DYOR: Unidentified Analyst Your two scenario price guide -- or...

DYOR:


Unidentified Analyst

Your two scenario price guide -- or EBITDA guidance for 2024 suggests an average increase of about $60 million in EBITDA per $1 per kilogram increase in LCE. Just wondering how we should interpret this when considering market prices within or outside of the lower to higher end price range? And if you could provide any color to what the realized LCE price was in the second half of 2023 as well as exiting 2023?

Paul Graves

Okay. Yes, your math is right, which you would expect. We have about 58,000, 55,000 LCEs in that chart plus some spot concentrate. So clearly, 5 to 6 times a $1, will be 50 to 60 or straight to the bottom line. Just to be clear, I want to make sure that you understand exactly what is happening in that chart and what we're trying to do. We're not saying all of our LCEs are sold at $15 in there, right, because you'll see that we sell about 3,500 LCEs in blutylithium, but we generate $150 million, $200 million of revenue there. You also know that we have contracted volumes with floors. And so some of those are already above that -- all of those are already above that $15 price. We're also not saying that everything gets sold at $15, technical grade carbonate, we apply a discount to it, right, because we know it sells at the discount in today's market. The hydroxide that we're selling outside contracts is probably more of a premium than you might think. So that's what we're trying to do with it -- and I will call them outlook scenarios in our guidance, because I don't know what the price will be. I mean I genuinely don't know what the price will be.

The market today -- I mean, you’ve seen what's happening with the share price today and you've seen that people are looking for guidance. One thing we know in this market, pricing moves quick when it moves in both directions. It just does. And so I think there's a very -- the risk to me today is asymmetric. It's not going to drop 10 more dollars. It can certainly jump 10 more dollars in the next year. But there's also a pretty reasonable and maybe a high-ish probability outcome that it stays reasonably stable for a couple of quarters as well. I'm making no predictions around that. I think what we're trying to say is you can see even in today's price environment, we'll generate over $400 million of EBITDA, but we have a lot of upside if the price does in fact go up. We've sized our spending on capital to essentially say that over the next two years, we will generate enough cash plus cash on the balance sheet to essentially complete the projects that we have out there, which will lead to another 25,000 tons of product coming out of Argentina and another 32,000 tons coming out of Nemaska in 2026 and then potentially even another 50,000 LCEs in spot concentrate form coming out of James Bay. It's all financeable at today's market prices. If today's market prices go down, that's not all financeable. So we'll take a look at it.