I would now like to hand the conference over to Mr. Ivan Vella, Managing Director and CEO. Please go ahead.
Great. Thank you. Good morning. Good afternoon, everyone. Thanks for joining us. I know it's a super busy day. Lots and lots of quarterly for the market, so you're running around. So appreciate you dialing in, taking the time out to catch up with our results. I won't spend too long, as usual, just trying to hit the highlights, Kathleen'll pick up the financials as we get further through, and then we can dive into some Q&A. Just to sort of touch the headlines first before I run through few areas in more depth. I think safety, again, continued improvement. I've talked about this since I started on the role two years ago, and I'm really pleased that we're making steady improvement every quarter. Team is working really hard at it.
They absolutely treat this as their first priority, and the results are flowing through, which we're really pleased about. Naturally, it's never done. That focus on a good mature culture is something that we keep working at. But I think it ties back into performance in the mine as well, and obviously, these results are largely focused around Nova. And you'll see, you know, the results from Nova have been really, really strong through the last quarter. Production cost team is doing a great job, and I've reinforced, obviously, a few quarters in a row now, how difficult it is when you get to the end of an ore body like this, but you're approaching the end of mine life. It is challenging.
The team is dealing with that extremely well, and, you know, we start to see where focus on good safety, good productivity, good discipline in our operations all tie together. We're also driving out great cost outcomes as well. I do recognize, of course, the benefit of the byproduct credits from copper, which is nice. It's another piece of the pie, and obviously, the nickel markets, you know, fantastic for the last 12 months of this mine. But as you can see, it all, you know, starts with what we control, and those basics are running well. For Greenbushes, look, you know, obviously a better quarter than the first quarter of this financial year, which was impacted by rain and some grades. We've seen that grade improve.
That, that's continuing to flow through, and we'll see that lift through the second half of the financial year. But, so improved production, sales offtake, which is just shipment, which, to be honest, is, with a, a very rapidly rising lithium market, not the end of the world. We're now just seeing some, improved financials on the back of that. And, you know, a lot of work that's happening, to get CGP up and, and going, CGP3 , at least. That's, as we've announced already, fit for start and producing concentrate this month. There's a huge focus on that ramp up, and I'll talk more on that in due course. Kwinana, look, another quarter that's sort of in line with prior quarters. I think really did call out.
It was impacted by a shutdown that took out some of the available days of production. The team did finish the last month at about 50%, which is sort of the best that we've seen from a refinery for any same period. You know, I guess we much as looking at prices up, we continue to take the view that this has got a very challenged future. So that's, I think, the quick highlights. Our financials, capital dig into it further, but as you can see that we've generated positive free cash and continue to maintain a very strong balance sheet. If I drop down a little bit further into Nova, and I've touched on a number of these points. I mean, a really good operational quarter, delivering cash to the business.
I talked about a blast misfire in Q1, which has been addressed and mitigated. Again, that's the sort of thing that the team naturally doesn't want to happen. They had to work really hard to deal with it safely. They've done that, and it's now in the rearview mirror, looking forward. With the mine at this point, so close to closure, we don't have the ability to flex our schedule, and so we have to deal with these things very attentively. Sales a bit lower, just in line with shipping plans. So one less ship a quarter, that'll roll through. There's nothing really materially in that. And overall, tracking really well against our end of life mine guidance. As I said, the performance from production was really good, and they continue to lead through this quarter.
So we're up. We've got some strong confidence there and right through to the end of this calendar year. And of course, costs are a function of that performance. All that said, the team are working really hard to manage our costs as this mine ramps down. We're certainly not looking to carry anything that we don't need to as we move towards closure in 2027. I've put Kwinana next, just to touch on it quickly, but then we can talk a bit more on Greenbushes. As I said, 35% nameplate a quarter, 2.1 kiloton. We're tracking, you know, pretty much in line with our guidance as we've set out for the financial year.
The costs are up, and, you know, that's a function of the production through the quarter. We did take a bit out as the maintenance shut was done and some other modifications that were done to the plant. The next slide was drop into Greenbushes. So look, you know, it's a good quarter, lift on Q1 in production. Costs are still running strong... high relative, and that's obviously largely production related. As the tons ramp up, we'll see that come back in. The realized price lifted to AUD 850, which, you know, I think reflects this very close connection with the PRAs or the spot price in the market, and I'll talk more to that on the next slide.
I think it's something that's very favorable, particularly in this lifting market, very buoyant market now. The big news was obviously getting first ore through CGP3 late last year, just before Christmas. The team did find some issues as they started to run it up. They stopped and fixed those early in January and then got back into it. As I said, we've just seen first concentrate starting to come through. Look, the asset's working. I think they took the time it was down to check a few more things, hopefully avoid any more surprises. The work in front of them now is to ramp that up, hopefully smoothly.
We're gonna know more by our half year results in a few weeks' time or three weeks away. So I think that'll be a place where I can give you a more substantive update. At this point, it's a bit early, really, to say too much until we see a few more results start to come through. I have a couple of extra slides on Greenbushes and wanted to start, as we talked about in the last quarter, to just feed in more information to the extent I can, about both the life of mine optimization or the strategic review that we're doing and the focus on productivity. First thing I did want to touch on first, though, was just on the SC6 price growth, which I'm sure everybody's following closely in the market.
It's certainly moving very, very quickly. I would say relative to the expectations that I had, that's fine. It is what it is. I'm sure we're gonna have some ups and downs. We saw overnight that there was a bit of a downshift with GFEX and others, and I think we certainly expect to see some of the CATL supply out there start to be reintroduced. And I think this morning mentioned that they were looking at that. I'm sure we'll see more of that, which might pay for it. But really, the takeaway from this slide is the way that that translates for Greenbushes.
As you know, when we take the average of the PRAs one month prior to the trades, but it's pretty much a very close connection to the spot price that's out there. Does give us a very good realized price that flows through. We don't have any of that lag or impact from contracts that you know might carry discounts or other frictions from a low area in the cycle. So I expect we're gonna see, obviously, some very effective lifts in our realized price over the coming months. The next slide then, I guess, brings to life how that translates into margin, which is one of the things, again, I called out before.
I think Greenbushes is one of those few mines of any mine in the world that generates extremely high margins. You know, we said 64% EBITDA for the last quarter, and I think the low end was just higher, 60%, at the absolute bottom of the cycle. But the thing that's really unique is it also drives fantastic cash conversion and translates it into returns that flow out of the business. They don't have to be reinvested to maintain production.
This chart just brings to life what that looks like if you take 1.5 million tons, so current production level, roughly, at 2,000 tons, and then with the lift in production that's coming through CGP3, you know, the sort of excess cash that's generated through that step up, it allows us to visualize that. The next slide talks a bit to the optimization work that's ongoing. It's a slide that I have referred to before. Just to reorient everyone, we've got an overall review of the entire mine, which is, I guess, a life of mine optimization, and I'm gonna talk about one example of the kind of work that's happening there in a minute. That is significant. It's got a lot of external expertise helping us with it.
It basically goes right back to the ore body, assesses the ore characterization, the design of the mine, how we manage waste, tailings, our grades, et cetera, top to tail and reassess that, in the optimal way. And in doing so, obviously, unlocks a lot of values. In parallel with that, we're also focused in with activity. Now, these things are naturally linked. Productivity work is happening now anyway, and that's focused across a number of different streams. All of that together, brings us to, I guess, our goal, which is achieving the full potential of Greenbushes. And, you know, Rob Telford, who's the CEO there at Talison, is doing a great job. He's got a lot to work through, and as the team he's put together are working through it.
They are finding a whole range of issues, challenges, and changes they need to make, and that's part of the shift. But, I mean, we've seen Nova, in a short space of time, make this shift and this, you know, steady focus on production, stability, and safety. I don't share the safety results at Talison, but there is some challenges there as well. I think these things are linked, and Rob's got a really good set of programs and changes in place, step by step, to support the team to shift that culture and focus on safety, on production, reliability, on stability, and ultimately, productivity. It will drive our, you know, more tons and obviously, less costs as well. The example I want to refer to for the overall asset review really looks at the pit wall size.
So steepening pit walls is something that naturally has risk or threat and opportunity, both ways. On the upside, it means a lot lower strip ratio, and in this case, you can see, and I'll talk to the line in a minute, but it starts to expose more metal or more material, valuable material that otherwise might not have been accessible. On the downside, if you get it wrong, you have a geotech issue or a failure in the wall that can sterilize more. So it needs a lot of careful work and thought. The team have brought in experts to help them with that. They are maturing their geotechnical management processes and activities. They're doing all the right work to make sure that we control those risks, but ultimately unlock a lot of value.
If you look through this chart, you'll see some little dotted lines that run out into the gray patch on the right-hand side. So that sort of pit shell, 2023 resource shell and 2021 resource shell, shows what the overall resource would be. You can imagine, if you actually did all of that strip, it's a huge huge amount of work and cost. The other point to note, though, is on top of that gray shaded area there on the left side of that slide, sits our plants. So it would require us moving a lot of the infrastructure and assets, which is extremely costly and painful. It's not to say you can't do it. I mean, that's the kind of work that other mines in the world have had to go through, but it's not very desirable.
So the other way to tackle this is if you, if you take those little dotted lines that run into the gray, and if you draw them straight up to the edge of the gray and you steepen that wall significantly, you can start to access that, that high-grade floor. You can lower your strip ratio significantly, so you expose more metal, lower strip, much lower costs, and ultimately, drive an enormous amount of extra value out of the mine. That's the kind of example of work that's happening at the moment, and I wanted to do this to try and just illustrate it. So when you start to see more of the results and the information coming through, as we get through the decision, finalize our plans, and we can present that back to the market, you'll understand where that's come from.
It just helps to give you a sense of the work that's happening. Equally, the care that we're taking to make sure that this is done properly. As many of you know, this mine is 135 years old. Even the pit we're working in is quite, quite mature and any changes to that, we need to make sure it's done with due care and attention. The last slide then on Greenbushes just speaks to the productivity throughout Australia that I mentioned earlier. We put in the sort of major areas of focus, mining being naturally a big one early, and I've put a couple of little charts in there to just illustrate the lift in productivity from the mining fleet. And, you know, that takes us to what we believe is industry average.
So we're not outperforming yet, but I want to give credit to the team, to Rob Adam and his mining team. They've made a lot of focus on this. They have hit a lot of issues and barriers. They're working through different challenges, but I think they're really starting to see some results come through now, and that will play out in our costs, obviously, our waste movement. The second area I want to talk about is in this production and plant performance, and that's a mix of utilization through better asset management and reliability, so we get that throughput, but also recovery. So more stability will drive recoveries and then work on to optimize recoveries. As part of that, we're also looking at value in use, which means what are the...
What is the grade that we're selling to our customers? Is that optimal for them? What level of impurities? How much are we throttling the assets, the processing plants to achieve that? And what's the cost or value trade-offs? So we're asking those kind of questions as part of this to make sure that we really optimize this, recognizing the customer's interests and their costs, but equally, what's the best we can do with the plant? The business has run on producing SC6 and a fixed, you know, grade on impurities for a very long time, and we haven't really asked the question, and so we are, or at least testing it, and we'll see what makes sense.
No decisions yet, but again, shows you the kind of work that's happening and the impact on productivity from these different streams is quite significant. So with that, that's a quick roundup on the operations, a bit more on Greenbushes. We'll turn it over to Kathleen and sort of touch on the highlights on the financials, and then we can get into some Q&A.
Thanks, Ivan. Welcome. Hi, everybody. Sales were net $32 million, and as Ivan indicated, it was largely due to the shipment timing from Nova. Nova's EBITDA was up AUD 42 million, which included some value adjustments with the increase in nickel price in the month of September. The share of net profit from TLA rounded to zero. Positive profit at Greenbushes being offset by losses at Kwinana, and this includes our share of capital expenditures, so we compare that at zero. I also wanted to call out again that we're running one month lag with pricing or so to me, so next quarter, we'll see the benefit of the higher pricing. Underlying EBITDA improved to AUD 30 million and was supported by Nova's result and some mark-to-market movements on the investments that we have.
We remain laser-focused on cost control, but you'll note that, or I'd like to note that the cost this year had a one-off payment for, you know, our insurance in there as well, so that's inflated quarter. Free cash flow was positive at AUD 13 million, and our balance sheet continues to strengthen with the net cash increasing to AUD 299 million. So that's a great place to be. I think that summarizes that. And thank you very much, Ivan.
Thanks, Kathleen. Well, look, we'll turn it over to Q&A. I'm trying a different mic. Hopefully, the sound quality is better for you. But yeah, we can open up and start taking some questions.
Thank you. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Rahul Anand from Morgan Stanley. Please go ahead.
Oh, hi, good morning. Thanks for the call. Just the first one for me is related to CGP3. Obviously, you've started commissioning and ramp up there. What is the rough timeline of you achieving that nameplate, please, just so that we can test our numbers going forward on that one? I'll come back with a second. Thanks.
Yeah, it's about, in simple terms, 5 months, so the end of the calendar year.
Got it. Okay, perfect. And then just on the pricing, we basically had you achieve the price during this quarter for, I guess, the months of September, October, and November. And even if I apply about a 5% discount, I'm still getting to a higher price. Now, obviously, I acknowledge that the shipment timings might have been a key impact here, but is that the right way to think about pricing? You know, September, October, November, and then based on when the ships basically are loaded and leave the port. Basically, you're selling, the timing is FOB basis. Is that right?
Yeah, it is. We can double-check it and clarify. Yep, that's your misunderstanding is absolutely correct.
Yeah. Yeah, just 'cause, looking at our numbers for the price and also for consensus, the pricing was a tad bit weaker. So just wanted to understand if we're kind of modeling that correctly.
Yeah, we'll double-check. I mean, we obviously do reconcile that, but we'll just make sure if there's something that's in, you know, in there, whether or it's tied to the shipment, possibly. I'm not sure, but we'll get back to you to make sure we've got the right inputs for your model.
Excellent. And if I can just slip in one more just around, so if Greenbushes going forward, obviously a strong lithium price environment, and you've got a downstream partner there at the mine as well. You've talked about the age of the mine, and then also you're ramping up CGP3. And if I look at your sensitivity chart in terms of the sales volumes, you've obviously got about 2 million tons, which is what your current plans are. Have any conversations started as yet in terms of any future expansions at the mine and how they might look like in terms of underground, above ground? What type of hurdles you guys need to cross in terms of thinking about further expansions? Anything related to growth, I guess, in the Greenbushes space.
Yeah, look, there's a lot going on there, but that's included in that broader life of mine optimization. The existing assets, so CGP 1 and 2, we believe, can offer up a lot more productivity and throughput and production. So optimizing them naturally is bringing CGP 3 up to its full potential as well. So that's using the existing suite of capital that we've deployed, the tailings retreatment facility. We're working through that study presently, so we know what to do there as well. So there is a lot happening in that space to recognize and drive growth from the existing capital base and make sure we've got the best from it. CGP 4 is in the mix.
You know, it's one of those things that sits in the, in the schedule, and we've got to find where the optimum place for that is. We don't have that answer yet. It's, you know, there's a lot of moving parts in the, in the review that we're doing. It's very significant, but, you know, as I get more detail, you know, step by step, we'll, we'll feed it out. I guess I'm just as eager as you are, of course, to have that finished because it gives us a really clear new baseline to work against. And Rob and the team are working really hard. I think we'll see some, some of that come through in the reserve resource update we do later in February. And, you know, you've mentioned underground, so we're certainly looking at, at where that fits.
As we think about the overall resource, I've talked about pit wall steepening as one lever that, you know, obviously drives a lot of value, but equally understanding which part of the resource we want to target through the open pit versus underground, and then what the schedule and sequence of that is, is, again, work that's underway currently.
Got it. That's very comprehensive. Thank you for that. Appreciate it.
Thank you. Your next question comes from Levi Spry, from UBS. Please go ahead.
Yeah, good day. Thanks, Ivan and the team. Thanks for your time. So, do we have an updated expected date for the life of mine optimization?
No. No, sorry, Levi. I would love that, too. I'm pressing regularly. Rob, Rob's probably getting annoyed with me. But look, they're working hard. They're making progress. I think there are some areas where they dig in, they find things that they just have to do more work on. Technically to make sure that we're going to make the right decisions. So I will share a clear plan or at least a target once we have one, but I just don't have that to offer up at this point.
Yeah. Okay, thanks. In the absence of that, can you maybe, you know, you need a big second half as CGP3 ramps up. Can you just remind us of its operating parameters, maybe tons, grade, recovery, so full speed by the end of the year? What does that actually mean?
Yeah, I mean, you're talking about the whole grade curve and so on. I mean, giving you the normal tons, 500,000 tons, it will run at. It's, I guess, design feed grade is the same as CGP2, which is about 1.8%. And, you know, it will run to, I guess, test recoveries. We are targeting higher than that. So, you've seen the results, CGP2 starting to rise, the team do more work on it. I guess, you know, our goal naturally from the ramp-up is that we don't have to go through that process, that we actually are hitting our grade curve from the outset and then beating it. But, you know, I'm not gonna promise that at this point. It's where the team's focused.
I don't know, is that what you're looking for? I mean, all those numbers we've shared previously, I'm just not sure there's nothing new at this stage that's going to change things until we get further into the ramp-up.
Yep. Okay. Thank you. So, just pushing a bit further on that. So just confirming on page seven of the preso, the 2 million ton rate. So do we take that as being the calendar year 2027 run rate?
No. That was an indication of, of margin at that volume. It's a, you know, it's a, a capacity. It's not a mine plan that we've issued as guidance yet.
Yep. Okay. And so the next round of meetings with CEO and the Tianqi for guidance. So when is the 2026 budgets expected to be set?
We've been through that now. They're getting signed off as we speak. So that's the 2026 calendar year for Talison.
Yep.
And, um-
Yep.
Naturally, we will then take that and build our guidance for the 27 financial year, obviously a bit closer to the time.
Okay. Thank you. Thanks.
Thank you. Your next question comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.
Morning, Ivan, Kathleen . Thanks for the update this morning. Just first one on your comments around Greenbushes' guidance, production sort of tracking slightly below, CapEx also below. I'm gonna try and triangulate those two comments. Is that just, you know, on, in terms of stripping at the mine, is that running a little bit behind and, and that's why, you know, your strip ratio has sort of fallen in the last quarter and, and why both production and, and CapEx might be lower for the year?
No, they're not all linked, so stripping will come down, and I've talked about this example on pit walls. I mean, we'll see a material reduction, we expect, in our strip ratios through that, and that will trend down. You'll, you know, quarterly variations is more about weather impact through Q1, you obviously have less pit access and availability. They're now fully open, so that, you know, that'll look different. But the team are looking at where they tip waste, how they manage waste, the, you know, the grade and seeping of those waste stockpiles. There is a lot of changes that they're working through presently. So I, you know, don't want to try and characterize these things as just one cause for change.
In terms of the production, look, it's partly grade-related, which was a bit better than we saw in Q1, of course, a little bit worse than we had in our plan, and that's just a normal reconciliation we're working through, the team are getting there. And the other bigger factor is, of course, just the way that CGP3 ramps are. That's really the key unknown. And, you know, what we anticipated in our guidance in terms of that start, we're behind. Is it not recoverable? No, not at this point, but that's what we're gonna see in the coming weeks or months, how that goes. That'll give us a gauge as to how the rest of this year looks and then obviously into the rest of the calendar year.
There's a few different moving parts. I certainly wouldn't tie them all together in terms of the production outcome for Q2.
Got it. In terms of the CapEx timing piece, so then I'm presuming those are all works that will still need to happen. So maybe that's more of a shuffling some of the CapEx into FY 2027 rather than things no longer out-
Yeah.
Is that fair?
I mean, as I've talked about in prior quarters, I mean, Rob has got a very tight handle on CapEx. He's being very prudent, and he is pushing back on it, which is good, but we're not in a place where we've credited a downshift guidance on it yet. We'll see how, again, how that pans out now as they run up CGP 3. Obviously, some of those costs are capitalized until we get to commercial production. So there's a bit more to come, but I don't think you should read into that that there's, you know, a major shift that's impacting production.
Got it. And then just sort of second one, I think, detailing off Rahul's question earlier around the, the realized pricing piece. Can you just remind us what sort of volumes are going out on the technical grade piece at the moment, and if that's also a, a bit of a delta there in, in terms of that realized pricing?
... It was very small. It wouldn't be material enough to affect the realized pricing. And we're talking 50-80,000 tons in a year, so it's very small prior.
Yeah. Got it. Great. And then just last one, if I can, sort of back on the IGO level, and you, you've highlighted obviously the, the step change in potential cash generation for Greenbushes at, at current spodumene pricing, and we're two months through, your current quarter, basically pricing setting. Does that then enable you to start thinking about dividends back out to IGO shareholders, given you have that line of sight to, to cash flow when you're sort of at or above your threshold for excess returns already? Or is that maybe a little bit too early for February still?
Yeah. Yeah, definitely too early. I mean, I think we've got a very clear capital framework at Winfield, which we use to manage, dividends and obviously the debt there. Obviously, there were some movements in the debt. We'll work through that. We'll pay, you know, dividends out at Winfield to the shareholders, TLEA, in due course, and that'll be done, but again, based on that framework, you know, very well managed and controlled. And then the key discussion will be the TLEA as to what we wanna maintain there in liquidity and what the shareholders might then pay out. So certainly no discussions or decisions on that at this point. The first step is to see that cash really starting to flow out of Winfield.
Got it. Thanks, Ivan. I'll pass on.
Thanks.
Thank you. Your next question comes from Kaan Peker from RBC. Please go ahead.
Hi, Ivan and Cath. Just on that framework that you talked about with Winfield, AUD 150 million of debt paid this quarter, but no cash contribution to IGO. What's the priority now, further degearing or versus distribution? And as CGP3 ramps up, is there a set level or cash buffer that's required before distributions resume? We'll circle back for the second.
Yeah, let me pick up the last part first. So we've got... I mean, there is a cash buffer we will hold, that's not tied to CGP3 or any specific part of the asset. It's just a part of our overall capital framework, and that's being managed. Naturally, we'll look at then dividends versus the debt and, you know, the balance on that, and we'll take into account things like the US dollar and, you know, forward views on cash generation and so on. So all those decisions go through a pretty structured process with the board and the shareholders, and, you know, out of that, we'll let you know how that translates. Obviously, you know, the way this market behaves is gonna be relevant.
Obviously, it's very buoyant right now, and certainly all the signals are for a very strong year of demand, but equally, we expect to see more supply come online, and once I see you can show you that other production as well. So, you know, I think before we get ahead of ourselves too far, we just wanna sort of see how that washes through and take a view then on how best to allocate that cash to drive maximum value for the business.
Just to confirm, it's de-gearing currently the focus?
No. Sorry, it's, yeah, no, it's not the focus. That was, you know, this is part of, obviously, a post managing in a, in a day-to-day sense. We will naturally wanna pay dividends and think about our debt, so it's, they're both, they're both important priorities.
Sure. Okay, maybe secondly, on Kwinana, conversion costs spiked materially this quarter. How much of that reverses with utilization, versus how much reflects embedded cost issues?
No, it's been largely impacted by the maintenance, because remember, we don't capitalize anything. Everything is expensed. And obviously the production volume is impacted through that period, so you've got a compounding set of impacting elements there. You know, I think the team are working to drive our costs, and as we're looking at, and we're working through 2026 budget for Kwinana, there is a lot of pressure on that, as you'd appreciate, and CapEx as well. So the team, you know, naturally are trying to find ways to drive better reliability and better performance, but do that with less cost as well. And I would not take Q2 as the marker that says it's trending up or that's the run rate going forward.
Cool. Thank you.
Thank you. Your next question comes from Mathew Frydman from MST Financial. Please go ahead.
Sure. Thanks. Morning, Ivan and Cath. Can I ask another one on the ramp-up of CGP3, which I guess you called out as the biggest factor in the software guidance commentary you've given? Can you give us any more information on the specific issues that have been faced and dealt with so far that you mentioned earlier on the call? You know, was there anything specific related to equipment or feed or people or anything? And then in your view, are there any sort of key risks or checkpoints now looking forward, or is it just a sort of steady improvement over the course of the year? Thanks.
Yeah, I would, you know, share what I can. It's a good question. It's equipment-related, so one of the mills needed some realignment. It's not an unusual problem. It's frustrating because you kinda go, "Well, how did that not get dealt with earlier?" But it happens. I've been through a few of those. We've just needed some resealing. Again, you know, not fantastic because it's painful to do it. It's not a big issue. It's just logistically, to get back in and fix some of these things, just takes a bit of time. The good news was the team used some of that downtime while they were working through some of these issues to then just go back over motors, pumps, et cetera, and pump test and check and just really get confidence.
You know, I think they changed out a few loose pieces so that we can get a, you know, hopefully a cleaner next phase of the commissioning and ramp up. But for anyone who's been through these things before, there's plenty of unknowns, so you have to be very careful not to get too excited one way or the other. It's still pretty early in the process to sort of see how it behaves. I think the good news is you talk about the other things that could be a factor. So feed is fine. That's all good. People and capability. We've got a great team there. Rob lined up well. Paul, who's the project director, you know, got an integrated team for commissioning. Strong team in place, so we feel comfortable with that.
We've got great support from the vendors. Got access to all the support equipment that we need. So there's no big risks there that we're deeply worried about. But, you know, I just think it's way too early to call or to get a better, a real sense. I think by the time we can get to our half, I'll get a better read on how things are going. At this point, though, I'm just pleased with, you know, we've got first time. They're starting to basically run the plant and actually start to see what the recoveries are, how it's behaving, and, you know, obviously look at tuning in the reagents and all of the normal steps you take in that first month or so from start.
Okay, thanks for that, Ivan. That's, that's helpful. Then secondly, you've, as you called out, put some additional, sort of numbers in the presentation there around some of the recent, productivity improvements at Greenbushes, you know, improved truck utilization, improved material movement, and you suggested that that, that will flow through into the cost line over time. Obviously, there's a lot of moving parts that go into the final cash cost number, but, I guess I'm wondering, in isolation, are you able to maybe put some dollars around some of those mining productivity improvements? I mean, what's, what's the goal for where you think you can get the, the cost of material, movement with, with some of this productivity improvement? Is it, you know, is it AUD 10 a ton?
Is it $7 a ton or whatever the number is from a ballpark perspective, what's the team working towards? I suspect you'll tell me that some of that will come out in the life of mine optimization piece. But yeah, just wondering if there's any sort of high-level thoughts around that at the moment. Thanks.
Yeah, it will. I mean, I don't want to give you a number yet. I mean, it's, that is the conversation, of course, when we go through budgets and we're pressing the team, they're a bit, you know, gun shy to offer it up in the first year because it's still a, you know, work in progress. But, you know, we've started to see a profile through 2026, 2027, which really does show some substantive improvements in unit costs on those underlying activities, and I think that will naturally flow through. We, you know, we're also, as every mine does, fighting grade decline. So some of it is eroded indirectly through that or set. But, you know, the goal is net net.
We're actually beating that and both through increased throughput or production and also then in these just, just more efficient work through less stripping and so on, that we're actually continuing to strengthen our position as the lowest cost lithium rock producer in the world by a long shot and just keep on consolidating. So Rob's, I think I've mentioned it before, you know, he's sort of put that broader goal out there to be the lowest cost lithium units in the world. And he's, you know, there's still a gap to the very best brines out there, but it's, it's, it's in shooting range, so I think it's a good target, a good challenge for the team to think and say, "What does it take? You know, how, how could you run this mine differently?
What needs to be true for us to start to get that level of cost performance?" That's not going to come in a quarter or two, of course. I guess what I'm trying to do is the extent I can share information as we do, just feed it out step by step to give you a greater insight and picture on improvements, and then also give you some of those underlying productivity and performance numbers so that you can update your view of the asset.
Okay. Thanks, Ivan. We'll continue waiting for the study outcomes with bated breath. Thanks a lot.
Thanks, pal.
Thank you. Your next question comes from Austin Yun, from Macquarie. Please go ahead.
Morning, Ivan team. Just, so one quick question. Yeah, most of the questions have been asked already. So just one on the base metal strategies. I think previously you were talking about, you know, outside of lithium, you were looking at just, you know, other early-stage opportunities. Just conscious that, you know, given this, this sense like a windfall of cash coming from the strong lithium markets, how does that change your thinking of, you know, the exploration of the other opportunities? Could we see some capital being allocated to that part in addition to shareholder returns and debt repayments? Thank you.
Look, Austin, it's a great question. No, it really doesn't change. I mean, the criteria that we've applied since I started two years ago, with a lot of discipline and, you know, has been a big part of this. There's real clarity around kind of returns that we're looking for from any growth needs to be in that ballpark around Greenbushes. We don't want to heavily dilute our business and, you know, trying to hit Greenbushes, you can imagine that's a very high bar. And so if we can allocate capital first there, then naturally that's gonna be the most accretive and most sensible thing to do, which we're focused on. Dealing with things that are a drag on our returns, i.e. Kwinana, which we're working through, we've been clear about that. And then to add something to it-...
I mean, it's difficult, hence why we've been, you know, continuing to be very disciplined. If we saw something that we felt would deliver appropriate returns, sure. The lithium price, to be honest, or having and the translation of that into cash doesn't really change that decision. Because we have a nice form of cash available to us, we're not gonna be, you know, more eager to make a decision there. It will be on the same criteria regardless. Arguably, the best time to be doing things, if you saw it, was five months ago or eight months ago. So, it comes back to, you know, our eyes to value, and we've got a very high bar, and that's, you know, good and bad.
It's an absolute privilege to be part of the custodian of Greenbushes, and it just means that our growth has to be very, very focused. That's probably all I can say at this point, Austin, but it's, yeah, more of the same.
Thank you.
Thank you. Once again, if you wish to ask a question, please press star one. Your next question comes from Daniel Morgan, from Barrenjoey. Please go ahead.
Hi, Ivan and team. Just a simple one, really. Grades at Greenbushes, I think if I'm hearing correctly, they're back above 2%. And so therefore, the implication is, like, just putting CGP3 to the side, not, you know, stripping that out from, from this question. We should expect a material lift in production for the next couple of quarters from the existing business, not CG, CGP3, correct?
Yeah. Well, you'll get a lift, yes.
Yeah.
I think it's, I mean, a number of those grades, clearly, equally interruption. We had a pretty good quarter, weather-wise. Some rain late, later than expected through Q2, but very, you know, Q1 is always gonna be a challenge. So there's naturally some of those impacts, grades impact. And then the productivity is the other piece, which I know Adam and his team are working very hard on. I'm pushing and expecting to see, you know, them to deliver results through all of that hard work as well.
Okay. Thank you for your perspectives.
Thanks, Dan.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Vella for closing remarks.
All right. Thank you. Look, we've finished well, which is nice. Gives you guys hopefully a break before the next one. I won't say too much. I mean, just to recap, I think Nova was really pleased. As I said, safety, production, cost, just hitting, hitting the mark. This is an operation that we focus on. Yes, it's relatively small and simple, but you know, it's a signpost of how we wanna bring our capability to operating a mine. And I think all credit to the team. They've done a great job there and set this year up very well. So that's great. Unfortunately, it's only a year to go, not another ten. It is what it is, though. They'll manage that through. Greenbushes, a better quarter. The big focus is CGP3.
Naturally, we're very pleased to be ramping that up into a lifting and buoyant market. It's fantastic, and there's a huge amount of focus to make sure that's smooth. And ideally, we meet all of our plans. That's always gonna be the target, but at this stage, it's early. We just need to back the team and support them as they get through that work. All that said, I mean, this is the time when Greenbushes really shines. This is the period of lifting price, a buoyant market, when you see the very best hard rock lithium asset in the world, turn it on, more production and a whole lot more margin. So we're really pleased to be part of that and continue to work with the team to improve the performance.
Thanks for everyone's attention and support, and we look forward to talking to you soon at the half-year results.
That does conclude our conference for today. Thank you for participating. You may now disconnect.