I'll now hand the conference over to Mr. Ivan Vella, Managing Director and CEO. Please go ahead.
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 Kath Bozanic, our CFO, as per usual, and I was joking with her earlier, saying, "Well, this is, this is your conference to talk to," but look, we'll probably keep the focus on financials pretty, pretty short and sweet. It's reasonably straightforward, and then cover any other questions or things on your mind. Before we dive in too far, I did wanna just note that Kath, as you know, she wraps up end of next week after over five years with IGO and has, in that time, made a huge contribution, both as a director and as our CFO.
She leaves big boots and is in the process of handover, preparing her team, getting everything ready. Johan starts with us on the first of April, and obviously he's gonna have a lot to pick up and get into as he gets settled. But just to call out to Kath and to thank her for her significant contribution in that time. In terms of slides, that we've got a couple on the financials and a 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, you know, 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, you know, we're really starting to see that downshift in both leading, well, upshifting leading results, the work that they're doing every day, and a downshift in the impacts, 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 and something we'll keep talking about and 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'd done, actually started before my time. Great to see, and there's a really strong partnership there, and that goes certainly through our operational footprint with Nova and the sites in care and 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 us support our work. 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 mid-year, so that that's in hand, and we know where we stand as we bring the line 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 gonna turn it over to Kath to talk through the headlines from our first half 2026 financials, and I'll add a couple of comments, and then we'll get into an operational update as well. Thanks, Kath.
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 from 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 Nova EBITDA, up 15% to AUD 67 million and lower spend in exploration, down from AUD 30 million to AUD 15 million. This is demonstrating our focus on costs and safe production, as I noted earlier. IGO's share of underlying net loss from TLEA improved to AUD 1 million, compared to AUD 20 million in FY 2025.
This includes Greenbushes' EBITDA of AUD 464 million on a 100% basis and Kwinana loss of AUD 71 million, also on a 100% basis. It's important to note, and we say it in all our calls now, that the Kwinana result includes 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. It includes the proceeds from the sale of the Stockman, Stockman royalty. In the prior corresponding period, statutory losses were AUD 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 2025. Underlying free cash flow was AUD 29 million, with a strong contribution from Nova, while some care and maintenance spend is ongoing at Forrestania at Cosmos. The Forrestania spend will cease 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. I'll hand back to you now, Ivan.
Brilliant. Thanks, Cath. Look, maybe just a couple of points to reinforce. I guess talking to the cash chart there, number four, you know, you can see that we've continued to focus on cost discipline and managing that across the business. We are gonna see obviously another step down again as Forrestania unwinds, and we're expecting that transaction to close with Medallion at the end of this month. Cosmos, as we announced a little while back, having stopped dewatering, that was a big part of the cost, the energy costs, the pumps, and so on. You know, a 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'll 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. He's doing a great job looking at generative and allocating our expenditure very carefully. And the drilling, and I guess, the more substantial elements of expenditure and cash you see in that half, have really related to lithium targets that we pursued in pretty prospective ground.
Nothing that, you know, has got us jumping up and down yet, but that's, 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, that will adjust accordingly and, 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 five in the operations summary, and let me start bottom up, 'cause I really want to call out the performance at Nova.
I think, you know, 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, 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, you know, from time to time, but the team are 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 is, you know, full expectation the team will continue that good work right through to the end of this year. It's also fabulous, you know, despite obviously the 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 to fund other activities across our portfolio. On Kwinana, I'm not gonna dive into too much detail. You know, certainly half-on-half comparison is better, and you expect that to come through, given some ramp-up and, you know, amortization of fixed costs and so on. But it's still, you know, ultimately underperforming.
It's, it's missed its, its plans, and expectations and promises on all fronts, and ultimately, you know, no change in our outlook. And with Kemerton's news, we saw just, last week, you know, a very difficult situation. Albemarle's 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, on, in Greenbushes, I'll talk forward-looking in a minute, but, you know, backward-looking, it's not a stellar half.
And I, you know, 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're probably, you know, aren't feeling the green shoots and the momentum that we'd all hope for at this point yet, but that will come and, you know, 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 at it, keep doing the right work, and we'll see that significant lift in performance. But going through the specifics, you know, still a very good EBITDA margin from a world-class asset. Sales volume's really just about timing, nothing more than that. And, you know, 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, you know, 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 being built and delivered. It's in ramp up now, and I think I've flagged in the quarter that, you know, it—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 tons, 7 kiloton, 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 kiloton, 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, you know, I was reluctant to share too much in the first update in the quarter because we just didn't have enough runway to see what was going on and see how the asset was gonna 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, we've seen a 24-hour period of 1,000 tons of production, 60% average recoveries, which at this stage, you know, ramp up. Anyone who knows lithium 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's getting all the right indicators and signals. That's not to say the job's done, but I think, you know, when we're sitting here, you know, just after the half in February, that's certainly encouraging and gives the team 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, you know, more called for in between, we'll certainly do that but the early indications are quite positive. The optimization update on slide seven, 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 S-K 1300 report. As you know, they do that on that 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's not complete, so you know, 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 S-A study and all of the backing and the data to support it. 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'll certainly report and share that. We're proud to be able to share the changes. I'm very excited to see, you know, what's coming through. But what we have seen, obviously, is a snapshot part way 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, you know, 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, 'cause 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, you know, 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's got a lot more in front of them, and as that work 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 gonna 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, you know, 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 a growth. You know, 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 appropriate returns. That's hard, but that's the challenge we keep pushing for ourselves and we continue to look through that lens. Naturally, that takes us to Greenbushes being you know, 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'll have its place in time. We'll figure out exactly where and how that looks. And that's the kind of, you know, very good capital that we can allocate in due course. Lastly, just an outlook on, you know, 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's 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, nothing new there. We continue the discussions with Tianqi to find that pathway where we're, you know, 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 two 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. You know, real shift in approach here on fail fast, very targeted and really leveraging the capability to drive to new return results rather than that very broad greenfield exploration that IGO had been pursuing for a long time.
I've talked to strategy and growth, which, you know, will continue to be highly disciplined, as we've shown over the last two years, in the way that we approach those things. So that's all I really wanted to cover at this point. I think that sort of sets out the key points for the business. Let's open up the Q&A, and then we'll go from there.
Thank you. If you would like to ask a question, please press the star key followed by the number one on your telephone keypad. If you would like to cancel, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. A reminder today to please limit your questions to two per person. If you have more questions, feel free to rejoin the queue. Your first question today comes from Levi Spry from UBS. Please go ahead.
Good day, Ivan. Thanks for your time. Maybe if we can just spend a little more time on the reserves and resources update. I guess, can you maybe just step us through, you know, 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, you know, in relation to the prospects 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?
Okay. Thanks, Levi. Yeah, great way to place the focus. You know, 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, you know, below full potential, below their capacity, and you've got a market that will take it. And we know the market's in a good place, and that's great news.
You know, our customers have had strong pull for any tons we can produce, and in fact, would love to have seen more already this year. So there's no issue there. And so it's, you know, you look back into the business and say: What can we do with CGP 1 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, you know, very basics, runtime, so getting the asset to perform better, getting it healthier, getting more consistent performance from it.
Secondly, is throughput and making sure that the tons 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 three 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 you know, it's a function of head grade for sure, but it's also a function of all of the good technical work the team's doing on improving recoveries through a whole range of strategies. They've got some very deep capability. They perform very well.
A lot of it, they protect very closely for, for good reasons, because I think the, the IP and experience built up there really is a standout and, you know, there's, there's a lot of work happening there to, to continue to lift recovery. So bringing those three levers, focusing on those existing plants and uplifting their, 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 growth project. Now, that doesn't mean to say that the tons that you receive there are just incremental, tiny, 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's an example where as we work through the available tailings, which we think will extend out beyond what we'd said, and I think we've pointed to some of that in the report. But 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, if you've dealt with all of those elements, you come to CGP 4, which would be the next logical plant to build. You know, 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 CGP 4, but the team needs to finish that study work and really understand how that's gonna 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's finished, to give you a sense of what does that do for, for tons and for cost and so on across the asset. There's also a piece of work though, going on, just general productivity. So running that mine in a, 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, in our normal mining process.
Beyond that, there's of course a focus on productivity across the business, which is just, you know, managing our cost 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... You know, look, I don't have a crystal ball to start looking at what the market's gonna do, but I don't think, you know, it's not gonna 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 Windfield, meaning no dividends out of Windfield, due to the growth plans that we have there. I just don't think that that makes sense, and so that's certainly not something that I'd be looking at. You know, 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 you know, there's certainly no intent sitting here that we we would retain that cash inside Windfield. That just doesn't doesn't fit with the way that we look at the business. Hopefully, that's covered it, Levi. I've talked a bit around a few aspects there. Does that that sort of hit your question?
Sort of. I guess, what about, what about inventories? Like specific, you mentioned specifics. Can you talk about inventories? So what are they at site? What's the plans to flush the sheds out, empty through this current year? What are they now?
What are you talking about, spodumene inventory?
Yeah, so talking about how the tier one asset behaves through the cycle. Hasn't necessarily, you know, been running at, you know, like a tier one asset might necessarily behave, and, you know, holding back material. So where is it now?
Look, 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, your comment's fair, that it has not run as a tier one asset or, you know, it hasn't run as well as it should. Agreed, and we're working hard on that. And I expect, you know, quarter-over-quarter, we're gonna demonstrate that. But, you know, when we're, when we're having inventory build up and down or shipments that... or, you know, sales and shipments that vary quarter to quarter, that's purely about shipment timing and 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, you know, when ships move and when they don't move. So look, you know, they'll continue to refine that. Naturally, we try and move every time 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, or, you know, 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's running and the trucks and so on.
Thank you. Your next question comes from Austin Yun, from Macquarie. Please go ahead.
Morning, Ivan. First one is on the discussion on Kwinana, like as you mentioned during the opening remark, Kemerton has put on a kind of maintenance and your peer, Pilbara's also made a comment saying that Australia doesn't have an ecosystem to support the downstream. Seems like, you know, these issues are well known. I know you've been flagging it 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 are being contemplated or discussed with your joint partner on this, the future of Kwinana. Thank you.
Yeah. Austin, look, I can't really speak to that. I mean, it's ongoing discussions, something that's still private between us. I mean, we've not been fixed on anything. As I think I've said to our investors on several occasions, you know, 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, you know, 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 know, you can imagine there's different ways of achieving that. TNCI has maintained a different view.
You know, I think we can, you know, we'll take that in and ask lots of questions, and I recommend that or suggest that you, you know, 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, you know, 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 gonna see some excess rents unless there was some massive shortage of capacity, which I guess no one, no one sees coming. So, you know, I struggle to see how you would ever justify the materially higher costs in Australia for the same work against China and, you know, make that work in a global marketplace. That's not dissimilar with other commodities, and, you know, 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, yeah, that's, I guess, just, you know, covering the points again, Austin, but, unfortunately, I can't get into the specifics of the options or the pathways we're discussing with TNCI in any more depth.
No, no worries. Thank you. The second question is just on the reserve and resource update. In that document there's a production or constant production profile of the last mile and I think in calendar year view. If I look at that number, it indicates that the current financial year production is could be tracking below the previous guidance. Just want to get some update on that, given the recent performance at the CGP3. What's your latest view on the mining and the production performance from Greenbushes? Thank you.
Yeah. Thanks, Austin. Look, the year is certainly running at the low end of guidance. You know, we, no question, I call that out in the quarterly. It's good to see CGP3 starting to find its feet very early, so it's hard to rule 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, you know, cause for concern. At this point, you know, we're not changing our guidance. Yeah, the team's still got plenty of work to do in front of them. But, you know, and it's, we talked about the grade factor through Q1 and, you know, partly in Q2. That naturally flows through and that's what we're seeing.
Those grades, you know, do move around based on where you are in the ore body and we can reconcile back to, you know, 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, you know, good, good effort and good progress there. I want to see that translate into hard production. And you know, I know Rob's 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 there's, you know, they're doing the work. It's partly a bit about being patient at this stage.
You know, 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, you know, 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, you know, puts us at the bottom end. But, we'll continue to work closely with the team and, you know, watch them deliver. We still are maintaining a focus that we will land around the end of, around the bottom end of guidance.
Thank you. Your next question comes from Kaan Peker from RBC Capital Markets. Please go ahead. Thank you, Kaan. Your line is now live.
Sorry, I had it on mute. Yeah, good morning, Ivan and Cass. On the recent Greenbushes resource and reserve update, it sounds like some of those initiatives are of the optimization study work are being incorporated in reserves. On the life of mine strip ratio decreasing about 30-odd%, how confident are you that these are sustainable through the deeper zones of the central lobe? Sounds like ore sorting is being considered. What work's being done? I think the resource and reserve suggests starting in 2027. Is that feasible?
Yeah. Thanks, Kaan. Look, you know, this is obviously, yeah, as I said, a first pass, and there's a lot of work going on across the mine in a lot more detail, looking at all characterization, our specs, further drilling, you know, much better reconciliation processes. There's a lot of changes that Rob's driving through the mine. So, you know, 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, we can hit the mine plan as it's shaped up. So I don't, you know, I don't think there's any reason for you to, to think, "Oh, well, that's a, you know, an ambitious target." It's, it's not.
I think it's based on good geotech assessment, a good review of the mine plan that, you know, 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, you know, value behind, and I think this is the first big example we've sort of pointed to as saying, "Hey, rethinking this, bringing in some fresh eyes can really change the game." So that's coming. I think the broader, you know, performance of the asset, you know, as they ramp up, we'll also start to see you know, a better sense of how those plants can perform.
You know, coming to the ore sorting, we know that that works technically, so it's a much simpler process than, say, sorting a you know, 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. You know, one of the competitors has been focused on this for a while now and seeing some results.
We're in study mode, so we'll, you know, we're, we're working through that and looking at how and, you know, what approach we would take to try and implement it, where it fits in the 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, you know, 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, you know, 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.
Cool. Thank you. Then the second one's more around the TLEA net debt. It looks like net debt's increased by about AUD 120 million, half and half, despite gross debt falling. Can you maybe please help us understand the cash outflows, you know, working cap, CapEx, pricing lag, so that the key buckets where we should be thinking about?
Sure. I might throw to you, Cass. Do you wanna just walk through some of the key movements in Windfield, please?
Yeah, 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 'cause we've got a one-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, 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 six months.
Thank you. Your next question comes from Daniel Morgan, from Barrenjoey. Please go ahead.
Hi, Ivan, and team. Just could you help me think about the cash flow implications from. Obviously, Nova is gonna 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 got three corporate entities, obviously, the Greenbushes or Windfield 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, you know, cash that isn't necessarily assured to come through you, through the corporate structures, you know, how do you manage that going forward?
Do you expect to have a net cash position as a, you know, a management tool to insulate that risk of dividends? Thank you.
Thanks, Daniel. Yeah, look, all work in progress. I mean, 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 it, you know, 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 gonna maintain a focus on exploration, as we've talked about, and that'll still be disciplined and targeted, but, you know, I think that's a key part of our growth strategy and the value that we, we believe we can bring. We'll maintain that, you know, core capability in our business.
We'll likely 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, you know, through the cycle, we see some variability in the cash that that JV pushes out. And, you know, we're probably, we're coming into this next phase now, where there's a bit of an uptick. Your, the last part of your question, you know, do we think that you 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, you know, how to make sure that we're allocating very carefully. But, yeah, the business will behave and look differently, obviously, when we don't have that internal cash generation from one of our operations.
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 they're partially allocated to fund some Kwinana cash outgoings? Thank you.
Yeah, 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 Windfield 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 gonna pursue train 2, and so the net cash demand of Kwinana is the first call on cash that's available through Windfield as the, you know, the generating asset. And having some liquidity there, again, and making sure that we're covered is important.
We've got some stability and that forward look and, you know, 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 TNG where we're not continuing to put net cash in. But until that time, then, you know, that needs to be covered. After that, then the cash goes out to the shareholders. There isn't any other basis 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.
Thank you. Your next question comes from Matthew Frydman, from MST Financial. Please go ahead.
Sure. Thanks. Morning, Ivan and Cath. Can I ask a couple more on the Greenbushes reserve and resource statement? Firstly, on the underground resource. Obviously a pretty, pretty sizable underground resource there. And I'm, I'm sure the optimization study will consider exactly how that gets developed, so I don't, 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, I'm referring to, you know, 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, you know, the impact on the pit shell and those sorts of things? Thanks.
Yeah, Matt, 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, engineering of it's gonna be an issue. You know, it's 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 yeah, that's not a big concern. I think, look, with the change of the pit design that we've done so far, again, not finished, but, you know, 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, what this business looks like over time with the community. I think being particularly transparent, which I really, you know, 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 and approvals will continue, but, you know, it's not something that I see huge pressure on our business, as we look forward.
Got it. Thanks, Ivan. That's helpful. And then secondly, on the, the cutoff grade, I guess particularly the resource cutoff grade, getting dropped to 0.3%, you refer to an improved metallurgical understanding that's driven that. So, you know, I think it, I think it added 42 million tons at 0.37% lithium. Understanding that, you know, that material is not currently included in the reserves, obviously, which is still cut at, you know, 0.5% cutoff grade. Yeah, just whether you could shed a light on why the change in thinking there, you know, what, what's driven that improved metallurgical understanding? And I suppose, you know, ultimately, do you expect it would be feasible to recover and process that material over time? Thanks.
Definitely. Yeah. I mean, look, I was surprised, I guess, when that came through. Matt, it's a very good question 'cause I queried it as well, and I think the team's 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 you know, it's not a case of just putting it in because it's a theoretical goal seek. They've, they've genuinely done some work to understand what it would take to get at that metal. And you know, this is also a good challenge in general for mining.
When we open up an ore body, the impacts that we have, we should be trying to squeeze everything we can out of it. We should be pushing ourselves to make that economic, to find the ways to process and extract it, and not be, you know, effectively wasteful when you leave potentially valuable material behind.
Thank you. Your next question comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.
Oh, hi, Ivan and Cath. Thanks for the update, and good to see the Greenbushes optimization's progressing well. I gather once that work's done, you've probably got a bit of flexibility to move quickly there, given that your CGP 4 and ore sorting already have environmental approvals. But just given a number of my questions have been asked, maybe one for Cath 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 Windfield. So, Cath, 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?
Yeah, there's no updates on the ATO determination. I think that you'll see in 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 to... The ATO is now considering the responses that TLC has provided, and we're anticipating that progressing over the next two 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 gonna refer back to my notes, there was a bit of a pay down 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.
No, that's helpful, Cath. Thanks. I'll-
Yeah, I think, I think, Hugo, just to jump in, it was, you know, about AUD 150 million down on drawn debt and about AUD 200 million down on cash, you know, 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.
Just confirming, there's still no debt in that TLEA vehicle?
No. No, no, no, no. This is all Windfield debt.
Yep.
Yeah, just to be absolutely clear. Yeah.
Excellent. Thanks for the plus one.
Thank you. Your next question comes from Lyndon Fagan, from JP Morgan. Please go ahead.
Oh, hi, Ivan. Yeah, 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 tons 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 reconfig? 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-
Yeah
... considering it's written in there, it'd be good to try-
No
and explore it a bit.
... Sure, sure, Lyndon, and, and, you know, 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, that's a critical number. Is it 10, or can you do more, or is it a bit less? And that's, you know, what can that mine consistently feed at an appropriate cost, that, you know, we, we really think is, 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, you know, the capital intensity of building things in WA. So that actually does include an uplift in, 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. You know, I don't—I, I'm a big fan of not putting excess capacity in plants on site because, inevitably, you know, you, you are effectively just running a lazy asset then. We need to be pushing the assets hard, and they haven't been yet. CGP1 and CGP2 have not outperformed and gone past their 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'll 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. We'll work on the tailings retreatment, and then the last point of allocation is a new plant, CGP4, in whatever shape that takes.
Would you say that 2032 date is something that we should work with for now?
Yeah. I mean, I haven't got one better. So, you know, I think this is a business where it's as quick as possible, right? There's gonna be once you know the mine can deliver, it, it's gonna 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 full potential. You know, I think then you've just got to be realistic about what it takes to design, engineer, and deliver a plant. And I, you know, certainly my goal is to make sure the CapEx intensity is improved from where we've been in the past. CGP3, for me, is a very expensive asset.
Yes, it's still incredibly value accretive and delivers incredible returns, but what an eye-watering price ticket, given the costs associated with doing some of these things at this point in the cycle.
Thank you. Your next question comes from Ben Lyons, from Jarden Securities Limited. Please go ahead.
Thank you. Good morning, Ivan. I'll keep it quick and just one question, given the time. It's bringing it right back from 2032 to the immediate future, so the rest of calendar 2026, 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, taking 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. Thank you.
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, for tons, and, that demand is strong. It's a quarterly nominations process, so we're always one quarter ahead in what's coming. So we, you know, we have basically a view to the end of the financial year. I think we have a view beyond that, and, you know, subject-- obviously, haven't got a crystal ball, the world can't change, but, you know, there's no sense that, any ton 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.
That, you know, the team continue to work on, but completely disconnected from customer demand, which is very strong. And, you know, without getting into the specifics of Kemerton, 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, you know, I don't think that's super relevant. Looking forward, it probably just changes the logistics patterns a little bit and, you know, means we need to make sure that we're handling not just the extra tons from CGP3, but also some extra tons 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.
Thank you. There are no further questions at this time. I'll now hand the conference back to Mr. Vella for any closing remarks.
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 got a great set of results from our operation at Nova, safety, production, performance, and so on, and that's exactly, you know, 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 gonna 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 the, you know, with this results period now behind us and talking further about our results. Thanks, everyone.
That does conclude our conference for today. Thank you for participating. You may now disconnect.