I will now hand the conference over to Mr. Ivan Vella, Managing Director and CEO. Please go ahead.
Thanks, Darcy. Good morning, and thanks for joining IGO's September quarter results call. I am also joined by our CFO, Ian Rowe, who will take you through some of the financial results and join me for the questions. It was a strong operational quarter, and it delivered several things that we told you to expect. CGP3 at Greenbushes reached nameplate in December, which was very pleasing to see after the fire. That was ahead of our end-of-year target that was reset back in July. Despite the recovery the team went through following that fire, Greenbushes moved back into the high-grade core of the mine since the March quarter, and that has been delivering as we signposted. We achieved record or saw record production of 435,000 tons through the quarter.
Nova is on track to finish above the life of mine guidance that we upgraded in July, and our group underlying EBITDA was $ 176 million. We ended the quarter with net cash of $ 376 million. There are also some areas that we have not yet delivered what you were waiting for, and I will address each of those ones directly. The timing for the Greenbushes SOR, the strategic options review outcomes, the distributions from TLEA to its shareholders, and the pathway and future for Kwinana. Safety at our joint venture operations also remains a key focus, and I want to take some time on this call to recognize Nova. This week, many of the leadership team were on-site to mark the end of mining, and it ultimately closes a very important chapter for IGO. First, let me spend a moment on the safety performance.
Our 12 month group TRIFR for IGO increased marginally from 3.7 at the end of June the 4 at the end of September. That reflects two recordable injuries at Nova in the September quarter and some lower exposure hours as the business ramps down. The group TRIFR is 50% lower than a year ago, and I have talked previously about the tremendous improvement and focus the team has had on safety and the results that we have seen from that. But this quarter is a reminder that progress is not linear and transitions like what we are doing at Nova do carry additional risk, and we must stay vigilant right until the demobilization is complete. As I also said earlier this year, safety at Greenbushes had deteriorated through FY 2026, and it has been a significant focus of the Windfield board, Rob, and the management team at Greenbushes.
It was pleasing to see that through the last quarter, safety at Greenbushes stabilized to some degree. There are still many challenges and areas to work through, and the team's very focused on that. The 12 month TRIFR at Greenbushes is 9.7 at the end of the September quarter. TRIFR at Kwinana is 12.7, has trended upwards over the past 18 months. Again, it's a strong area of focus for the team and the management at the refinery. It is too high, and it's something I know that they are focused on addressing and bringing down. The business has stayed cash generative. I'll just turn to Nova first and then come back to the lithium business.
It's our final full quarter, and Nova's produced in that quarter 4,635 tons of nickel, up 19%, 2,144 tons of copper, up 27%. Both increases came from better mining performance and high mill runtime. Unit cash costs fell $2 a pound. Obviously, that's representing both the by-product credits but also the trend down of costs. I think you've seen the teams had great focus on their production stability, very strong focus on productivity, and then careful focus on cost, and that reflects that ramp down while still hitting fantastic production outcomes. Nova generated sales revenue of $ 158 million, underlying EBITDA of $56 million and free cash flow of $67 million. In July, we upgraded Nova's life of mine guidance, 19,000 tons-20,000 tons of nickel. When we take optional production into account, it's still being finalized.
We're on track to exceed the top end of that upgraded range with cash costs below the bottom of the cost range. So a really fantastic outcome through those final periods. Difficult for the team knowing it's coming to a close, but they should be very proud of how they've approached that and the results they've delivered. I also want to call out and recognize Barminco, our mining partner, who's been a big part of that fantastic performance. Nova's been a remarkable asset for IGO. Sirius Resources discovered it in the Fraser Range in 2012. It came to IGO with Sirius acquisition in 2015, and while still under construction and moved into commercial production in 2017. We've concluded a few photos of the team celebrating final ore coming out of the mine on Monday this week.
It's a milestone that belongs to many employees, contractors, and partners who've contributed to Nova over the years. Including the Ngadju traditional owners, in partnership with whom Nova was developed and operated. As you can expect, it's a bittersweet moment. There's a lot of sadness at the end of this era and pride in what Nova achieved, and the relationships that were built along the way. It's one of the standouts, talking to the team at site. They've got deep connections and friendships that will carry well beyond their time at Nova. Some people have been there through its entire life and started their careers there even. Yesterday I was on site meeting some of the team completing processing of the available ore.
I met with one of the operators, Troy, who was there to commence processing for the very first ton of ore. He will also be there later this week, most likely being the one who presses the button to stop the mills when the last ore is processed. So amazing accomplishment and to see the connection the team's had, the pride to see it through. Many examples of team members saying that they've had various other job offers. They're hotly sought after in the market, but wanted to stay on and finish the work, and all credit to them. I went down to the Barminco workshop. They're busy packing up their equipment and tools and shipping it off to their next sites. Our mining team are finalizing their reporting and wrapping up their work.
Across the board, there's a huge amount of pride on the site as the team reflect on how well they finished this operation. Personally, I've seen this kind of thing in different commodities and different parts of the world in my career, and this is really a standout performance across the board. Ultimately, I think the team will carry a very unique experience into their next sites and next roles. I want to thank everyone who's contributed to Nova over the past decade. It is a great example for the mining industry of how to discover, build, operate, deliver, and responsibly produce the commodities the world needs from a mine, including the handoff now to Global Lithium Resources. Over its life, Nova mined about 14 million tons of ore and produced 221,000 tons of nickel, 99,000 tons of copper.
It generated $5.4 billion in revenue and $2.9 billion in cumulative free cash flow, paying out nearly $ 250 million in royalties and creating nearly 500 direct jobs. I know it stayed generative through the cash, through the nickel downturn of 2023 and 2024, when much of the West Australian nickel industry did not. As we outlined in July, Nova goes straight from mining to new ownership. No care and maintenance period, no delay, no extra costs. We expect to complete the divestment to Global Lithium Resources during the December quarter. With that, let me turn on to the lithium business. First, just a brief word on the lithium market, given the recent volatility, and as I've said on all of the previous calls, I don't ever try and call the lithium price, and I won't try and start today.
Just maybe share some observations, both near term and longer term, on this very volatile market. Firstly, on demand. Look, battery production measured in gigawatt hours, which is the big picture, continues to grow strongly. Particularly, it has for energy storage. Both in the near-term and long-term outlook for lithium demand remain strong. Supply is the much bigger uncertainty, and it's unclear how quickly it's going to respond as that growth in demand flows through. Delays in projects, changes in projects, cost pressures make it hard to predict. There are many moving parts in the supply side, which is what creates, obviously, a lot of volatility, and I suspect that will continue in both directions. Some other more near-term observations I would like to make. Prices seem to have fallen further than near-term fundamentals justify. Chinese inventories are still drawing, and energy storage demand still remains strong.
It's quite possible there'll be some partial recovery in the coming months, but volatility will continue. I'm sure that with new supply pulling through, we're not going to see any sustained run-up in prices. Through 2027, the risk is supply, not demand. New supply and growth from brownfield and curtailed assets could loosen the market, but equally, delays, cost pressures, et cetera, will mean it remains volatile, and the market balance in 2027 is really very difficult to predict. Our response is unchanged. Capital discipline, conservative price assumptions, and a focus on a lower cost, long-life asset like Greenbushes. Even at the bottom of the last cycle, Greenbushes delivered EBITDA margins of around 60% and kept paying out dividends. Our focus stays on what we control: safety, productivity, and cost. At Greenbushes, our record quarterly production of 435,000 tons was up 12%.
As we signposted, the mine has been back in the high-grade core since the March quarter and is performing well overall. The improvements in the mine are very noticeable, and the productivity and conformance to plan through winter has been a standout. Mine grade rose slightly to 1.77%, and recovery's improved, supported by CGP3 reaching nameplate. Cash costs fell 7% to $418 a ton, with the FY 2027 guidance of $380-$ 440. The EBITDA margin increased to 83%. It's a strong quarter and a good start to the financial year. As I've said before, we set guidance carefully and we want to see this performance sustained. I know that concentrate inventory and shipping rates have been a recurring question. Sales were 376,000 tons, down 4%.
The team worked through a number of port constraints, and it meant that the smaller average cargo sizes and some restrictions ultimately with inventory increasing. Port capacity is one of the key enablers of the work on the strategic options review, and Talison is working hard on that. The average realized price for spodumene fell 7%, $2,130 per ton, in line with the price reporting agencies. Windfield paid out a dividend of $680 million to its shareholders during the quarter on a 100% basis. TLEA's share was $ 347 million. On the strategic options review, I want to be direct. In April, I said that we'd hoped to be able to share the outcomes in the September quarter. We haven't met that timing. Talison has substantially completed the technical work following extensive technical and peer review. It has identified significant value opportunities in four areas.
The resource and reserve optimization, some of that we called out in the reports in January, February. Mine design, including steeper pit walls, mine scheduling, recoveries, and product grades. Realizing these opportunities also depends on critical enablers such as water, tailings, port logistics, and capacity. Pulling all of that together, the remaining step is valuations, and that'll be finalized through the coming months and built into the Talison's calendar year 2027 budget and their future plans. The Windfield partners are aligned on the work required to unlock this value and naturally are all pursuing that with real focus. Because this is a joint venture asset, how and when those outcomes are released needs to be worked through with our partners and how we'll communicate that. Turning to Kwinana. As we foreshadowed in July, the shutdown to commission the calciner off-gas treatment system has extended into the September quarter.
That work is now complete. The lithium hydroxide production was naturally impacted, 918 tons produced through the available days in that quarter. Conversion costs were just over $33,000 per ton, and that was naturally elevated due to the limited operating window. EBITDA lost $ 65 million on 100% basis, including a $32 million inventory write-down. Our view of Kwinana's economics hasn't changed. The high volumes don't change that. in August, I said that we're working through this with Tianqi. That work's been ongoing for some time. We continue those constructive discussions, but it is a complicated issue and of course, it remains an important priority. I'll now turn it over to Ian for some comments on the financials.
Yeah, thanks, Ivan. Group sales revenue, all from Nova, rose 12% to $158 million for the quarter. Higher nickel sales volumes and a higher copper price more than offset a lower nickel price and lower copper sales volumes. Our share of net profit from TLEA was $114 million, down 5%. Record production and a higher margin at Greenbushes were offset by lower sales volumes and a lower realized price. This is equity accounted profit. It becomes cash to IGO only when TLEA pays a dividend. Group underlying EBITDA was $176 million, up 49% for the quarter. This includes a $32 million mark-to-market gain on listed investments, compared with a $10 million mark-to-market loss in the June quarter. Excluding those movements, underlying EBITDA rose about 13%.
Nova EBITDA was $ 56 million, up 83% for the quarter, and as I noted in July, the June quarter included about $31 million of end-of-life provisions. Underlying free cash flow was $40 million, down 43%, mainly because of the timing of debtor receipts, which we would expect to unwind this quarter. Windfield paid TLEA a $347 million dividend at quarter's end, following $ 199 million in the June quarter.
TLEA did not declare a dividend during the quarter, and we expect the board to assess distributions during the upcoming quarter. After paying a FY 2026 final dividend of $38 million during the quarter, IGO's net cash fell $10 million -$ 376 million, and our $300 million revolving credit facilities remain undrawn. Our capital management framework remains unchanged. With Nova's final cash flows coming in the December quarter, IGO's future capacity for shareholder returns will depend increasingly on distributions from TLEA.
With that, I'll hand back to Ivan.
Thanks, Ian. Nova closing, IGO's earnings and cash flow will come predominantly from our lithium interests. That makes that link between Greenbushes' performance and returns to IGO shareholders our central priority. I know many of you are looking for the timing of a distribution from TLEA. Seeing cash flowing from TLEA as Greenbushes continues to generate considerable cash is a key priority. Our other priorities are as follows. Greenbushes, completing the work, and SOR valuation and agreeing how those outcomes will be released. Continuing to support the Talison team through the JV to lift performance, productivity across the business, starting first, of course, in safety, and then broader productivity and cost performance. Turning to our non-core assets, completing the Nova divestment, assessing value realization for Cosmos, and continuing to rationalize our exploration tenure.
For exploration, there's about 8,000 meters of lithium drilling at Forrestania during the first quarter next year, and geophysics and other work ahead of drilling at the Copper Wolf sites and tenement in Arizona. BioHeap, we're continuing to progress commercial arrangements and work with partners towards a production trial. On M&A, we continue to be highly selective and disciplined in our review of opportunities in copper and lithium. To summarize, Nova's finishing on a high above our upgraded guidance, and we'll report that final production outcome and completion of the divestment in the near future. Greenbushes delivered record production. CGP3 is at nameplate ahead of target, and the mine is back in that high-grade core and performing particularly well. Our balance sheet is strong with net cash $ 376 million.
What remains clear is releasing the SOR outcomes, getting cash flowing from TLEA to shareholders, resolving a path for Kwinana with Tianqi, and lifting safety and productivity across the joint venture operations are critical work ahead. With that, now let's turn over to your questions.
Thank you. If you would like to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. If you would like to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Hugo Nicolaci from Goldman Sachs. Please go ahead.
Morning, Ivan and team. Thanks for the update this morning and great to hear Greenbushes optimization technical works are largely complete. Clearly some significant value to be unlocked there. On that piece, historically, you've talked to converting the tailings retreatment plant and the JV partners largely considering that a path of virtually no regret. Is that something we should still expect in the next couple of years? Is that then the right timing when that's being reworked to think about the potential for the product grade and recovery uplift across the broader site?
Hugo, look, definitely that is on the agenda. It's been a fantastic asset to draw more value from the old tantalum tailings and in fact, even some of the old lithium tailings. That continues, and that resource will continue for a while. But the asset and converting that does represent a real opportunity, and that's certainly one of the things that's been assessed closely through the SOR work. I would separate that from your point on recoveries and product grade. They're three distinct pieces. Naturally, improving recoveries through the existing three plants, chem one, two, and three, is an ongoing priority, and I'm really pleased to see the work that the team's done over the last quarter, stabilizing and improving that in some of those plants. The work at chem three has been fantastic and it's been a real standout in that space.
Product grade is a discrete choice again, which is being weighed as part of the overall decisions for the SOR.
Fantastic. That's helpful. Appreciate there's still some work to do there. Maybe nearer term, Greenbushes production, obviously very strong with that CGP3 ramp up ahead of your expectations. I think your guidance was based on it being nameplate at the end of this calendar year. I think some of the JV partners had budgeted it even beyond that. Are there any major plant shuts now to consider at CGP3 or across the broader site that we should be aware of for FY 2027? If not, is an upgrade to guidance something we would need to wait until February for post the JV calendar 2027 budget in January to get?
Well, yeah. First of all, on shuts, nothing out of the ordinary. The normal shut sequence for the three CGP plants, and they will continue on that cycle. For CGP3, the recovery from the fire and the remediation has been very successful, so that is pleasing and I think well proven now. In terms of guidance, look, we set that with some real care and focus with the team at Talison. We will see their calendar year budget soon, and obviously another quarter's performance, and then can determine whether there is cause for any change. But at this stage, we are standing with our guidance as it is.
Okay, great. Thanks for that, I will pass it on.
Thanks, Hugo.
Thank you. Thank you. Your next question comes from Levi Spry from UBS. Please go ahead.
Yeah. Good day, Ivan and team. Thanks for your time. Just in terms of these port constraints that you've called out, and I guess the build and the inventory, so it looks like it's back to constraint inventory levels are probably back to as high as they've been for a number of years. Can you just tell us a little bit more about the constraint? What is it? How does it impact the CGP3 ramp up, and how should we think about it in terms of how you can draw down on that inventory that you've built up?
Yeah, Levi. The port is obviously a shared facility. It's not something that's exclusive for Talison, so we need to manage through the change of different products through the berth. What I observe is the Talison team working with support actually drive very, very good productivity out of the access they get and achieve a lot in terms of the exports. Obviously as production grows, we need to make sure that we're getting either more access or/and more efficiency, more productivity from the space that we've got. They're working through that. The actual specific issues vary, of course. Sometimes that's berthing and shipping-related cargo sizes. Sometimes it's port-specific, port productivity, suite of issues. I think the team's focused on a holistic approach or solution.
It's something that's been part of the SOR work, looking at that to recognize as the production of Greenbushes ramps up, we don't want to have this as a constraint. So, in focus, they're doing the work. I guess we continue to focus on Bunbury because it's very proximate to the Greenbushes mine. That keeps costs down. It keeps us very focused. We can consider other port facilities, but, I think the goal is to really get the very best out of the pathway that we've got now. The team's got a big focus and energy on that.
Just to be clear, though, is it a constraint on the installed capacity at the mine?
Well, we've built inventory, and we can manage that inventory. We're not going to slow the mine because of it. If that's the question, no. We will manage that accordingly.
Okay. All right. Just back to the dividend question, I guess. Can you just help us understand what the balance sheet looks like at TLEA now, and help us understand maybe some disappointment around why there wasn't a dividend to IGO that quarter?
Yeah. Levi, look, I know that's a hot area of interest and plenty of focus. There was a dividend paid very late in the quarter through to TLEA. As I've said in the quarterly report and in my comments, I think Ian mentioned it as well, we'll assess that now through this quarter. The board will meet and consider the distribution of it. Of that cash, there's obviously quite a cash build at TLEA, and I guess nothing too much more to see than that. We're pleased with the cash generation from Greenbushes. That's continuing flow through to TLEA, and we'll go and work through that next step now through this quarter.
Do we have a number? What sits at TLEA?
Are you talking about cash at TLEA? That is not something we disclose explicitly.
Yeah.
But I am sure you can work it back through pretty clearly based on the other results.
Okay. Thanks.
Thanks, Levi.
Thank you. Thank you. Your next question comes from Kate McCutcheon from Bank of America. Please go ahead.
Hi. Good morning, Ivan. Can I just dig into the physicals at Greenbushes? From the disclosures on mined and then also the processed ore that you put out with the annual report, there has been material stockpiles above 1.1 million tons of ore just from that 2H FY 2026 and grade streaming, that 1.8% ore through the mill. Is this new? Has that now stopped? What will happen with that stockpile material that is sitting at a lower grade than the target feed grade?
Kate. Well, eagle eyes. I think there are a few different pieces going on. Clearly, the mine productivity and stability has been in focus now for some time, and it is performing very well. Productivity lifted. That did not slow. We did not dial it back or change that during the period that CGP3 was offline and, with the fire, and obviously in ramp up as well. There is some material that grew through that period.
That is one part. Secondly, there is some weathered material or spec material, that the team will separate. It is not to say it is not valuable, but it is preferential in terms of making, driving stability through the plants to have clean, greater ore and try and drive through our ROM stockpiles, very consistent feed grade to each of the plants. That is something the team, again, has had in focus and done a great job.
That is probably the two contributors. Nothing more to see than that. I do not think it is something that you would expect to keep growing or changing there. It is really just been a function of where we have been at in the mine over the last 18 months.
Okay. That makes sense. You mentioned that the optimization options are largely done. Is that going to be disclosed to the market? When may that be? Will we just get snippets with the new guide, or is it something that you need to talk about with the JV partners?
Yeah. Again, we talked about this, obviously, for a number of quarters. The team's done a great job on the technical work, the studies and the assessment, and the optimization and potential value that can be unlocked from Greenbushes. That's going through valuations and assessment now, and equally then working through with the JV partners as to how we might communicate that. We work through that, and then we'll share more on that in the coming months. We certainly intend to share some of the very good news that the teams work through. I just can't give you specific shed as to how we're going to do that at this point.
Okay, got it. Thanks, Ivan.
Thanks, Kate.
Thank you. Your next question comes from James Redfern from RBC Capital Markets. Please go ahead.
Good morning, Ivan and Ian. Hope you are well. Just want to ask two questions on Kwinana, please. The first one is in regards to comments about agreeing a pathway with Tianqi. Just wondering if you could please expand on that, in terms of what options are on the table, what is the timeline, and is care and maintenance actively being modeled at all? I have a second question. Thank you.
James. Yeah, look, again, I have covered this in many quarters. I will not get into specifics on those discussions until they are complete. We have worked through a range of options with Tianqi. We have been clear on our position. It is a very complicated situation to work through. As you appreciate, Kwinana sits inside one JV with the interest in Greenbushes, and so there is quite a bit to step through in how we address that. To my comments earlier, the conversations and work is very constructive, very active, remain positive, but it is incomplete. I know that does not give you much clarity or joy at this point.
That is fine. Thank you. I appreciate that. The second question, just in relation to the FY 2027 production and the conversion cost guidance for Kwinana. Given obviously the first quarter is impacted by the shutdown, but Kwinana needs to perform very strongly for the rest of the year to meet the guidance. Just wondering if you are happy with the guidance that you have got out there at the moment for Kwinana. Thank you.
Yes. Good call out and fair recognition given the impact for the start of the year due to the shutdown. At this point, the team still got that guidance in line of sight. So we'll give you an update at the next quarter as we see how things go post that shut, the ramp up, and performance of the asset.
Okay. Thanks, Ivan.
Thank you. Your next question comes from Austin Yun from Macquarie. Please go ahead.
Morning, Ivan team. Just two follow up actually, please. The first one is on the cash distribution. As you mentioned, you're going to be going through a discussion at the board level, in the current quarter. I'm just curious about, given that Talison is also doing the budgeting process and then the SOR study is still underway, will the cash assessment be dependent on the outcome of the other two events? Thank you. Come back with the second one.
Thanks, Austin. Yeah, great question. No linkage to the budgeting at Greenbushes of cash generation from that business is obviously so strong it will cater for whatever direction decisions and capital allocation we might want to make. TLEA is a separate matter. It is really a case of us just looking at what we need for that business standalone with Kwinana and look at distributions going forward. So they really are quite separate.
Understood. Second one, just given the recent experience at the port, the congestion stuff, does that change your thinking around the opportunity to lower the product grade to improve the recovery and bump up the volume further?
There are clearly links and that, I guess, draws down on the point I made that there is a number of significant value opportunities that we see through the SOR technical work. They do require a number of enablers to be in place for that value to be unlocked, and in this case, port capacity and logistics is one of them. They are all linked and that is what the team have been working through.
So it is not a case of them just finding that out. They have been doing that work for some time and beyond just product grade, if that does change, equally just uplifts in productivity and performance of the three chem plants, the tech grade plant, and the tailings treatment facility. You have five plants there at Greenbushes, all with potential upside and both productivity and creep capacity inside those assets, all resulting in potential for more tons.
That is only any good if we can get it out to our customers through the ports. Yeah, very much in focus by the team.
Thank you, Ivan.
Thanks, Austin.
Thank you. Your next question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Hi, Ivan. I sort of wanted to follow up on Hugo's earlier question. Obviously, a very strong Q1 at Greenbushes and questions about the rest of the year. In years past, when you had a strong Q1, you did not change your guidance and with perfect hindsight, you saw and we got to see grades which came off a bit and production came off a bit. So I guess my main question is there anything that you see where production in future quarters might step back from the run rates you have achieved today, be it grade, be it throughput, anything at all in the business plan where you might see production step back? Thank you.
No. Great question, Dan. No, there isn't. We were clear about the area of lower grade we knew was coming in 2026. Obviously, it was lower than we expected, hence the impact on production and guidance ultimately. We don't see that in this financial year. The fact that CGP3 has achieved nameplate earlier is obviously positive, and that does give us potential for upside. But at this point, we're not in a place to do anything with production. There's still plenty of work ahead.
Great. Very pleasing answer. My second question just on lithium price discovery. Is there an issue here on how the commodity pricing works in this industry? I mean, the price for the commodity was perhaps ahead of fundamentals early in the year, and now we're seeing or witnessing a collapse while the fundamentals actually seem okay. I mean, just wondering if you could opine on price discovery in the industry. Thank you.
Again, another very good question, Dan. I think that's a longer conversation. Certainly, it's a small market. The number of transactions and the number of, I guess, spot or liquid market deals does limit that price discovery process. I know that that's been an area of focus for a number of participants in the industry. I definitely think it can improve and it will with scale, volume, and obviously, more structure in the way that this market works. So there's definitely upside. From where we stand right now, though, I think we get a very good outcome, and we see that in realized pricing for Greenbushes. Just using those four PRAs and effectively, an average of spot through a period and then trailing that one month gives us very good outcomes when we compare that with other participants across the industry producing lithium hard rock spodumene.
So plenty of upside opportunity, but I think we're coming from a pretty good place, at least in a relative sense at Greenbushes.
Okay. Thank you, Ivan, for your perspectives.
Thanks, Dan.
Thank you. Your next question comes from Matthew Frydman from MST Financial. Please go ahead.
Sure. Thanks. Morning, Ivan and team. Can I follow up again on the production outlook over FY 2027? I guess you can see we are all driving at the same thing here, but I am just wondering about the planned end date for production from TRP. I think originally, the expectation was that the material being reclaimed from TSF1 was due to run out around the end of 2026, but it sounds like there is still more material to process there. I guess, no plans to wind back on TRP production over FY 2027 at this stage. Thanks.
Thanks, Matt. In the resource reserve update we provided in February, we did talk about more resource that was available. Hadn't been converted to reserve at that point. But it's fair to say there is a line of sight to more material beyond this financial year, in fact, beyond calendar year 2027. So we have got some good runway there. It's valuable, of course, even though some of that grade is lower than what we started with. I think when I first joined IGO, we were running at nearly 1.4% grade for tailings which is phenomenal. It's back to probably around one, but it's harder. It's still obviously highly value accretive to reprocess that, given the opportunity. Then look at how that dovetails neatly with some changes to that plant, increased grinding capacity so that we can then turn it into, effectively, another long-term plant.
That's one area of work that's been done through the SOR. So fair to say, in summary, it will go beyond 2027, and that will need to fit neatly with the work then to convert that into a long-term plant.
Yeah. Got it. Thanks, Ivan. That's helpful. Then secondly, I guess, just the cost result from the quarter, then looking forward. Anything to consider there with, obviously, CGP3 sort of ramping up through the quarter, recovering from the fire, et cetera. Any, I guess, costs or kind of impacts from that that may be kind of unwind over the remainder of FY 2027 or sort of any other sort of cost pressures that you'd want to highlight or call out? Thanks.
Yeah, you break up a little bit, but if I get the sense of the question you're talking, is there any sort of upswing or surprises that we'd want to cater for in cost? There isn't. I think our cost guidance sits with production. Nothing new or different. There's no big chunk sitting out there that we're going to have to deal with following the fire or otherwise. Overall, I think the team at Talison are focused first and foremost on safety, secondly on productivity and performance and compliance to plan for the existing business as it stands, thirdly on growth and the potential for further upside, and fourth on cost. That's not to say cost is ignored, but you can't have everything as equal priorities. I think that's the right equation for value.
What that does mean, though, is as the new CFO, Mark, started a couple of months back now. He comes from a very deep operational cost management background. A lot of experience, and he will bring a lot of discipline and rigor, I am sure, in the systems and tools to manage that going forward, and I think that will unlock plenty of opportunity. But it definitely comes after those other points in that order.
Got it. That is helpful. Thanks, Ivan.
Thanks, Matt.
Thank you. Your next question comes from Tim Hoff from Canaccord. Please go ahead.
Thanks, Ivan and team. Just focusing in back on the port situation. What kind of visibility do you have at the moment on what the December quarter looks like? Have you got the ships booked, things moving, you will move some of that stockpile, or is there just not enough visibility to even talk to?
I cannot comment sitting here today, Tim. I mean, the team are actually working on it. We clearly do not want to carry excess inventory. We want to get it out to our customers. They are screaming for it. It is not like Tianqi and Albemarle are not hungry for those volumes. So it is an important problem for the team to solve, work with shipping partners, the port, and so on. I cannot give you specifics to your question. Maybe what we can try and do is just bring a bit more of the work that is going on there or the look ahead on how they are going to increase capacity, as they work through those challenges and try and give you an update at the next quarterly.
Yep, fantastic.
Thanks.
Then perhaps to Kwinana again, in terms of that cash that is now in the TLEA level. Is there going to be essentially a buffer or a provision for how much cash Kwinana burns that you need to think about before making distributions to the shareholders?
Yeah, it's a conversation we've got to have. As a Director of TLEA, certainly that's what I will be looking for, is we need some liquidity there to cater for the demands of Kwinana, and we can see what that is. We've got a budget coming together for 2027 calendar year as well. That gives us a good basis to roll the cash out from the business.
Yep, fantastic. Perhaps one just quick one on the net debt level at Greenbushes. Obviously, a little reduction there, clearly impacted by the distribution. Is there a number there that I guess is being targeted, or is the JV happy with the amount of debt that it's currently carrying, given the pricing environment?
Yeah. Call it largely flat, and we're sort of comfortable with it in that space. Again, it's something that the board will continue to discuss and review, but at this point, there's no intentions to change that.
Thank you very much.
Thank you. Once again, if you would like to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Thiago Ojea from Citi. Please go ahead.
Hi. Thanks for the questions. My first question is regarding capital allocation. Now that Nova is kind of finalizing. One, within Nova, if you can provide if all the conditions for the deal are already set and, if there is any residual rehabilitation or anything that we should be aware. Two, this post Nova, you have disclosed before interest on investment copper, still lithium. Lithium price have fallen a lot in the past few weeks. If you can provide any update on capital allocation post Nova would be good.
Hi, Thiago. I can jump in and provide some comments on that. In terms of the question on anything material coming through from Nova. We have mentioned that there is some debtor receipts to unwind in the December quarter, and we will complete that transaction with Global during the December quarter. So there is no sort of material outgoings expected there. More broadly, obviously we have commented that we will be reliant on our distributions from TLEA moving forward. We are sort of comfortable with that. We see that dividend stream resuming and being a healthy cash flow stream through the cycle now that CGP3 is paid off and we will be benefiting from the increased out from that site moving forward. Altogether, the cash flow stream coming through from TLEA, whilst it is not flowing at the moment, we do see that resuming in due course.
Then it is a matter of how we allocate that across the business. We have talked about our growth priorities across exploration and BioHeap, which we have not talked to a lot today. But we have got some exciting things in the pipeline there. When we have sensible things to allocate the capital to, we will do that. Otherwise, we have got our capital management framework which talks to the distributions that will come through to shareholders. So, there is no sort of changes in what we discussed, at the end of the financial year in terms of our overall thinking about that.
Just a quick follow-up before I jump to the second question. Any preference on the exploration or assets that are more mature or anything like that? Or even jurisdictions, any preference that you can share with us?
Thiago, the primary focus for exploration is on copper-related interests. We're seeking projects or assets where there's known mineralization that we can use our technical capability to drive some upside, and partner with an existing player out there. So moving away from that very broad greenfield-type exploration that IGO was doing in the years gone. We'll do some minor focus on lithium. It's very targeted, and it's in tenement packages that we've got in Australia. But that's definitely a small part of the plan looking forward. In terms of jurisdictions, I think it's simple to say the Americas. Canada, U.S., Chile, Peru, and so on. So, jurisdictions which are known for large opportunities in copper and potentially some of the very benign countries in Africa, like Namibia.
Okay, great. On my second question, regarding the strategic options review, this will be released jointly with Albemarle and Tianqi. What kind of form will be this? This will be a formal life of mine plan. How are you expecting to provide this information to the market? Thank you.
Yeah. We just haven't got through that discussion yet, Thiago. We'll let you know as we do. As I said, I'm very pleased with the progress and the technical work. We can see the deep analysis and thinking. A lot of work that's gone in over the last 18 months on this. So there's lots of exciting news to share, and we need to then work out how best to communicate that. I want to call out, recognizing that you've got three listed companies involved, Albemarle, Tianqi Lithium Corporation, and IGO. Each have got different reporting expectations, regimes, time frames, et cetera. So it's far from straightforward, in how we think about that. We need to be very respectful of everyone's interests there.
That is clear. Thank you.
Thanks, Thiago.
Thank you. Your next question comes from Lyndon Fagan from JP Morgan. Please go ahead.
Thanks. Good morning, Ivan. Just back on the strategic options. I am just wondering whether they stay options or whether you are actually going to FID something over the foreseeable future. I guess what I am getting at, a lot of the options put more lithium units into the market, and I am wondering whether you can share the attitudes of the JV partners and whether there is alignment from all three partners on actually putting more lithium into the market.
Well, I think I can't speak for the other partners. I'll speak from my point of view. The lithium market continues to grow, and we've seen that without any hesitation over the last few years, despite the volatility in price. The demand pull-through is significant. The Greenbushes asset and mine is one of the lowest cost sources of lithium in the world, hands down, of any source. It's by far the lowest cost hard rock mine in the world. Low CapEx or productivity, brownfield expansion options from that are extremely value accretive and move into, obviously, a growing market. That's fantastic news, and I'm clearly highly motivated to see that done. Even if they're small projects, doesn't matter. Lining those up and giving the market a view of the potential is exactly what we're here to do.
Of course, for that, IGO has also considered some much bigger choices and growth options, and we can see where, for example, CGP4 would fit. Obviously, significant CapEx and highly value accretive. I think you could work that out very quickly. Anyone can do the back of an envelope numbers on it. We need to then contemplate where that might fit. My bias, and I think I've said this in several calls, is we do need to demonstrate that we're getting the best from the existing assets and that we can run those in a stable and high productivity fashion and a safe fashion before we then chase much bigger projects and much bigger changes. The good news is, I think there's tremendous upside in the existing assets.
There's five plants there, and having all of those run to full potential gives us considerable upside, without any major CapEx to boot. So we've got the best of all worlds at Greenbushes. A low-cost starting point, an amazing resource reserve, fantastic asset base that we can draw on, and a lot of upside in productivity and creep capacity. So that's really where the priority is, getting that out on the page so that you can see what that growth looks like.
Thanks for that color, Ivan. So I guess, is the first step giving us the options and then the next step potentially FIDing them? Or are you looking to come out with an announcement where you're actually going ahead with some of this stuff and giving us the information all in one go?
Yeah. I just can't answer the question yet, Lyndon. Something we've got to work through. Obviously, we're doing the valuations and the modeling of how all that would fit together. The board needs to work through those decisions and then also agree on how we communicate. But certainly all the kind of things that you're contemplating are pieces that are on our page to consider and get back to you. I do completely appreciate how important this is and how much interest there is in the outcome. So we're working very hard on it. It's a key priority.
And I guess the final follow-up. Is the current price weakness likely to constrain any sort of project approval? I guess what I'm getting at is, would Albemarle and Tianqi need to see a better price in the marketplace to be pressing ahead with projects that put more lithium into the market? Or is that something that I guess you can't really talk to?
Again, can't comment for our partners. But from my point of view, when I see the kind of potential low CapEx growth. In fact, some of it's no CapEx growth. It's productivity improvement in the plants that we've got. There's huge upside, and I would pursue that every day of the week. The price today it's 1,200, 1,300 a ton. We're still making probably, I'm doing it in back of an envelope, maybe 70% EBITDA margin. We're going to push every ton we can.
Great. Thanks for that.
Thanks, Lyndon.
Thank you. There are no further questions at this time. I will now hand the conference back to Mr. Vella for any closing remarks.
Look, we will leave it there. We are just about on time. I guess I wanted to just close again recognizing Nova. A fantastic story coming to an end this week. It is hard, obviously, to close up, and it is sad for the team to see the end, but they finish on a very high note. We are very proud of their achievements and performance, and definitely a great story to celebrate in nickel mining in Western Australia. It is an absolute standout case. So I will just leave it there, and thanks everyone for your time and attention through our reports today.
That does conclude our conference for today. Thank you for participating. You may now disconnect.