Core Lithium Ltd (CXO) Earnings Call Transcript

Hello, and welcome to the Core Lithium September Quarter Investor Call. Our presenter today is Paul Brown, the Managing Director. Paul will give a brief presentation followed by a Q&A session at the end. [Operator Instructions] You'll find a copy of today's presentation on the ASX and also the Core Lithium website. With that, over to you, Paul.

Thanks very much, and good morning, everyone. I'm also joined with James Virgo and Chelsea Bates. So we'd be happy to take any questions at the end of the presentation. But look, again, thanks for joining us. We had a really busy quarter. Really happy and proud to be able to put our results out today and certainly talk to everyone in a bit more detail. A quick reminder of some of the key features of our project. We have a long life. We're fully funded. We have established infrastructure, and we have multiple sources of growth optionality. The operating plan targets of 1.2 million tonnes of throughput and a nameplate production of around about 250,000 -- 257,000 tonnes of SC5 concentrate. We also switched it up since our last presentation. So we're actually reporting an SC5 rather than an SC6 equivalent, which you'll see in the green highlight there. As I mentioned, we are fully funded. I think that's important. We spoke about that on several occasions. And obviously, with the current market conditions, it just highlights the initiative we had in last year when we were going through our funding process. We always wanted to be fully funded. So I'm pleased to be able to say that we've achieved that, and we're head down, bum up, and into the project. So we had $244 million of available sources and $157 million of restart capital spend. Spend remaining with free cash flow also to come out of Grants when we start shipping. The stage restart combines near-term production from Grants where we develop BP33 with Carlton deposit in reserves and exploration potential, which we'll talk about with Blackbeard. So we're executing both -- across both operations and the development of BP33. This quarter marked a significant milestone in our transition to operations with plant commissioning underway and first spodumene concentrate produced, and we're obviously on track to deliver our next major milestone, which is shipping in the December quarter. BP33 underground development and surface infrastructure continue to advance with first development ore on track for mid-calendar year '27. We finished the quarter, as I said, with $244 million in available funding, including cash receivables and Tranche 2 of our senior secured with remaining restart capital of $157 million, leaving a significant liquidity buffer, which is pleasing. Our restart plan is unchanged since FID. So the scheduled production plan and capital assumptions remain unchanged. We've delivered on all of our key early milestones, including funding, FID announcement, contract award, commencement of mining, commencement of development and our first concentrate production. The next immediate milestone for the first shipment of Grants in the December quarter. And obviously, we're focused on the ongoing underground development and of course, our exploration that's happening currently out of Blackbeard. BP33 development remains on track for first development ore in mid-calendar year '27, followed by steady-state production in mid-calendar year '28. I think there's some really good images here. The images demonstrate the physical progress achieved at Grants since FID in late March. And again, we mobilized NRW in May. So we had considerable advancements at Grants. The progress reflects the rapid mobilization and the focus of the team. So really pleased with the results at Grants. I think another great picture here. I think we had our board and some investors on site when we actually first crushed our first ore a few months ago. But you'll see the picture there, we're well advanced from Grants ROM delivery and obviously crush material. But I think this image demonstrates the physical progress that we have achieved. And again, really pleased that we're executing on plan there. Just moving to the DMS plant. Obviously, there's been a lot of action in and around this in the lead up to our first concentrate. And just like to shout out to the team there around a very safe, well-executed upgrade. You also see the middle image there, which is the last piece of plant that we'll install later next year. It's the long lead item for the capture of the tails. But again, the plant itself holistically, apart from the reflux classifier, has all been upgraded, and we're well into commissioning. So another couple of good images here. These are actually images we took on site last month, but you'll see that spodumene is being produced. It looks fantastic. I mean from the moment we turn the plant on, the plant performed really well post upgrades. You'll see the picture with the spodumene in the hand there. It's lovely, clean, lovely, glowing green, clean spodumene. So again, really pleased with how the plant is performing and importantly, looking forward to the September quarter -- sorry, the December quarter when we do ship our first concentrate. So just moving to BP33. Again, you'll see the aerial image there. And again, just a shout out to the team that is developing BP33. So we have Develop Global in there, Beament's crowd. I mean we couldn't be happier with the progress that's being made there. It was certainly one of the bigger decisions we made as we moved into FID and beyond. We're thrilled that the team has mobilized rapidly, safely, cut our first portal, and obviously, the development and the decline is tracking on schedule. So we're really pleased with the quality of people that have turned up there. I think we talk a lot about the difficulties of inflation and skills in the market. And pleasingly for us, Beament's got -- has a ready-made fantastic team. He has multiple operations that he can source skills from and equipment, and we're really enjoying the relationship that we've created there. Again, couldn't be happier with that area and the development. Some photos, obviously, of the site as well. We've obviously advanced infrastructure quite considerably. You'll see offices, workshops. We've also got [indiscernible] on site doing the vent raises. So again, associated infrastructure matching the development. I'm really pleased with the progress in these areas as well. So look, just we did put out a result from an exploration perspective at BP33. So again, we're really pleased with the program, albeit only released one hole, but the assumption there was there could be some additional mineralization at the depth we've drilled there. And certainly, we intercepted around about 34 meters at 2.09% lithium oxide and a further 3.43 meters at 2.44%. So at depth, considerable high grade that we've established there. And certainly, the results reinforce the confidence in the quality and the continuity of the mineralization beyond the 10.5 million tonnes of resource that we have. Three additional holes are still targeted. We obviously haven't completed them yet. They are deep holes, but obviously, the holes are designed to target the extension down dip and along strike, supporting potential for future mineral resource growth or potential upgrade. So just moving to Blackbeard. We have around about a 12,000-meter program planned at Blackbeard due to the, I guess, the extensive wet we did get in there a little bit later than we would have liked, but the program remains on track. And as I said, we're drilling around about 12,000 meters. The purpose of this really was to understand what might be below the ground. Obviously, previously, we've had an exploration target of around about 7 million to 10 million tonnes at a reasonable grade, 1.5% to 1.7%. We've only drilled this area to around about 200 meters. So obviously, this program is designed to go a fair bit deeper and also, we've only used RC. So we're doing a combination of RC and also some diamond drilling. I think strategically, this remains a very interesting growth optionality for us. It is within 20 kilometers of our existing infrastructure. And as we said, we have a reasonable expectation here with the exploration target we put out previously. So we are continuing to drill. We'll drill right up until the wet. And obviously, we are planning on putting out some results in the near future. So we look forward to updating everyone when they become available. I'll just hand over to James. He can talk us through the quarter and cash flows and give us a bit more flavor on how you're thinking about our funding stack.

Thanks, Paul. Turning to cash flow. We finished the September quarter with $200 million in cash, up from $182 million at the end of June. During the quarter, we received $98 million in funds net of costs, comprising $62 million from convertible notes and $36 million from the senior debt facility. On the uses side, we invested $51 million in capital expenditure, primarily relating to BP33 underground development, associated infrastructure and upgrades to the processing plant. We also invested $30 million in site operating costs as Grants mining and processing activities ramped up ahead of first shipment in the December quarter. This alongside corporate costs, exploration expenditure and transaction costs associated with the funding package. Looking forward, we have $244 million in available funding, including undrawn debt and expected receivables. Importantly, our September quarter cash flow does not yet include any revenue from near-term production at Grants of approximately 134,000 tonnes of SC product with first shipment on track for the December quarter. Together, this provides a strong funding position to support our development program through to steady-state production in 2028. I'll hand back to Paul.

Thanks, James. Look, I think I love this slide. It was really good to be able to kick off the quarter. And as you'll see, we're executing to our plan. As James mentioned, the funding package, we're really pleased with getting that away. And obviously, the cost of those structures are highly, highly competitive. And we've certainly got a great, very supportive consortium-led funding package with Glencore, InfraVia and Nebari. So look, the -- as I mentioned, the funding package, major contracts, logistics chain, portal cut, initial plant upgrades and first concentrate production have all been delivered. And again, we -- this has been our aim. We want to get market confidence and do what we say we're going to do. Current activity is focused on Grants mining, plant optimization, BP33 development, infrastructure construction, offtake and exploration program. We're also looking at expansion studies as well, which will include plant upgrade or potential plant upgrades, Carlton and obviously, BP33. The restart schedule, production plan and capital assumptions remain unchanged since FID, which again is really pleasing in a pretty challenging market with first shipment, the next major milestone, followed by first ore from BP33 in mid-calendar '27. And of course, steady-state production is aimed, still on track for mid-calendar year '28 of BP33. Look, we really want to thank everyone for their time. I think, again, a massive thanks to the Core Lithium team and contracting partners. We have had a massive quarter. I was driving in this morning thinking to myself this time last year, our market cap was about $120-odd million, and we're looking for funding. So we've really got after this. We haven't sat still through what was a pretty challenging lithium winter. We've secured great funding, great partners. And certainly, from an execution perspective, thrilled with our contracting partners, with Develop, and everybody else that's contributed. So again, really pleased with the quarter and happy to open it up to questions.

Thanks, Paul. [Operator Instructions] It looks like we've got no questions. So I'll just hand back to Paul to wrap up.

Yes. Again, thanks, everyone, for the time. We'll certainly be in touch with a few analysts in the coming days. And again, thanks for everyone's support.