I will now hand the conference over to Mr. Ivan Vella, Managing Director and CEO. Please go ahead.
Thanks, Kaylee. Good morning, everyone. Thanks for joining us. Lots to cover today, and I want to get to your questions, so I'll try and keep my remarks as brief as possible. That said, I do want to provide some color on the performance through the quarter. Let me start just quickly with a summary, and then we'll sort of dive into a bit more depth on each area. Firstly, on safety performance. Look, that's been a continual focus through my time with IGO, and I'm really pleased to see that continual improvement that you'll see reflected in our results. That is the outcome from a lot of focus on it, strong leadership, and I'm really proud of the way that the team's operating at Nova in particular, including our exploration team as well and the broader footprint.
Very strong focus on safe production and ultimately translating to great results. That's clearly linked with Nova's operational performance as well. The two definitely go hand in hand, and that's been exceptional this quarter. There's nothing else to say about it. It was just green lights everywhere we look through the results. Again, I'm really proud of what the team's achieving, and it's all the more impressive given we're at the final stages of that ore body, where there's little room for error. They are managing a very complex period as we approach the end of mining later this year. There is no optionality. There's no room for error. The ore flow through, through the mill to our customers, it's all literally synchronized.
They're doing a great job to keep that strong focus on safe operations and make sure there's a very proud finish to mining of this world-class ore body. Greenbushes is a tough quarter. We'll get into it. Equally, you see the standout, even though we have some lag in the way our pricing works, still 75% EBITDA margin is just outstanding and shows the strength of this fantastic mine, this mine. There were a number of safety and operational challenges through the quarter, which we'll talk about, and the team there at Greenbushes are working extremely hard on those. They have been, and we've talked about it quarter-on-quarter. While this is obviously not a great quarter for the team, it shouldn't take away from the hard work and the good progress they are making, driving both strategic improvement but also underlying productivity improvements.
Then lastly, just a quick comment on our financials. Very positive, and we're starting to see both the benefits of that positive shift in the lithium market flow through. That's only going to get stronger next quarter as those prices start to roll through. And also very strong production performance and cost discipline at Nova. Overall, excellent EBITDA margin at Greenbushes, as I said, 75%. Then for IGO standalone, underlying free cash flow of AUD 36 million, taking our cash balance to AUD 327 million. Let me jump into safety and talk a bit more depth about that. As you know, safety performance is fundamentally linked to operational performance, and we see this at Nova as we've worked hard to implement the programs and changes and work with the team to improve our safety performance and the way that we manage safety.
We've seen that very much connected with productivity and the operating performance across the site. We're now, as of today, 115 days without recordable injury. We've gone six months without a serious potential incident. For at least from the records I can see, this is an all-time record for the business. It's no surprise that we're also seeing record levels of productivity in the mine. Fantastic performance. The team just finished a shut on the plant. No injuries, no incidents. Just really, really strong, in control, and well-managed in their activities. Safety at Greenbushes was concerning. It deteriorated from the prior quarter, and there were a number of serious incidents that the team are working through. While we don't ordinarily report on Greenbushes' safety performance, I think it's important context in the broader operation and the challenges that Rob and the team are managing through there.
I'm so pleased we've got someone of Rob's caliber there managing the business through this shift and this change. He's got deep pedigree in operations and in safety, and he's, as you'd expect, putting enormous focus on safety. I'll come more to that in due course. He's got a structured plan he's working through around addressing these issues on safety, and I'm confident, just as we've seen that focus and improvement at Nova, I think we'll be talking about that steady improvement with the work he's doing at Greenbushes in due course. Let me move on. I thought I'd start with Nova as we get into the operations. It's a very good news story there. The mine is performing exceptionally well, and I think I've said a few times it would be great to have another ten years of ore in front of us.
It's probably the most frustrating part of the situation. They're really hitting their stride, demonstrating fantastic levels of productivity, spatial compliance, the recoveries in the mill. Everything is in hand and being well- managed. As I said, it's at a time when there are limited options. We don't have the ability to blend and to do anything different if something changes. The performance and that discipline and that execution against plan is absolutely critical. The plant reliability's been really solid. Recoveries are strong. Nickel production increased 11% through the quarter, and copper was increased all up 7%. Naturally, this is on some lifting prices for nickel, and we're continuing to see various bits of news that encourage that, and that's obviously favorable. I guess the copper price, while it's been a bit volatile, still is giving us some positive by-product credits there.
I also wanted to call out Barminco, who's our mining partner at Nova, and just recognize the huge contribution they've had around improving safety and production performance through the year. You can imagine as you get to the end of life, and they're planning their role and what comes next, in a place like WA, where there's really hot demand for talent, retention and maintaining stability in the workforce is tough. They've done a really great job at managing that and dealing with any change we have had to make sure we've got strong, stable leadership, we've got real focus on safety and production, and we're getting the performance and productivity. As I say, when you translate that through to actually a lift in productivity, a lift in performance across the board and just fantastic safety results.
In fact, for them, it's a real standout, and I did want to just call out and thank their leadership for the close partnership and support as we bring Nova to the end of its mining life. Overall, these results are a real highlight, and the high levels of operational and technical capability that we see from our team and our mining partner, Barminco, are translating to this performance. Very disciplined line management team, very proud of what they've achieved through this quarter, and it sets them up well to finish off later this year with the operations. On to Greenbushes. Let me talk a bit just to the results first, and then we'll get into guidance and more of what's going on on the ground. First of all, production was pretty much flat at 351,000 tonnes, and that result is disappointing. The team, they feel that.
They had a plan above that. They didn't hit it. They have had various challenges and issues. I don't want that to take away from the work that they're doing and/or reflect any broader concerns. This is part of a large-scale change. Rob and the team dealing with a lot of systemic challenges through the business that he's working through to set us up for a really high-performance mining operation as we look forward into the future. What we did see was underperformance predominantly out of our two large plants, CGP 1 and CGP2. Equally, the tailings retreatment was also down from its usual performance, and collectively, these factors delivered that outcome. Lower feed grades is a key contributor, and while the team were expecting to be moving into a higher grade feed zone earlier, there has been some delay, and that certainly flowed through to their production.
That naturally affects recoveries, but we've also seen further challenges around recoveries in the plants, and that's linked with some increased downtime from maintenance shutdowns and some delays around that through the quarter. Talking about CGP3, while the production did move right from a schedule point of view, the ramp up is actually, or again, commissioning is progressing well. Again, I want to give credit to the team. It's a big plant. It's a lot of complexity. When you mix that in amongst some of the other challenges that they've had, they've done well to maintain a disciplined commissioning and to really hit their milestones and performance, both in recoveries and throughput. We had a bit of a pushback in January in terms of really getting momentum. Strong February, which we talked about at our half-year results, and then a mixed performance through March.
By the end of the quarter, we're pretty well where we expected to be, and I'm very confident with the way that plant's ramping up and its ability to lean into this lifting market for lithium spodumene as well. The unit cash costs have increased. No surprise. There's a part of that that's related to CGP3. Those operating costs are now from February rolled in once commercial production was declared. Naturally, the bulk of the unit cost change is a function of the lower overall production. I mentioned the safety incidents that we've seen through this quarter, and as you'd expect, Rob has and will always take decisive action. He's conducted two site-wide major safety stops where all production on the site has stopped and has given the team a chance to stop, reflect, reset, and refocus on our most important priority of safety.
While there is an impact to production, and that is clear, our priority around safety is unquestioned. The entire board and Rob and his whole leadership team don't blink. They will always lean into that and focus on that first. I think that strong commitment that Rob carries around safety is exactly what we want to see, and I know that he will deliver a turnaround, and we'll see that steady improvement with the programs that he's putting in place. Despite all of these challenges to safety, the various issues, we still saw a business, a mining operation, delivering a 75% EBITDA margin, and that's with a trailing price. It's just an extraordinary asset in that sense. Plenty of upside in front of us.
Tough quarter and tough to deliver that news, and I'm the one who's facing into it, of course, and had a lot of conversation with Rob about it. Naturally, he doesn't want to be in the space where we're not hitting expectations. They're working really hard, and I wanted to get into that further in a minute. First of all, let me talk about the guidance revision. We, as you know, in the last quarter, gave you directional guidance that was trending marginally below the bottom end of our guidance in that December quarterly update. That has included assumptions around the ramp-up to CGP3. As, I guess, where we're standing today, CGP3 is performing. Commissioning is going to plan. We're not seeing major issues with the asset. There's nothing there that's a point issue that we're worried about, but some of that production slid right.
At that point, when we were talking about it, I guess we still saw another half of the year of a normal production in front of us. We certainly had a view that the team would still be able to get there to the bottom end of guidance. At this stage now with this quarter, we need to make that revision and, hence you see that update in the materials that we've released this morning. There's a large-scale pushback, which I think I've talked about in a couple of quarterlies on the western wall, and that's well progressed now. That will allow the team to get back into that high-grade core of the ore body from this quarter on. Now, that's a bit later than expected, so there's a factor there, and I talked about the feed grade that they've had through the last couple of quarters.
Once we access that, I mean, that lasts for some time as well. This is not just a quarter-to-quarter thing. We'll see that translate through our business in FY 2027, and we'll come to that next quarter. I guess the broader challenge is, though, we don't see any real opportunity or likelihood of being able to recover a lot of additional tons in Q4, and hence, why we wanted to make the guidance update and reflect where we think we'll land. Cost guidance is really a flow-through from that volume outlook, and some fuel, but that's pretty well-contained, at this stage at least, and who knows where that ends up. It's also worth noting that we have reduced our CapEx guidance quite materially, and that reflects two things.
One is that continued discipline that Rob's applying with the team around CapEx projects, where they're spending and how they're spending, and also the timing and scheduling of some projects. Ultimately that's quite a bit to flow through. Just digging into Greenbushes and giving you a little bit more color on what we've seen. As you know, I'm somewhat constrained by our arrangements, but I want to be as open and transparent as I can with the kind of challenges that the team are facing down there and how they're dealing with them. I'm absolutely convinced that they have the right focus and pathway forward. The changes that are taking place as part of the strategic options review and the broader productivity uplift are fundamental and systemic. Those results will not be immediate, and I've said that before. They also won't be linear.
While the production hasn't met plan this year, there is a lot of very good progress on the site delivering and offsetting some of these challenges and laying great foundations that will help this business to really hit its full potential. As the team makes more progress, we will see that positive impact start to flow through and the leverage it will give them in a broader productivity uplift. I'm very committed to the process of improvements that Rob is leading with his team. I think they've got a good plan. They're making progress. They've had some setbacks and some challenges they're working through. But that's a quarter-to-quarter issue, i t's not something that, what we believe is systemic or lasting. I guess we'll get through some of the examples in a minute. Some of the positives that I think is worth really recognizing.
First is that very strong alignment and relationship between the JV partners and Talison strategic direction. It's complete alignment, obviously on safety and the conviction there, but also in the productivity and the focus to lift Greenbushes to really be the best it can be. Secondly is around the growth of Greenbushes, and there's a great plan out there. The approvals and the strategy around those approvals has been improved quite a lot in the last nine to 12 months. That continues to progress. There's a clear pathway on the key issues that we'd identified, and great engagement with the stakeholders that are party to those approvals and that growth. Overall, tremendous progress and alignment in the background. It's not something that shows up in the production quarterly, but it's fundamental to the future of the business, so, r eally pleased with that.
Cash preservation or cash management and capital discipline is another key area that I'm really pleased. The team are much more focused on their cost management. I think I've talked to this in prior quarterlies. They continue to drive that discipline and that cultural change right across the organization. As I said, that focus on capital and the discipline around it plays into that. The fourth key point or positive I wanted to call out was CGP3. I've mentioned it already, but recoveries and product quality going well. The challenge of ramping up a plant of that size should not be underestimated, particularly the complexity in the scale of this broader business.
It's a very significant operation, three major plants, the two other plants running in the background, in quite a congested footprint and managing all of that effectively, the commissioning, along with obviously where they've had some issues in CGP1 and CGP2. They're doing a really great job bringing that online. The next positive I wanted to call out was truck productivity. This has been a work in progress some time. Rob took early focus and interest in this when he started, and he's making great progress. I guess to give you an anecdote, haul trucks have reduced from 38 down to 23. He's moving the tons. Yes, okay, our strip ratio will come down with some of the changes in the mine plan and the steepening of the walls, but ultimately, they're getting more out of our assets and are driving that performance on a continued basis.
That's focusing on reducing cycle times, looking at congestion, the flow around the pit, better maintenance management, and so on. There's obviously an added benefit around diesel consumption, and that's particularly relevant at the moment. It does cushion some of the price impact from fuel. Look, they're far from done yet. There's still plenty more to do with the team as we think about overall mining productivity, but significant progress. Q1 mining costs on an annualized basis are around 10% below 2025 mining costs on an equivalent basis. It's great to see that step-by-step improvement. Finally, the runtime and throughput improvements in CGP1 and CGP2 that has offset some of the challenges of shutdowns, overruns on shuts, and the impact of the lower grade this quarter.
The March quarter feed grade was down about 16% on 2024 on a like-for-like basis, just to give you an idea, and yet production performance was only about 5% off. While you're not seeing all of the detail in the background that Rob's working through, he's really managing to offset some of the headwinds that he had in this period. As I said, as we unlock that high-grade core again or the main core of the mine, that shifts, but he's got to process what he's faced with at any point in time. He's also not got the benefit of drawing off large pit stockpiles where the team might have had that in years gone in the past . On to some of the challenges. There's been a number of areas where progress has been a bit of a challenge and there's been some stalling or issues they've had to deal with.
It's not to question the approach and the work that they're doing or the plans. I think there's strong focus and commitment in the right areas, but we've got to face into the near-term issues. Firstly, safety. I've talked to that. Secondly was maintenance. They had a number of issues through this quarter. Shutdown planning, execution, asset integrity, reliability, and post-shutdown commissioning or recommissioning of the assets. That's all work in progress. Grades, which we don't control the ore body and how it presents, but there is obviously work to do around mine planning, production drilling and reconciliation, blending strategies, geotechnical understanding, all areas in focus and all areas which will give us an uplift, b oth in improved planning and the management of the ore body, but also better execution. The last one I guess that's worth talking to is recoveries.
On a grade agnostic basis, they are below expectations, and we've seen some variability. Rob and the team have got some external help in this space. Excellent, really top-class people in helping them. There is some work around a broader mine and mill optimization that's underway as part of the SOR. All of that will help them understand some of the issues and the variability and make sure they can implement sustainable solutions. What we've seen with CGP 1 and CGP2 is when they hit their stride, they can deliver very, very strong recoveries. What we need to do is get to a place where we can sustain that and sit. There's no reason to think that we can't consistently sit above the standard grade recovery curves and the testing for each of these plants. The variability is the key challenge here.
It is naturally linked with plant stability as well, and I think I've talked about that in the past. If you're having periods of instability with throughput, plants up and down, issues with recommissioning, all of those things do flow through to recoveries as well. The last point I wanted to note around recoveries is also a product strategy review that he's going through and looking closely at what makes the most sense for the business. That work has progressed well, and that will also contribute to the way that he's operating the plants and the performance that he's delivering. Look, some short-term impacts there. Clearly disappointing. We're fronting up to that. It's not where we want it to be. I know that Rob's working on the right things, and that will translate.
It's been a tough quarter for them on the back of two quarters which also weren't running above plan. Compounding all of this, and I mentioned the two site-wide safety stops. That takes the whole production across the entire operation down. We're all very supportive of that action. We have to make sure that safety is number one and do whatever we need to do to make sure that we're in control there. That has a flow-through impact, and of course, it's more than just a few hours of lost production or the day that's impacted, given that you have to recommission or you have to restart plants and so on. There's also been some dust suppression measures focused or required through the quarter. It's a drier time of year, and the winds were unfavorable through parts of this.
When the team are blasting higher up in the pit, as they've had to do for part of this quarter, they need to manage dust carefully and be very cognizant of our community around the mine. That means supply schedules have to move, truck movements are impacted, mine plans have to be adjusted, et cetera. They're near-term impacts, but they do flow through in our production results. Looking ahead, look, I'm seeing the progress they're making under the covers. I'm confident that they've got the right work underway. I'm confident that we'll see the lift in productivity, and ultimately, we'll get this site to a place where it is hitting its full potential. Couple of words on lithium downstream, so Kwinana, a good production period relative.
It's the highest level of production in a quarter we've had in the three and a half to four y ears since it was started. That's positive. We touched just over 50% of nameplate through that quarter. The conversion costs obviously improved with that higher production, though total production costs still remain well above realized prices. The team are working through a big shutdown at the moment, and so that will impact volumes through the June quarter, and I'll give you more next quarterly update on that. Our financial results, look, I won't spend long because I want to get into the questions. I'm conscious you'll have lots. The group results were great with increased contributions from Nova and Greenbushes, as I highlighted in my summary. Sales revenues increased 45% on the higher volumes and prices at Nova.
EBITDA benefited from Nova's performance, TLEA contribution due to Greenbushes, and obviously the gain on the Forrestania transaction. Our underlying EBITDA was AUD 119 million, and underlying free cash flow was AUD 36 million. We ended the quarter with a net cash of AUD 327 million. Strong balance sheet, strong set of numbers there, and obviously, all ahead of us as Greenbushes both sees that price realization flow through, given we have a lag in our pricing, but also in terms of their production. With that, I might stop there and dive into some questions.
Thank you. If you wish to ask a question, you will need to press star one on your telephone and wait for your name to be announced. Your first question comes from Rahul Anand with Morgan Stanley.
Yeah. Hi, team. Thanks for the call. I have two questions. I'll start with the first one. Thank you for that detailed introduction around Greenbushes and safety. I'm not sure if you can provide a bit more color in terms of what the safety incidents were, but that's not really my question. I want to focus for my first question on the grade. I guess on the grade, is the grade in line with your mine plan? And, I guess you've highlighted that there's a bit of a delay in accessing the high-grade areas, but how is the mine reconciliation going? And once you do get to these high-grade areas, how should we think about the amount of CapEx you need to keep accessing the right grade in the future periods? It's all around grade, I guess, for my first question, and I'll come back with a second.
Thanks.
Okay. Thanks, Rahul. Look, in terms of accessing that high-grade core, that's basically the core of Greenbushes, which we've been in and we know well. We've been there for years. I think we have good confidence that we understand that part of the ore body. It's well- drilled and been very consistent. Given the pushback where we were to open that up, we were in other parts of the mine which weren't as favorable, and your question on grade and sort of how it presents. There was some negative reconciliation there in the way that presented, and some of that's flowed through, and of course, that's where the team's been up against it in terms of what they'd expected to what they got.
It's a different part of the ore body, and it's not something that we want to drag forward in a sense that we expect that to carry on as we move back into part of the ore body that we know well. I think that's fine. In terms of the CapEx, in fact, the stripping is, per our update last quarter, will come off quite a lot given the change to the pit design and the steepening of the walls. There's a lot of work going on around the geotech to make sure that's well- managed, make sure we deal with the risks. It's huge value unlock in terms of surfacing a lot more Lithium Metal Equivalent through the ore body with steeper walls, a lot lower stripping, and obviously a very different cost profile.
That will come through in our stripping and therefore CapEx as you're calling out.
Got it. Okay. The second one is perhaps around CGP3 itself. Are you able to provide a bit of color in terms of sort of where you sit in that ramp-up as a percentage? Like what percentage of nameplate have you hit? How does that ramp-up look sort of going forward? What type of a timeframe are you expecting to get to nameplate in the asset? I appreciate the complexity, but just want to understand what the plan is and where it stands at the moment. Thanks.
Yeah. Look, it's going very well. I won't give specifics on exactly percentages to report and recoveries, but we've hit all our numbers. A typical ramp-up in these plants is actually very steep in that first three, four months, and we're seeing that. We've put in a chart. I know we didn't put all the detail around it, but look, it's progressing very well. If you use, I guess [Magnitsky] as a guide, it's just one industry way of thinking about it. We're sitting in the right place in those ramp-ups. The key is not that first 80%, let's say. It's all about the tail, and that's where there's a lot of value that can be gained because that's the hard part.
The second issue in any commissioning or new plant like this is then getting the maintenance tactics and that maintenance performance working so that we get into that rhythm in the right way. Overall, the team are tracking to plan. Their milestones are hitting on recoveries, on product grade, and on throughput. We're really quite pleased. As I said, it did shift right timing-wise, which has cost us a bit in terms of production, but that doesn't faze us or it doesn't affect us as we look forward into this quarter and beyond.
Yep. With the CGP3 plan, I think you were also going to put the life of mine plan out, which is expected in the first quarter. How much has that shifted right, just so we know what to expect then?
Yeah. We put out, obviously, our MRE, the update, earlier this year. What Rob and the team are working through, we call it SOR, or strategic options review. They're tracking through that. I think there's an expectation they'll finish that in this quarter of this calendar year or Q2 of this calendar year. Then that'll go through the board and the appropriate governance and independent review and be something that I expect that we can then share, in Q3 this year or Q1 of FY 2027. That's sort of where they're pointed at the moment. Look, I'm in Rob's hands. He's got to do the right work and make sure that he's finished that well, he's really got something that he's got solid, can present, and really lay out the changes and improvements that he's driving and what the schedule and timeframe of that is.
We did want to get out the update on the resource earlier this year, because I think that's a significant shift. There is lots more good work going on across the business.
Got it. Thank you for that. I'll pass it on.
Thanks, Rahul.
Our next question comes from Levi Spry with UBS.
Yeah. Good day, Ivan. Thanks for your time. Maybe if we could just focus on page six. I feel like the market probably deserves a little bit more granularity, a bit of detail here on some of these physicals. Can you just talk through the mining tons, the grade, the process throughput, and the recoveries, and maybe just the delta on what you're expecting, if you can't give us the absolute numbers?
Yeah. Look, Levi, as you know, we don't provide that level of detail in our quarterlies and reports. I've given you, I think, quite a lot of color on my opening remarks on the kinds of issues that they're facing. Talked to feed grade, being down on expectation. Talked about recoveries obviously as a factor of that, but also some other instability. I talked about throughput or plant runtime being affected by maintenance shutdowns, some overruns there. I think I've given you the color that I can. I'm not in a position to give you a detailed plant-by-plant reconciliation of those numbers.
Okay. I guess moving on to the capital. AUD 200 million is a pretty big number with there being only two months left in the year. How much of this is just deferral into next year? Is it all about stripping? I assume it's not all about cost savings.
No, that's why I said there's two reasons. One is that continued filtering and discipline and focus on the list of projects and the timing of those projects. Like any large mine site, the wish list is always long and multi-year, and Rob is trying to manage that, both in terms of execution timing, when is it really required? How much should you spend, and how do you execute to get the best capital intensity for the relevant project? He's filtering that and squashing it from both sides. Clearly, stripping is also a factor, and you can see that in the truck fleet. You can work that back into the mine plan with the update that we gave last quarter, there's obviously a material shift as that starts to flow through.
I think it's probably something as we get into FY 2027, and we've also got a bit more of the SOR work done, that Rob's going to be able to give us, I think a better clarity on what that long-term CapEx demand will be or steady state, aside from the one-offs that you naturally have on some of the big issues or the big items. It's probably all I can say at this point, but I give him credit for continuing to manage it, and it's all about cash as well. There's a strong focus, despite lithium price being up, we want to make sure that we're converting as much cash as we possibly can.
Okay, thanks. Maybe let's just talk about cash. No dividend from Windfield. What happened to cash at the Windfield level?
Yeah.
Thank you.
Yeah, it's starting to flow through, as you can imagine, with the prices that we're seeing. It's very favorable. There was a big shift in receivables, which we don't report on. I won't give you specifics, but I guess you can pretty easily work out when you look at the numbers that we did give you, that the money had to go somewhere, and that'll obviously unwind through this quarter now, and I think would put us in a very good space.
Okay. Thank you.
Your next question comes from Matthew Frydman with MST Financial.
Sure. Thanks. Morning, Ivan, and thanks for the questions. Look, I don't want to labor the point excessively on grade, but I do think it is worth talking about further in the context of the fact that, grade at Greenbushes has declined almost every quarter for the last three years in effectively a straight line. You mentioned the pushback timing and the high-grade core that you previously expected would come online in the second half of the financial year, whereas clearly grades have actually gotten materially worse, and your guidance kind of implies that the fourth quarter won't get any better. I guess the questions are, firstly, what exactly drove that unexpected delay to accessing the high-grade core that you've talked about now expecting will come online in the current quarter? I'm not sure that we've really had a clear answer on that.
Secondly, what can you point to that will give shareholders some comfort that there isn't some fundamental or systemic issue with grade at Greenbushes, and that you've got sufficient visibility on the mine plan and reserve reconciliation, and so on, to be able to properly guide the market? Thank you.
Okay. In terms of just where they're at with the mine plan, the team have worked through a significant pushback, and it's a case of, if you think back to quarter one of this financial year, we had a lot of wet weather, and they'd, I think, been affected with access to ore in the pit, plus obviously just the impacts on accessing the pit, or moving different parts of the mine around. As you're obviously higher up in the ore body, or in the mine, you're also dealing with clay and other sort of transition material, which can be a challenge at that point. That's flowed through, together with a suite of changes and work that Rob's doing around trying to get that mine plan stable and get the mine performing at the level.
There's nothing systemic in terms of, or fundamental, in terms of the timing of accessing that. He's had some issues. They've worked through it. They're getting to it now, which is great, that pushback is behind us. It probably is more about the second part of your question, which is more fundamental. I think, we've obviously been mining different parts of the ore body for a period while we get back into this on, as I said, a significant pushback. We've just released our resource reserve and there was a lot more drilling that had been done right across the business that underpins that. There's a lot of scrutiny that the team put through on that. I think as we get back into the core where the business is mined for a long time, I mean, they understand the reconciliation of that very well.
We're not sitting here with any forward concern or doubt or uncertainty around that. We've had a tough year, but it doesn't really reflect in terms of our view or confidence looking forward.
Okay. Thanks, Ivan. Maybe as a follow-up then, and you spoke about wet weather as a driver to the delay there, I guess outside of some of the reconciliation issues that cropped up. I suppose in the context of wet weather, you knew about those impacts in January when you set guidance at that time that the grades would improve in the second half. I suppose, with all respect, my view is that rain is not really an appropriate excuse when there's so much value at risk at this operation. Every well-managed operation that I've ever seen or worked at understands that you need to take preemptive steps to manage rain events like water diversions and culverts and weatherproof roadways and so on and so forth.
I guess, yeah, the question is, Rob's had more than 18 months to put in place some of those sorts of improvements operationally. Why haven't we seen evidence of these sorts of steps being taken? Is that indicative of, I guess, a broader approach to the way that Talison is running the operation? Thanks.
No. Look, yeah, fair comment. I agree with all of the kind of mitigations or strategies, and they're the things the team are working on. They're the things I see when I'm down on site. Rob's absolutely clear on that and doing the right work. There's a lot of change as well. It's probably about trying, you know, it's very hard for me to try and characterize where they've come from to where they're going to on that journey. They've had a tough quarter and will not finish a great year, but there is significant improvement in the mine. If we take the mine as just one part of the business in the productivity, in the disciplines, but there's work to do. I was down there earlier this year, and the pit floor was still pretty lumpy.
That's back to drill and blast and some of the improvements that they still need to make there. They're working on powder factor. They're working on stemming height. They're working on their blast designs, trying to get that right. Now, that clearly affects mining and mining productivity. It affects injuries because if you've got a really bumpy pit floor, that creates musculoskeletal risk and hazards for our team. What it also does is affect fragmentation and throughput, and you see blocking material around the pit. I'm not standing here saying we're done. We're far from it. Rob, if he was on the call, he'd be sitting next to me giving you the examples. He's doing the right work. I think your call-outs are all right. We absolutely accept there's more to do, and we need to get in front of these kind of things
I remain confident, and he's got a very capable operating team around him. They're doing the right work. We will get through this period and deliver the stability that the market expects
Got it. Thanks, Ivan. I understand they're pretty broad questions, which are sort of hard to answer on an analyst call. Thanks for your comments. Cheers.
Thanks, Matt.
Your next question comes from Austin Yun with Macquarie.
Morning, Ivan and team. Just a question on the CGP3. My estimate is that your recovery is sitting around 60% at the moment and it's been bouncing around a bit. What's the sort of scope of improvements should we anticipate in the next two, three quarters? And do you need to see more investment to improve the recovery? Thank you.
It's a bit hard to hear, Austin, but take it, you know, CGP3 recovery is where are we at and how are we improving? Will that need a lot of capital? No. They've put in a very, very comprehensive asset. It's got a great flow sheet. They've got online analyzers. They've got all the right toys to drive the very best out of the ore feed. They're on track. There's nothing more to spend as such there or some big sort of next step we need to do. As I said, they're already making the milestones from a commissioning point of view. We'll see that continue to ramp up.
I think the challenge is as we lay out that grade recovery curve and we get stable feed in front of these plants, what we've got to do is continually be challenging the team to be beating that grade recovery curve, which we've seen the plant's ability to do. We have hard evidence. We can see how they behave when things are run smoothly, and we get a consistent ore feed and so on. We've got to make sure we're doing all of the operating tactics to get the very best out and not be sending more material to tails than we have to. The quick answer is, yeah, no additional capital or extras there that are looming.
Sure. That's clear. Just a quick follow-up on the downstream for the Kwinana operation. It has hit over 50% utilization rate. Yet it'll still be loss-making. Is this a result of, you know, with the discussions with your joint venture partner, have they changed their view on the future of this facility?
Look, you'd have to ask Tianqi on their view. Yeah. So it's not something I can comment on. Our view is clear, and it's not a comment on even the asset for that matter. Yes, I think we've got some challenges in the ramp-up, that's evident, but it's just lithium refining competitiveness, and we saw Albemarle obviously take the hard decision around Kemerton recently. When you do the bottom-up math with the costs of electricity, gas, labor, maintenance, chemicals, et cetera, waste disposal, it's a very, very hard bar to reach. You need pretty high lithium prices for that to work out in a Western Australian context. That's obviously why we've gone through and impaired it over a year ago now.
Thank you. That's done.
Thanks, Austin.
Your next question comes from Kaan Peker with RBC.
Good morning, Ivan. Just to continue on with the questions with Greenbushes. You've listed a large number of drivers which drove the miss. Simplistically, which issues are fixed today and which still persist into June and expected to persist into FY 2027? It seems like wet weather, access to pit seems to be still a concern, maybe grades, plant variability. If we can get a bit more detail around that'd be great.
Okay. Thanks, Kaan. Yeah, it's a great question. I'm going to try and do it on the run. Something I could be able to reflect more carefully on. The mining, it's back to Matt's question around the mine. Make sure you're set up for winter, make sure you don't have wet weather impacts, make sure you control access to your ore, set all those kind of things. Look, I think that's still a work in progress. It's nothing new. It's the same in any mine. We get a bit more wet weather down south, and it's probably a bit more of a difficult environment, but very known, very well- understood, and we just need to make sure we've got all of the right controls in place. I think this winter will be a good tell. Rob's made a lot of changes with the team.
The new mine manager in there, Scott's doing a great job lifting, working with Macmahon. I think that's just a continued work in progress, and that goes with the mining productivity, which fundamentally will affect cost. I think the piece that sits around it on the mine that I've got a lot of focus on, which I don't think we're there yet, but we know the work in front of us, and that I talked about mine-to-mill optimization, making sure our production drilling, grade control, reconciliation, and the quality of our blast designs is on point is absolutely critical. I did talk a bit to that in my opening remarks.
That's fundamental because that creates, obviously, the right discipline and spatial compliance, following our plan, good reconciliation, making sure we're on point with feed grade, and then also presenting the right feed to the different plants and getting the very best out of them. That sets you up for good recoveries. I think that piece is still a work in progress, but they got the right team on it. They're doing the right work, and we'll see those results. The next piece I would say is plant reliability, and I think they've made some headway. There's still plenty more to do, and that includes shutdown management. This offers up a lot of opportunity.
Runtime is a real factor in this, and it's compounding because you lose the tons for that period of runtime where you're down, but you equally lower your overall recoveries because of the yo-yo, the up and down nature of the plant. So that's a big piece. Feed is also part of that. Having nice, consistent ROM feed, get that blended well, make sure the grades are consistent, all helps the team to do their best with the processing. There's obviously the fine-tuning on recoveries, which again is in focus, and I think that's probably still a piece of work that's open. They're looking and studying. It's about sustainability, because we've seen periods of really strong recovery. So they've got it, and then we see some dips there where we lose it. Understanding what's causing that, making sure we can get it, and make sure it's sustainable is critical.
Big piece of focus there. That's probably just a very quick touch, Kaan, on where we're at through the value chain. There are then obviously a suite of broader strategic projects going on around the SOR that will flow through. I think to really point to your question, that's how I'm sort of seeing the different segments of work that are in front of Rob.
Thank you. Maybe the second one. It might sound a little simple, but just wondering how you set guidance. I know there's only a few months left, but just if you can step through that process, that would be great.
Yeah. Naturally, we've got guidance on a financial year. We get a calendar year budget from Greenbushes. We see out that second year, so we take a view on that. Our team, when we go through that, we sit with the Talison team to make sure that our understanding is clear, and then we've risk-weighted that. There's a lot of work that goes into that. I think probably some of you might recall that some of you gave me a hard time when we put the guidance out saying it was a bit low, and we said, "No, look, we've been through this very thoroughly," and we had a view that that was quite achievable. Look, as of the end of this last quarter, we still thought that the team was on track to come in either just on or just below guidance.
They've had a tough quarter, and that's compounded, and as we look forward to the finish of the year, we just don't think we're going to make that up. That's, I guess, it's very disappointing. It's certainly not something that I want to be reporting back to you and Rob either. We've talked at length. It's something I take very, very seriously. It's not going to translate, though, to a change in our methodology or just trying to pad it more. I think we're very thoughtful and careful about how we prepare our guidance.
Cool. Thank you very much. Appreciate it.
Thanks, Kaan.
Your next question comes from Daniel Morgan with Barrenjoey.
Hi, Ivan. In your release, you've got some very strident or forthright commentary at GB. Just wondering, how is it systemic if improvements are being made? Also, I guess, what is the motivation to be so strident in public? Is there a specific change that by being public and strident, you're looking to bear more influence? I guess the motivation of why being so strident is something I'm asking about.
Well, look, I didn't think I was being strident. I think I was trying to front up to obviously a tough quarter and a downgrading guidance, which is a really serious issue. None of us want to be here. We want to deliver, we want to do the best, and there's a real passion right across all of JV partners and the team at Talison to get the best from Greenbushes, and we're not there. I wouldn't take it as trying to be strident or anything more than that. Maybe you're misreading the point on when we say, issues are systemic. There's a lot of history that Rob's working through if you look at where we're coming from, and I don't think that's new news. I've talked about it.
I've shared some of my observations when I visited the sites around the legacy and the opportunity, I guess, that he's working through. He's making progress. The team are doing good work, but we haven't hit our mark, so I guess we're fronting up to that in an open way. There's nothing more to it than that, but it's not something that says, "Hey, this is a lasting problem." We've got some issues that we've worked through. We've got some more to do, but equally, I'm very comfortable and confident with the plan that's in place and the performance and the improvements that are starting to flow through. Yeah, maybe that's just the way you read it, Dan, but that wasn't my intent.
No, no, I appreciate that extra context. Maybe just on, I think one of your broader aspirations is product change. Is this still live and here's reminders of the process to contemplate a change to the product mix?
Yeah, look, that's work that Talison's doing. They're looking at their ore body, the mine plan, the plants, the recoveries. That's what that end-to-end review of the entire business is. You will always go right back to your ore body and you go right forward to your customer product and say, "Let's make sure we've considered it all." They're doing that. They're not done yet. I'm sure that as they work through that process, they will optimize and find the very best value. As you can appreciate, we're in a really unique situation where we've got customers who are also shareholders, which is fantastic because you're going to get very clear feedback from them on what matters and what the right technical value is in terms of the product. Ultimately, that means we get the very best out of the ore body.
Ultimately, what we're trying to do is get more lithium units out of the mine and onto the ship and to our customers. Finding that sweet spot is something that I think Rob's gonna work through, and he'll absolutely be able to put his finger on that exact point.
Okay. Thanks, Ivan. I appreciate the update.
Thanks, Dan.
Your next question comes from Lyndon Fagan with JP Morgan.
Hi. Thanks, and good morning, everyone. Ivan, if I look at your share price, it's down 7% year- to- date. Meanwhile, Pilbara [audio distortion] up around 40%. Around 50% underperformance, and that's spodumene up over 60%. There's been an out and out de-rating here of the share price. I think one of the issues has been transparency, and I guess even before today, we're still sort of flapping in the breeze a bit on waiting for any detail around Greenbushes' life of mine plan review. I'm wondering if you can maybe give us some timeline on that. Secondly, even after all the discussion today, I'm still confused what grade I need to model at Greenbushes for the next four quarters or so. Yeah, just hoping you can perhaps help.
Okay. Well, look, I guess the first part on transparency. I mean, the joint venture has some constraints in terms of how we present and share information, and that's something I take into account and work within those bounds and that discipline. There's no intent behind that other than just being respectful of the other terms under which we all work. You talked about the broader strategic options review, that life of mine review that's underway, and I did mention it earlier in my remarks. I said that Rob's expecting to bring the bulk of that work to a close in this quarter and basically by mid-year. Then that'll go through a series of review independently, but also with the joint venture partners to make sure everyone's comfortable.
I'll be in a position to share more of that in due course, after that into probably Q3 this year. It's a bit later than we'd sort of expected, but again, Rob's working through these things. They're not a simple linear project. There's a lot of complexity and a lot of, in some cases, retracing of steps as they go through that full review of the entire business. I suspect the only time it's ever been done in its 130-year history. I guess I'll try and keep it short, Lyndon, but I don't want you walking away to think there's any intent behind or lack of transparency. We'll try and be as candid and open as we can. We're very proud of the work that the team are doing at Greenbushes. We contribute as much as we possibly can.
Fully supportive of the work they're doing, and we share what we can. There are some constraints, and if we had a conversation at Nova, I could talk more openly about that, and that's just the nature of the asset. On your point on grade, look, I don't think there's anything secret there. I mean, we just put out our updated MRE, ORE. That's got a lot of detail, and I think there's plenty in our annual S-K 1300 as well. We've had a period, as I've commented already, that's a lower grade given where we were mining. As we move into this high grade core, we're going to see that increase and that'll flow through. I guess the more important thing is we'll be back with guidance next quarter.
Thanks.
Thanks, Lyndon.
Your next question comes from Matthew Costa with CLSA. Matthew Costa, your line is open. We will move along.
Yeah, given the timing, let's try and catch Mitch, and then we'll wrap up.
Thank you. Moving on to Mitch Ryan with Jefferies.
Thanks for taking my question. Just one today. I saw a recent press report that the ATO is conducting an audit of Windfield for 2020- 2024, around their income and transfer pricing. Can you provide an update on that process and if anything is happening there?
Yeah. Thanks, Mitch. Look, it's just started, so I can't actually give you any more color on it. Also not something we would dive into any depth on. They'll tell us and disclose that in their report, and we'll work through the process, update you on anything that's market relevant.
Okay. Thank you. That's for me. Appreciate it.
Thanks, Mitch. Look, with where we are with time, we might just wrap up there and close off. Thanks for the questions. Tried to cover quite a lot in my comments and replies. Hopefully, that's helpful. Take the desire for more detail. I've given you obviously what I can given the guidance and the production for the quarter. I look forward to sharing more as we go next quarter. Thanks, everyone, for joining.
That does conclude our conference for today. Thank you for participating. You may now disconnect.