Elevra Lithium - Earnings Call - Q1 2026

Transcript

Lucas Dow (CEO)

Welcome, everyone, and thank you for joining us for Elevra Lithium's September 2025 Quarterly Shareholder Update. I'm joined today by Sylvain Collard, Chief Operating Officer and President Canada, Christian Cortes, Chief Financial Officer, and Andrew Barber, Chief Development and Investor Relations Officer. As a reminder, unless otherwise stated, all references to dollar amounts today are Australian dollars. This quarter marked an incredibly important milestone: the completion of our merger between Sayona Mining and Piedmont Lithium, which formally established Elevra Lithium. We were pleased to finalize the merger and see strong support from both shareholder bases, with more than 90% of the votes cast in favor of the transaction. With this merger, Elevra controls 100% of North America's largest operating hard rock lithium mine and has a geographically diversified and scalable growth portfolio.

In parallel, we completed a AUD 69 million capital raise with Resource Capital Fund, adding a highly strategic investor to our register. Resource Capital Fund has a multi-decade track record of successfully partnering with mining companies, and their decision to invest is a clear vote of confidence in Elevra's growth trajectory and asset quality. These steps have positioned Elevra to deliver sustainable growth and value creation for our shareholders. While finalizing the merger, our team remained focused on maintaining a high level of discipline at our North American Lithium operation, NAL, and delivered strong operational performance. We were pleased to deliver our best safety performance since the restart of operations in 2023.

The health and well-being of our employees is critical to our success, and we are pleased to report five consecutive months with no lost time injuries and 40 consecutive triple zero days, which are days without lost time injuries, no modified duty injuries, and no medical aid injuries. This foundation directly supports the consistency we are seeing operationally. During the quarter, we mined 338,000 tonnes of ore, which was slightly below the previous quarter but remained aligned with mill feed requirements. As planned, mining activity moved from phase two to phase three with the peak during the quarter. Phase three represents a higher average trip ratio as we work around and through historical underground mining areas at NAL, and this was incorporated into our FY 26 guidance. The mill achieved 87% utilisation for the quarter, which was down 6% from record highs in the June quarter.

The main reason for this decrease was the execution of a longer scheduled maintenance shutdown this quarter, where the prior quarter did not have prolonged scheduled maintenance shutdowns planned. We also experienced some short-duration unplanned downtime, which has since been rectified. Lithium recovery averaged 69% compared to 73% last quarter. The variance was largely attributable to lower feed grades and higher iron content, which required greater use of the magnetic separators. We achieved several weeks with recoveries in excess of 70%, and recoveries remain consistent with NAL's long-term averages. Overall, the plant produced 52,003 tonnes of spodumene concentrate at an average grade of 5.2%, which is our third highest production quarter since the restart. On the sales side, NAL sold 25,975 tonnes of concentrate in the September quarter, compared with 66,980 tonnes in the June quarter.

The lower sales volume was planned and aligned with our previously communicated guidance to prioritise shipments in the December quarter in order to capture the expected benefit of high realised pricing under existing forward sales agreements. As a result, we finished the quarter with 51,000 tonnes of finished product in inventory, which will support the uplift in December quarter shipments. Our average realised price increased 14% quarter-on-quarter to AUD 1,198 per tonne FOB on an Australian dollar basis, or $784 per tonne on a U.S. dollar basis. This improvement reflects both the rebound in spot lithium prices and the benefit of Elevra Lithium's forward sales programme. The pricing uplift partially offsets the lower sales volume, and we recorded AUD 31 million of revenue.

Unit operating costs increased by 1% quarter-on-quarter to AUD 1,250 per tonne sold, which equated to $818 on a U.S. dollar basis, reflecting continued cost control despite lower sales volumes. Unit cost of production on a tonnes produced basis saw a similar trend, with costs increasing to AUD 1,161 on an Australian dollar basis, or $760 per tonne on a U.S. dollar basis, as compared to 737 US in the prior period. The increase in unit cost was primarily related to the impact of lower processing volumes resulting from the planned maintenance shutdowns in the crushing and milling circuits during the quarter. As context, that cost level remains below our FY 2025 achieved outcomes and in line with our FY 2026 guidance.

If we take a step back and look at the broader trend, NAL has evolved into a stable and consistent operation, capable of producing at a run rate over 200,000 tonnes of concentrate per year. This progress, along with the mineral resource update, underpins a strategy within the NAL expansion scoping study, which highlights the potential to expand production capacity to approximately 315,000 tonnes of concentrate per year. Additionally, unit operating costs are planned to decrease to $562 per tonne on a U.S. dollar basis, which is a 30% decrease relative to this quarter and will ensure that NAL remains cash flow positive through most pricing cycles. Expansion will build directly on our operating platform and leverage existing infrastructure, our established workforce, and their experience.

Because of this, the expansion can be developed faster, with lower execution risk and in a capital-efficient manner to generate strong economic returns as compared to greenfield projects. We're evaluating a set of potential alternatives to fund the expansion, with the ultimate goal being to ideally fund through a non-dilutive manner. Baseline environmental studies are underway, and we expect to advance through feasibility work, targeting a final investment decision in the second half of calendar year 2027. For shareholders, the expansion provides a clear pathway to earnings growth with a higher degree of certainty and a lower level of risk compared to the development of a greenfield project. We believe this is the best opportunity for near-term value accretive development anywhere in the lithium sector.

Part of what makes the NAL expansion opportunity exciting is that it's the first asset within the broader portfolio of high-quality growth projects that Elevra Lithium will develop. Similar to the MRE increase at NAL, we also announced a 30% increase in the JORC-compliant MRE at Moblan, which brings the total resource to 120 million tonnes at a grade of 1.19%, with 48 million tonnes at a grade of 1.31% in all reserves. This reinforces Moblan's status as one of North America's largest and most strategic lithium resources. Meanwhile, at Carolina Lithium, we continue to advance in key permits. These efforts are progressing against the backdrop of a significant policy shift in the U.S., where the government has taken historic steps to develop domestic supply for critical minerals, not just in downstream battery manufacturing but increasingly in upstream raw materials and processing. Over the past several months, the U.S.

and Australian governments have committed billions of dollars to create secure domestic supply chains for lithium and other critical minerals, reducing dependence on foreign supplies and sources, and ensuring stability for the energy transition. We believe that this evolving policy landscape represents a positive and strategic backdrop for our Carolina Lithium project. The U.S. government's focus on strengthening its upstream raw material base aligns directly with Elevra Lithium's capabilities, and we believe our project is well positioned to play a meaningful role as the U.S. seeks to ensure more of its critical mineral supply chain. At Ewoyaa, we remain in constructive dialogue with the Ghanaian government regarding revised fiscal terms of the project's mining lease, which will be agreed prior to presenting the lease for ratification.

Together, these projects form a diversified and world-class growth platform for Elevra Lithium, positioning us as a leading North American lithium supplier to meet the accelerating demand from the energy transition. From a financial perspective, Elevra Lithium finished the quarter with a cash balance of AUD 148.8 million. The increase reflects proceeds from our merger and placement, offset by capital expenditure, working capital movements, and non-recurring merger-related costs. This cash position provides the flexibility to continue investing in our operations, advancing growth projects, and maintaining prudent financial discipline. We've seen the spot price of spodumene improve recently, up by more than AUD 100 per tonne since the end of September, with the PLACT Index this week reporting SC6 prices of $950 U.S. per tonne on an FOB basis from Australia.

If this pricing had occurred during the September quarter, we would have seen NAL delivering product to port on an operating cash flow positive basis. In closing, the September quarter was truly transformational for Elevra Lithium. We've completed our merger, strengthened our financial foundation, advanced our key growth initiatives, and delivered consistent operational results in NAL. We thank you for your ongoing support, and I'm happy to take questions.

Operator (participant)

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Austin Yun from Macquarie. Please go ahead.

Austin Yun (Equity Research Analyst)

Morning, Lucas and team. Yes, good result, and I'm very thankful too. You laid the sales in an upswing lithium market. Just can you understand what the sort of capacity you have for the finished product, or how much do you plan to retain as a base load, i.e., how much can you sell in the next quarter? I will circle back with the second one. Thank you.

Lucas Dow (CEO)

Thanks, Austin. Austin, it was just to make sure that I'd answered your question. Was the question about how much of that inventory we will sell during the course of the next quarter, or have I misunderstood your question?

Austin Yun (Equity Research Analyst)

Yeah, just trying to understand. It sounds like your sales numbers are going to be higher than production for the December quarter. Trying to get some color on that delta you can handle. Also, what's the port capacity you need to, you know, build even more finished product at the port?

Lucas Dow (CEO)

Yeah. Austin, typically we won't run much sort of above 50,000 tonnes at the port, so you can expect to see essentially the ensuing quarter production get deposited or sold into the market, and we'll also reduce that stockpile as well. We won't be stockpiling volume unnecessarily, but again, we clearly weighted the sales, around 75% of the sort of first half into quarter two, and similarly into quarter four as well. Quarter three will be a lower, lower volume, so effectively we'll run those finished product inventories during the course of this quarter.

Austin Yun (Equity Research Analyst)

Thank you. The second question is probably for Sylvain. Just keen to understand, given that you have a transition to the phase three mining, what's the kind of the early numbers you're seeing in terms of strip ratio, and how long should we kind of forecast for in terms of the elevated strip ratio in the near term? Thank you.

Lucas Dow (CEO)

Thanks, Austin. I'll just provide a couple of initial comments before passing to Sylvain, and you'll comment on that. I think one of the key or two of the key elements, Austin, as we transition into phase three, it's the high volcanic area, and you'll recall that from site. The consequence of the high volcanic area is we do see increased iron content. We've got the ore sorters deployed, and Sylvain's actually got a couple of additional activities that we'll describe in a moment, and I'll let Sylvain expand on that around improving the presentation of that ore. We're very focused about reducing the iron content that is of the ore presented to the mill.

Having said that, it is higher iron content, and it does impact our recoveries as a spot of the quarterly result, albeit, you know, it's sort of 67%, 68%, but still for a flotation-only operation, that's still, you know, pretty exceptional performance. We have got some additional steps that Sylvain will talk about in terms of new collectors and so on. The strip ratio, we're just working through those older underground workings in phase three, consequences being that the ore in those underground workings had been extracted, so the strip ratio is inherently higher. That had been banked into FY 2026 guidance, but obviously there's ongoing work as we're moving through that, and, if anything changes, we'll be sure to update. With that, Sylvain, I'll pass it to you if you want to add anything else.

Sylvain Collard (COO and President)

Yeah, thank you, Lucas. You're absolutely right. What we're focusing on right now with the earthy content coming from the phase three, which is the volcanic rocks, we're focusing on the sorters for sure, optimization of the winds, but also we want to put another step of pre-cleaning the ore before feeding the pre-crushing. With that, we're assuming we can minimize the waste material going directly to the crushing area and the milling process. We want to make sure we minimize that to increase or optimize our recovery. For sure, like you explained, Lucas, strip ratio is a little bit higher because the ore has been removed from the marvelous dike, but nothing very special, which wasn't included in the plan. It's mostly the major points which we're going to be focusing in the next quarter.

Austin Yun (Equity Research Analyst)

Thank you. I will pass it on.

Operator (participant)

Thank you. Once again, to ask a question via the phones, please press star one. The next question comes from Reg Spencer from Canaccord. Please go ahead.

Reg Spencer (Mining Analyst)

Thanks. Good morning, Lucas and Christian. Thanks for answering my questions. Hopefully, you can answer them. Just on your inventory management, I'm just wondering, is this going to be an opportunistic strategy to base this forward curve or what you expect market prices to do, or is this something that you would look to do on a regular basis based on any seasonality that there might be in the market?

Lucas Dow (CEO)

Yeah, Reg, probably more around seasonality rather than, I mean, it's not a predefined strategy that, you know, quarter one will be light on shipping and quarter two will be heavy. It's very much impacted with where we're seeing sort of market movements. Also, in terms of sort of volume offtake with the likes of Tesla and LG Chem, as well as in terms of when they want to take volume, has an impact as well, Reg. Christian, I don't know if there's anything else you'd like to add on that.

Christian Cortes (CFO)

Thanks, Lucas. Reg, just building on what Lucas was alluding to, there is obviously the opportunity to assess as we look at what pricing is doing in the markets. We have greater flexibility when it's uncommitted volume, and therefore we can figure it out based on the curves what makes more sense if we want to have a locked-in pricing that is at premium from spot. In the event of us believing that pricing is tightening, in those cases, we'll be looking at having greater exposure to spot pricing, knowingly that there is a greater exposure on timing post-delivery product. We'll be assessing as we move forward on a cargo by cargo basis.

Reg Spencer (Mining Analyst)

Clearly, it's got an impact on cash flow, and I guess now you guys have got a balance sheet to be able to do this, with that additional liquidity you have on hand. It sounds like it's going to be a quarter-by-quarter thing or an opportunistic thing then, guys. You know some quarters you will be shipping more and others you'll be shipping less effectively.

Lucas Dow (CEO)

Yeah, Reg, I think that's a pretty accurate description. Particularly given the volumes, as we think about the expansion, it might become more of a bit of a drumbeat when you've got larger volumes. Just the way, and you might also recall, one of the key aspects for us is being able to club cargoes in sufficiently large volumes to be able to get those freight benefits as well. If we were to be dispatching smaller cargoes, effectively, we'd see margin erosion through increased freight costs.

Reg Spencer (Mining Analyst)

Understood. My other question was just on the cash waterfall. I might take that offline and have a chat to Christian post this. Thanks, guys. Congratulations on another solid quarter.

Lucas Dow (CEO)

Thanks, Reg.

Thanks, Reg.

Operator (participant)

Once again, to ask a question via the phones, please press star one on your telephone and wait for your name to be announced. To ask a question via the webcast, please push the Ask a Question blue button. At this time, we're showing no further questions via the phones. I'll hand over to Andrew Barber for any webcast questions.

Andrew Barber (Chief Development and Investor Relations Officer)

Thank you. Lucas, I have one here. Sayona Mining has previously provided commentary on West Australian exploration tenements. Why was there no mention of these in the Elevra quarterly report, and what value do you attribute to these tenements?

Lucas Dow (CEO)

Thanks, Andrew. I think in short, with the merged entity base with Elevra Lithium, the WA exploration portfolio, while still having importance and value, is probably not as material as it was to Sayona under the combined group. Certainly, if we have material updates from those exploration activities, we'll be sure to obviously keep the market informed and provide shareholders with insight. In short, the materiality threshold has shifted somewhat under the combined portfolio. As I said, when we see material movements, we'll be sure to provide updates.

Andrew Barber (Chief Development and Investor Relations Officer)

Thanks, Lucas. I have no further questions now.

Operator (participant)

Thank you. At this time, we're also showing no further questions from the phones. I'll hand the conference back to Lucas for any closing remarks.

Lucas Dow (CEO)

Thank you very much. I just wanted to thank everyone for their time and their continued support, and we look forward to being able to continue to deliver and provide you with an update in the ensuing quarters. Thank you and have a great day.