matt. It's not pointed. I think it's very valid and clearly an issue that's at hand between the joint venture partners and the board. I don't think it's helpful for me to get into it much further. I think the issue is clear, and as you can appreciate, there must be different points of view on the future of the asset and of the business.
My focus is almost entirely on making the best of Greenbushes. We work extremely well with our partner, with TNT, on that. I'm of course, as the other partner at Winfield. The Talison team are doing a great job. Rob's turned out and I think stood up a new management team. Massive focus and the value to unlock there is enormous. Of course, there's an impact from the cash outflow at Kwinana, which we are conscious of and managing and working through. Those discussions are active. The focus is intense. I realize everyone would love clarity and detail and guidance. There's a lot of views and support, I guess, for our perspective on this, but it's something we just have to be respectful and work through in a thoughtful manner. We're doing that. We also recognize as an operating team at the site that we need to care for.
They need to operate safely and do their jobs under the guidance that we're giving them from the board. I'm not trying to sort of steer away from your point. It's well made. I agree with it. Those issues are in front of us and we're working through them.
I understand. Thanks for your views there, Ivan.
Thank you. Your next question comes from Rahul Anand from Morgan Stanley. Please go ahead.
Hi, Ivan and team. Thanks for the call. First one's just on the CapEx on CGB3. Can you remind me post-acquisition or post having the stake in Greenbushes, how much has the joint venture spent on CGB3 cumulatively to date, including next year's guidance, please? Thanks.
Yeah, Rahul. I mean, I don't have that number. It's not something we disclose on a sort of run-rate basis. We did give an update. I think it was October, yeah. Kath's nodding. You could reference that, but we don't sort of give you a track on spend against that.
Okay. I was just trying to understand sort of what we should think about CGB4 on the back of that. Also, given that at the time of acquisition, that spend was supposed to be around $300 million, and then I think that went up to $550 million.
The last time I heard offered, I just wanted to see sort of how we're tracking in terms of the budgets that were set at the site. Just to help, you know, forecasting some of the CapEx to come in future periods.
At this point, we don't provide guidance on that sort of growth CapEx and growth strategy, which is sort of well out into the future. Naturally, CGB4 remains an option, something that we'll assess and consider and look at the business case for it. There's been a bunch of thinking and work done on it, but it's not at a point where we're folding it into guidance or direction that we can give you. I think your observation on the escalation in CapEx across the board is well made, and I think that's industry-wide.
What I would add to it is I equally bring, while we recognize that and feel very uncomfortable with it, I equally bring a huge focus personally on capital intensity in the lithium industry. You go right back to the strategy we talked about late last year. I think we've got a long-life asset, and we need to think about productive assets and getting best value from them at a business like Greenbushes. Equally, we need to make sure we're really spending money wisely there. The CapEx intensity, I think, needs laser focus. It's getting more and more of that with Rob. I feel like he's brought a real step change in the culture and the mindset there in the senior team, but there's still work to do to think that through.
Then how that translates into the way that we scope and design a new plant and set the right balance on CapEx intensity against the value long-term for that asset in the business needs a bunch of work. I don't have numbers. I can't really give you a guide because we were not in a position to do that. What I want to do is leave you with confidence that that next stage of investment, when that comes up and when we're contemplating that in the life of mine and in the optimization of Greenbushes as a whole, we will have a very intense focus on capital intensity to make sure that we're getting the best out of it, regardless of the kind of massive returns you'd get from any increase in production. I'm sure you can run the numbers in the spreadsheet.
That doesn't excuse us from just spending more than we should on it. I think CGB3 came through at a different time and was probably signed off with a different context, also with different levels of escalation in CapEx through that period in the industry.
That's a point well made. Thanks for that. The second question's more around you've talked about how you've set your guidance today, in relation to CGB3, but then in terms of the broader business and having to stitch up that guidance. I just want to touch a bit upon that just because you're significant shareholders in the project and you've obviously got a different reporting period. How much input are you getting from your partners in being able to set this guidance up?
If that input isn't enough for you to have a high level of certainty with that guidance, doesn't it warrant switching to maybe a calendar year reporting cycle?
That's a great question. I'll let Kath answer that one.
I'll throw to Kath. We actually have looked at that in the past. The complexity around changing reporting years is not as easy as it sounds. There are tax implications, accounting implications, and all the rest of it. I do think that it is a really good question and we should continue to challenge that based on where we are as a business. At the point in which we looked at it, which I think was about 12 months- 18 months ago, it didn't make sense, but I will endeavor to reopen that and revisit that as we should.
I guess the first part of the question really was about how much support you're getting from your partners in terms of helping you set that guidance, right? I mean, you are significant shareholders, you're on the board. Why not have a bit more of a dedicated process to being able for you guys to be able to guide to the market?
Yeah. Look, I was about to pick that up at the end. I just was keen for Kath to deal with a more complicated question around our accounting periods. The team are very forthcoming and helpful, very engaging. There's nothing held back there. It's just obviously when you're still planning a mine year to year and you haven't done the life of mine optimization or haven't finished that work to get that full view to have greater confidence in the sequence, confidence in spatial compliance.
I can go on and on. As we get more maturity in the way that business is run, I think this is going to get a lot easier. The other challenge is obviously the step change we're making in the way that we think about capital. I believe Rob has brought quite a different mindset to that. His focus on where we spend it and how we spend it and the value we get for it is shifting and rolling through the business. We have team members who sit on the capital committee and spend a lot of time with the Talison team thinking about that. That is an evolution. It's not something that happens in a one-off hit.
All of these things do give us good inputs and good data, but we're not at a place where I think this has got the maturity and the confidence for us to then be really tight on this or take more, I don't want to say risk, but take a stronger view. I'd rather just be thoughtful and prudent. As we build up that broader connection and that confidence in the performance of the business and the reliability of their outer plans, that'll give us a basis to give better indications to the market. The last point I'd make is, we still work year to year. I realize you haven't had any real update to the overall model for a long time, and that's something that we recognize would be helpful.
That's something we'll talk through with the JV partners to just help people understand what that runway for the business is. That comes off the back of the optimization work that Rob's doing. As he gets that fuller view, it'll give him the ability to give us that big picture and do it with some real confidence. That's very fair. Thank you very much. I'll pass it on.
Thank you. Your next question comes from Levi Spry from UBS. Please go ahead.
Good day, team. I'm sorry, it's probably a name issue, but I just wanted to follow up on some of the port congestion issues that we saw from the first half of the year, which seems to have further resolved over the fourth quarter with a bit of a catch-up in sales. Just checking that there's nothing to sort of be wary of regarding underlying logistical capacities or issues moving forward, particularly noting with higher volumes from CGB3 later on and just what that means for cash flow timing.
Quick answer is no. You're always going to have periods that are more or less productive. I think every port facility I've been involved with, either operated or drawn on their capacity, I've seen these issues. It's pretty normal.
I know Rob is working to improve productivity and improve the interface and the logistics, which gives us more comfort that we won't experience delays or impacts. Ultimately, we've got a pretty good inventory buffer in the system at Greenbushes, so it doesn't really create a lot of concern other than working capital, which naturally we try and manage closely. No, there's nothing more fundamental than that. It's just the normal worker getting the ships loaded and getting them out and managing the flow there. There are other users of that port facility, and naturally, there's points where you can just have a point of conge stion or peak demand that can create some of those challenges.
Thank you for that. Just a quick second one, if I can, relating to the lithium industry support program. You noted that there was continued benefit rebate during the quarter.
Is there ongoing support in FY 2026 and the quantum of that that you expect?
Yeah, there is. Thanks to the West Australian government for their support and encouragement and thinking about the whole industry. We do benefit from that in TLEA, and that's very welcome. I can't disclose the specifics, but it's really quite material. I think they deserve a lot of credit showing the commitment they have across the industry, supporting lithium and recognizing its future as a part of the West Australian mining industry.
Thanks, Ivan and team. I'll pass it on.
Thank you.
Thank you. Your next question comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.
Hi, Ivan and team. Just the first one from me. Greenbushes, on your cost guidance, how much, if anything, have you allowed for CGB3 ramp-up spend in FY26?
Yeah, that's included. I think the fact that it sort of inches down shows you what's ahead. Obviously, as the fixed costs get more diluted, as volume comes on, it's only going to head one direction. That's in there. Naturally, we're encouraging the team to realize their productivity programs and continue to create downward pressure right across the property. CGB1 and CGB2 have potential upside in terms of throughput and productivity in general, recoveries, which are all in focus, and then the mine productivity as well. You'll notice that the material movement through the mine has been increasing quarter on quarter. They are making headway.
We don't headline it because it's still got plenty of work ahead, but it's nice to see that mine productivity just stepping up each quarter.
Got it. Thanks for that, Ivan. And then just a second one at Kwinana. What does the gu0idance CapEx spend entail, and do you envisage needing to spend more than what you guided in FY 2026 into 227 to get to that target 90% utilization?
Yeah, there's further modification to the plant anticipated in that CapEx. There is some sustaining CapEx, a small part as well, but the majority of that guidance reflects intended modifications and improvements to the plant to increase its ability to meet nameplate. That's guidance, and we'll treat that with a lot of scrutiny and make sure that any money that is committed is spent wisely. It's obviously part of a broader set of challenges at that asset.
Maybe another way, I mean, you're sort of reaching periods of 50% utilization. What does the FY 2026 spend get you closer towards on your budgeting?
It's not something I can give you, unfortunately. Here you go. I think there's probably more fundamental issues than that anyway, but I'm sorry I'm not able to give you the specifics on that. We've given you guidance on production, which implies a level of ramp-up, and that's really all I can comment on.
No problem. Look forward to future updates then. Thanks. I'll pass it on.
Thanks, Hugo.
Thank you. Your next question comes from Jon Sharp from CLSA. Please go ahead.
Yeah, hi, Ivan and team. I'm not sure if you've covered these questions before, as I've jumped on a little bit later than usual. Apologies if you have, but just with the grade, was the lower grade in 4Q a one-off? I know the result wasn't far off the reserve grade, but it was lower than most expected. Should we assume softer grades in the first half or the first quarter going forward? Thanks.
Yeah, thanks, John. No problem. We touched on it, but it's no problem to just broaden that out. It was lower as a function of a number of factors, some of which was just unseasonable weather. They had a very, very wet period in June, which of course affects some, or sometimes affects access to ore and so on. We had a number of things that impact it.
It is also going to swing like any mine through the year, the grades available. We think overall grade will be a bit lower in 2026 on average, but not, you know, not materially. I actually said, look, don't take this and draw a straight line across. I don't think that's helpful or useful guidance in terms of what the team's expecting. They're naturally working down to open up some very attractive parts of the ore body, and they're just going to try and manage that in a more and more optimized way as they go and open up this business and drive the productivity of the mine.
Okay, thanks. Just a quick, another question, just with Greenbushes. It remains cash generative even in the current price environment.
I'm just interested in your view, is the mine plan being sequenced to potentially preserve high-grade ore or maximize margins and volumes when prices recover? Just interested in how you're thinking about managing that trade-off in this part of the cycle.
No, it's a big operation and growing, and we will optimize it holistically. That means for a stable production plan. It doesn't mean to try and focus on high-grade or try and play to that. It's just not something we need to do or should do. Ultimately, you will, in the fullness of time, destroy value doing that. We very much want to make sure that we're thinking long-term. What Rob is doing is actually lifting everyone's eyes and actually extending that horizon even further, which is great.
I know that's going to translate to downward pressure on costs in that aspect as he goes and ultimately deliver better returns. Naturally, we all want to see the price increase, but the value that we get out of every ton today is still extraordinary. I guess just continuing what we control, which is the cost and driving them down, is where we've got our focus.
Okay, thank you.
Thank you. Unfortunately, that does conclude our time for questions. I'll now hand back to Mr. Vella for closing remarks.
Great. Thank you. Sorry, it looked like we missed a couple of people who had extra questions. I probably talked too long on a couple of those answers. Just to wrap up, I want to go back to the operational and safety improvements across parts of the business I've talked to. Really encouraging to see that, particularly at Nova. Congratulations to the team. Greenbushes, what a stellar asset. Continue to deliver outstanding margins right through the cycle. Lots of work ahead as we optimize that business and drive productivity. I think the scope for upside is enormous, but we equally need to back and work closely with Rob and the team. I think the JV partners are all very aligned doing that work to get the very best out of Greenbushes and make sure we maximize value there. We've got a clear pathway to the end of life for Nova.
Set out the guidance, and we see cash flow generation through that period. Reasonably flat production. There'll be some ups and downs, as you'd expect, with grade and stokes and so on. We've got a tight plan looking forward on that. We continue to look at the future of the business and growth. I think I've made a few comments around exploration. Some exciting work there. We'll continue to be very prudent, thoughtful, and disciplined about how we allocate funds outside of the core of our business. Naturally, that includes focusing very hard on the cash burn at Kwinana to make sure that we're addressing that as quickly as possible and give everyone a clear view on the world-class asset that Greenbushes is. With that, we'll wrap it up. Hope everyone has a good day. I'm sure it's busy for you all with all the different companies reporting.
Thanks for joining.
That does conclude our conference for today. Thank you for participating. You may now disconnect.