ioneer Ltd (INR) Earnings Call Transcript & Summary

Good morning, everybody. Thank you for joining us here on this auspicious occasion. We have today the Managing Director of Ioneer Limited, Mr. Bernard Rowe, who's going to be discussing the announcement this morning of the U.S. government approval for the Rhyolite Ridge Lithium-Boron Project in Nevada. I'll hand it over to Bernard to talk through that, and then we'll have time for questions at the end. Over to you, Bernard.

Yes. Thank you, Peter. Thanks, everyone, for joining, and good morning and good afternoon, depending on where you are in the world. I'm sitting in our office in Reno, Nevada, and pleased to report that earlier today, as you all know, we received a positive record of decision from the Bureau of Land Management. There was a ceremony that I attended here in Reno, at the offices of the BLM, about 5 hours ago. At that ceremony was representatives of a number of government agencies, state and federal, local community. Some of the people there -- I'm just not going to mention everyone, but some key people there were Laura Daniel-Davis, who's the Deputy Secretary for the Department of the Interior. There was Steve Feldgus, the Deputy Assistant Secretary for Land and Minerals. There was the State Director for the BLM, Jon Raby; the Director for Western United States Fish and Wildlife Service, Paul Souza; County Commissioner, Ralph Keyes, representing the local community. And James -- Director James Settelmeyer from the State Government Office, Director of Conservation and Natural Resources for the state. So, there was a really great turnout, really strong sign of support from the government. There was a number of people from elected Senators and Congressman offices were also present. So, there was this very strong show of support. You hopefully have seen that in some of the quotes in the announcements. We were very, very delighted, of course, with the outcome. It has been the culmination of a number of years of work. I'm not going to go into all the detail of that today, but I would like just to summarize it. We drilled the first hole at Rhyolite Ridge in December 2016. So, it's 8 years or close to the 8th anniversary coming up. And during that time, we've achieved a tremendous amount of progress on this project. Not only the permitting, but drilling out the resource, the reserves, the pre-feasibility, the pilot plant, the feasibility study, the detailed engineering. We then started in 2019, the baseline, environmental baseline studies. Fortunately, around the same time or even in some cases earlier, we were already engaged with key stakeholders such as the local community, tribal nations, the Fish and Wildlife, and the BLM. So, we were very early engagement, very collaborative in our approach, which has paid dividends. That's why we are where we are today, that those baselines were completed over a 2-year period. We then had the listing of Tiehm's buckwheat in the sort of the middle part of the process. We had to do some redesigning to take that into account once we knew where the critical habitat boundaries were for the Tiehm's buckwheat. We were able to do that, but it took time and effort. But the company committed ourselves to doing that in the best interest of the project development and conservation elements of the project, which run throughout all of our design, sustainability and conservation. We then, in early 2023, entered into the NEPA process that's taken just under 2 years through a series of scoping and public comment periods and replies to those public comment periods, again, some modifications to the project as we went through that process and then culminating today in the record of decision. Now what that means from here going forward is that we're fully permitted. We have our two other key permits of both air and water, state issued permits. This record of decision is a federal permit. It was the final one that we're waiting on. We're going to now close out the two of our financing components to this project. One is a USD 700 million conditional loan commitment from the Department of Energy Loan Programs Office, which we were awarded now nearly 2 years ago. So, one of the key conditions precedent, CPs for that was, of course, being fully permitted, so we can now move to close that DOE loan commitment. And we also have a commitment from our partner, our future partner, Sibanye-Stillwater. We also are closing that. That's the equity component of the financing. It's for $490 million. That would give Sibanye a 50% joint venture stake in the project. So, Ioneer would contribute the project into that joint venture. The structure is already set up. Sibanye would contribute $490 million, and then we would move forward as 50-50 joint venture partners. So, we're closing both of those. We've done a lot of the work that was necessary. In addition to the permits, the other conditions precedent are largely completed now. You'll see those over the coming few weeks as we move through November and December. Things like updated resource and reserves, updated mine plans, updated CapEx and OpEx estimates, and ultimately, updated project economics. Obviously, we're very confident around that. It's an amazing project that we have, and we've been fortunate enough to work on. Just highlighting just how special Rhyolite Ridge is. It's the first lithium project to be permitted by the Biden Administration. So that's a major milestone for us that we're extremely proud of, of course. But it's way more than that. It's actually going to be the very first mine anywhere in the world where you have a major production of both lithium and boron from the same operation. There are no other large lithium and boron producing mines anywhere in the world. So, this is a first. It comes with a lot of benefits because of that. We've had to design the flow sheet around it, but it uses known existing technology. We've borrowed it from other industries, particularly the leaching from the copper industry. But some of the other major benefits of having this mix of lithium and boron are, firstly, economic benefits. About 30% to 40% of our revenue will come from the boron, the remainder from the lithium. So, it's really a true co-product. And again, to my knowledge, there are no other lithium mines in the world where you have a co-product. Some have byproducts, certainly, but none that I'm aware of that have a co-product that contributes 30% to 40% of the revenue. So, this is really a very special deposit. But it also means that we can process this in a way, and you can see the flow sheet, the engineering design model behind me, which we've worked on over the last 6 years and develop that ourselves. We've tested it. We've piloted it. We've retested it. We're extremely confident. We've done hundreds and hundreds of tests over that time to be able to make sure that we can produce these materials. And another big advantage in doing this and developing this flow sheet is, unlike any other hard rock, lithium mine in the world, we will be producing lithium carbonate at the mine site and boric acid at the mine site. So, this large chemical processing plant will be an integral part of the mining operation. It will be located roughly 2 to 3 kilometers away from the mine itself. So, it's all on the same site. It's all part of the same permit that we've just received. And that will put this into a very special category where we're doing hard rock mining, drill and blast, with this amazing boron-bearing lithium ore that is readily leached with coarse crushing, vat leaching, similar to what's used in the copper industry over a couple of day period. Easy to wash, easy to separate. No filtration, no complex filtration required at all to separate solids and liquids, a very unique, all part of ore because of the unique mineralogy and the boron in this deposit. So, it really is a tremendous deposit. A couple of other things I'd flag as highlights just to, again, show you how special this deposit is and its location in the United States in production in 2028 is our target date for target timing for production. This will be the first new lithium production in the United States in 60 years since the mid-1960s with Silver Peak, and it will be the first new boron mining production in the United States in more than 100 years. So again, it's a tremendous milestone. And of course, in the context of where we are today in world history, it's going to become the linchpin, if you like, of two critical minerals, lithium and boron necessary for energy transition, energy security, domestic supply chain. Both of these elements, lithium and boron are incredibly important. And so, this mine is going to be part of that domestic supply chain in the United States. It's a large deposit. It's a very long mine life. It's going to be around for multiple generations. It's going to be a wonderful economic contributor to the rural community of Esmeralda County, where we have very, very strong support for the project. And it's really going to make a difference to the people in that community, and they welcome the project development. So that's also wonderful to hear and see. I think some other things, perhaps just to quickly mention our engineering, I've pointed to the plant behind me. That engineering is more than 70% complete. So, from an engineering perspective, we're ready to start construction of this project. From a permitting, obviously, we are now with the record of decision and with the financing I've already described. So, all of those things are coming together very nicely towards the end of this year, between now and the end of this year. We would be looking at making a final investment decision in the early part of next year and earlier if we can, but certainly working on that and being in construction in the early part of 2025. There will be a ramp-up period in the construction because a large project like this does require some time to place long orders for long leads, to sign contracts, to mobilize the hundreds of people that are going to be involved. There will be a maximum of about 500 people involved during the construction phase. So that will be unfolding in the early part of next year. And then it will take us from, say, the middle of next year through until the end of 2027, so sort of a 30-month period of construction. That would allow us then to be producing in 2028. And for those who are not so familiar with the project, the Phase 1 of the project will produce approximately 22,000 tonnes of lithium carbonate a year, equivalent to supply about 370,000 electric vehicles, and in the order of 170,000 tonnes per annum of boric acid. Boric acid is worth about $1,000 a tonne currently. So, it's a very, very significant economic contributor to the project. And it will do that for an initial mine life of 26 years, has been currently published. We're going to update that soon, and it's going to be well more than 26 years. And as I think mentioned earlier, the resource itself is 351 million tonnes. It contains about 3.2 million tonnes of lithium carbonate. If you take the whole deposit, not all of that's part of our mine plan. There are areas where we're excluding and there are areas of mineralization that are a bit different and don't have the high boron in it, and we're stockpiling that for future processing alternatives. But this is a very, very long-life mining project that will be, as I said, the linchpin or cornerstone of U.S. critical mineral supply for many decades to come. I'll pause there, I think, Peter, and take some questions.

Right. Thank you, Bernard. We have a pretty good audience here today and some questions have come through. Firstly, in terms of permitting approvals, are there any other minor permit approvals that need to be ticked off before you have the full green light to go ahead with project development?

Yes, there are. And some of them are permits that you actually can't actually obtain until you've actually got your rod. So, we're doing those, but they're more of a formality process. So, we don't see any of them causing any time delays. They're simply processes that we have to go through and obtain. But the 3 key ones are the record of decision, which is the federal permit, the water pollution control, and the air permit. And we are making some modifications to the 2 state permits because, again, the project has developed over time as we've gone through the NEPA permitting process. So, we just need to bring all those up to be consistent with what the final design is. But again, we don't envisage any delays around any of that.

And funding. Can you talk around the process for the U.S. government funding and Sibanye-Stillwater funding as well? I guess, the time frame around that?

Sure. So, we're working to close both of those before the end of the year. So firstly, on the loan, the Department of Energy loan, it is a conditional commitment. There is a process to go through to close that loan. There are a number of CPs, conditions precedents that have to be met. And I've already mentioned that permitting was the big one, but there are others, including the updates of our mine plan, the updating of our CapEx and OpEx estimates, et cetera. We've done the most of that work, okay? It's very close to being finished. So again, we're confident that we'll finish that off over the coming weeks and then be in a position to close that out. In terms of Sibanye, it's a very similar set of conditions that are required, conditions precedent. And so, basically, the same workstream, if you like, that's been necessary for satisfying the Department of Energy is also required to satisfy our obligations to Sibanye. And then once those things are completed and the work is completed and finalized, then the final investment decision will be put to both the Ioneer and Sibanye boards for final approval. So again, it's over the coming weeks and months so that we would be in a position that we can be placing those long lead item orders and gearing up for construction starting in the early part of 2025.

And Bernard, a couple of questions here regarding the elephant in the room. Is there any risk to the approvals that have been awarded if a Trump Administration was to take over?

Yes, that's a good question, and we get asked that a lot. And the simple answer is no, we don't think so. And there are obviously, reasons for that, that we feel that way. Firstly, we started this project in 2016, December 2016 was the first drill hole. So, 8 years ago. So, we've actually been through 2 administrations, one Republican, and one Democrat. There's strong bipartisan support for this project, and more generally for the development of a critical mineral supply chain in the United States. So, we don't see there's risk around if there is a change of administration around the development and the timely development of this project. Strong bipartisan support, domestic onshoring of manufacturing, okay? This is why we're putting a chemical processing plant beside the mine. We're creating jobs, rural jobs, high-paying jobs, these sort of things in communities that really are very limited in terms of their economic activity. And so, there's strong bipartisan support for that. And we've enjoyed that. We've seen that strong bipartisan support over the last 8 years, and particularly evident from the support we've got from the electeds within Nevada. Congressmen and Senators, most of whom have visited the site, keep very much up-to-date with what we're doing. So no, we're very confident that regardless of the outcomes of the election, this project will be moving ahead in a timely fashion. It's important for the nation. It's important to have a domestic supply of lithium, and it's equally important to have a domestic supply of boron. There's only one mine of each of those materials currently in the United States, and they're critical materials for national security, energy security, and those issues have strong bipartisan support.

Bernard, there's been great press coverage in the U.S. and Australia regarding the approval here today, but some of those releases also point towards some environmentalists committing to challenge the project through the U.S. courts. How do you see that situation?