Chemical & Mining Co Of Chile Inc Q4 FY2023 Earnings Call

Thank you, Chris. Good morning. Thank you for joining SQM's earnings conference call for the fourth quarter of 2023. This conference call will be recorded and is being webcast live. Our earnings press release and the presentation with a summary of the results have been uploaded to our website where you can also find a link to the webcast. Ricardo Ramos, our Chief Executive Officer, will be speaking on the call today. Gerardo Illanes, our Chief Financial Officer; Carlos Diaz, Executive Vice President of Lithium; Felipe Smith, Commercial Vice President of Lithium; Juan Pablo Bellolio, Commercial Vice President of Iodine and Industrial Chemicals; and Gonzalo Aguirre, Business Intelligence Director, will also be available to answer any questions later in the Q&A. Before we begin, I would like to remind you that statements made in this conference call regarding our business outlook, future economic performance, anticipated profitability, revenues, expenses and other financial items, along with expected cost synergies and product or service line growth, are considered forward-looking statements under Federal Securities laws. These statements are not historical facts and may be subject to changes due to new information, future developments or other factors. We assume no obligations to update these statements, except as required by law. For a complete forward-looking statement, please refer to our earnings press release and presentation. I now leave you with our Chief Executive Officer, Ricardo Ramos.

Thank you, Irina, and good morning, and thank you for joining the call today. We reported our full year 2023 earnings yesterday with our net income reaching over $2 billion, delivering over $7 in earnings per share. I would like to focus on key performance drivers observed during the last year and our first impression on how this year should unfold for SQM. Starting with Lithium business, our full year revenues were over $5 billion, approximately 36% lower when compared to the previous year, partially offset by record high sales volumes of 170,000 metric tons, almost 10% higher when compared to the previous year. The sales volumes during the fourth quarter were over 51,000 metric tons, record quarterly sales volumes for SQM. Their revenues were affected by lower sales prices, which were decreasing quarter-over-quarter starting at the beginning of 2023 as a result of excess capacity and inventory in the battery supply chain. Our lithium sales volumes guidance for this year considers an expected growth of around 5% to 10% based on the contracted sales volumes for the year as well as market estimates and conditions we are seeing at the moment. We believe lithium demand could grow another 20% this year; China remains the biggest demand and supply market for lithium products and is still going through the restocking of both battery materials and lithium chemicals inventory accumulated in the past years. That, coupled with estimated incremental supply, makes it challenging at the moment to expect our sales volumes to increase above provided guidance. Nevertheless, depending on the timing of new supplies and any potential production curtailments, we could revisit our guidance as we advance through the year. Later in this call, we will discuss in more detail our lithium market views and electric vehicle market dynamics. In the Iodine business, we reached record high production volumes during 2023, producing over 13,000 metric tons of iodine and increasing our sales volume despite global demand contraction seen during last year. We expect to see some demand recovery in the iodine market during 2024 with relatively stable prices as seen at the end of last year and stable sales volumes with potential upside subject to a lack of any incremental volumes from the competition. We believe SQM, as an industry leader, is the only global iodine producer, which has been able to materially increase its supplies in recent years. In the Fertilizer business, we saw some sales volumes recovery and market prices stabilizing. We expect to see positive demand growth in the potassium nitrate market, driven by increased demand and product availability and expect our sales volumes to grow accordingly. In the meantime, we will focus on cost improvements and new market opportunities for our products. Finally, I would like to thank the SQM team for their dedication and unified vision in sustaining our leadership position in our key markets while continuously delivering robust performance year-over-year. Thank you. Before we move to the Q&A, I would like to address one of the issues that has been brought up in conversations with investors, especially in the last two months, probably related to the future of the electric vehicle industry. For this discussion, I have invited to this meeting, Gonzalo Aguirre. Gonzalo is responsible for lithium market intelligence at SQM and could help us to better visualize the EV battery industry. Thank you for being here, Gonzalo.

Well, it's true that we have seen some news, many of them coming from the U.S. However, it's essential to remember that the U.S. market, while significant, currently represents slightly less than 20% of the global car sales. On the other side, looking back one year, there were concerns about 2023 being a challenging year for EVs due to the end of subsidies in China, macroeconomic factors, and bearish sentiments, but still, global EV sales for 2023 were even higher than initial estimates and closed the year with more than 14 million units sold. In China, they already went through these very same doubts, feeling the market couldn't sustain itself without support. They no longer have relevant subsidies, just some tax exemptions, but the industry continues to grow incredibly. It's not an industry that could collapse if subsidies are removed. I would like to emphasize a topic that is often overlooked. It is important not to forget the product that we are talking about. If we look at the models on the market, we have already reached performance levels much higher than what we expected a few years ago, with ranges over 250 miles in many models, and we are even reaching the 70 to 100 rule, meaning 100-mile fast chargers in as quick as seven minutes. I don't know who can say that these numbers are not at the same level or even better than their ICE equivalents. The future of this industry is not based on government incentives, but on competitiveness, performance, and, obviously, on the positive impacts on the environment.

Yes, Gonzalo, but at similar performance levels that suppose similar performance between two alternatives, are EVs more expensive, really?

But less and less every day. Thanks to the price competition between manufacturers, we see that in recent years, prices have fallen sharply. Today, the most popular EVs in the U.S., the Tesla Model Y can be purchased new for about $35,000. To make a fair comparison, when we look at the total cost of ownership, which considers how much someone will spend over some years, since electric vehicles require less maintenance and have a lower cost to operate, we see that the gap between EVs and ICEs has been narrowing year after year across all segments. According to some analyses, light vehicles are already in the money. In Europe, countries like Norway have achieved over 80% EV penetration last year, aiming to end ICE sales from next year and others like Sweden are following closely behind with close to 60%. There's no reason why, in the medium term, EVs cannot be at the same cost or even lower than their traditional equivalents. Successful companies such as Tesla, Hyundai, KIA, and several Chinese producers have shown us that they can be extremely cost-efficient when producing an EV and continue delivering cars of the highest quality.

Yes. But do you think it's reasonable to expect, in some way, a higher price of lithium in the future, if you consider significant additional supply and additional demand, particularly if you think that demand for lithium may double or triple if we're positive about electric vehicles? This surely will affect the cost and the way it competes with electric vehicles. What's your opinion about that?

I understand. Let's do a simple exercise with numbers. If we take an electric car like the Tesla, to manufacture that battery, it takes approximately 50 kilos of lithium carbonate equivalent per car, okay? Now if we think about some price, let's say $20 a kilo, lithium costs would mean a total of $1,000 per car. We're talking about less than 3% of the total price, and each additional dollar of lithium price affects the final cost of the car by only $50. So as you can see, lithium is not so significant to the price. At least it should not be a variable that affects the demand for EVs in the future. Obviously, as in all industries, producers will try to lower costs as much as they can. And finally, the price will be linked to the total margin costs that include investments of all the products needed to satisfy the demand. Today, the cost of batteries is high due to the significant investments in R&D that have allowed huge improvements in their performance. It is reasonable to expect that stabilization of R&D expenses as well as economies of scale in EV production will allow significant reductions in total costs. There is no reason to think that in the long-term, EVs should be more expensive than their traditional counterparts. If the EV being sold is a good car and it's competitive, the price of lithium should not be a factor that hinders its adoption.

Okay. And what about the some concerns regarding the potential negative environmental effects of lithium mining?

Yes, maybe we can take SQM's alliance with Codelco as a good example. It shows signs of the industry leadership with a full commitment to environmental standards. We can see that projects like Salar Futuro marked an extraordinary step in the right environmental direction, and it will set the standard that will be required for the entire industry. New products will need to incorporate these environmental standards into their costs, given that they will be a minimum requirement in the industry. This way, the entire industry will aim to be sustainable. It is also important to note that the use of batteries in battery storage systems makes the energy transition viable due to operational intermittency of renewable sources, which certainly has a direct effect on reducing the environmental impact from the use of fossil fuels in the electric grid.

Yes. Talking about the electric grid, there's also doubt and some people are concerned about the electric grid and the availability of fast-charging stations if they can support the expected growth of electric vehicles.

The thing is that this concern has always existed since the early days of EVs. China is a solid example that these elements are not the real constraints. In three years, they increased their annual sales over 6x without this effect causing major problems. As demand grows, charging stations will follow quickly. It's not a very complex technology. Fast charging is quite straightforward. Additionally, in the U.S., there are several Federal incentives and subsidies to encourage the installation of chargers, to the point that today, it is estimated that 125 new chargers are being installed every day. Last year, we also saw some declarations involving seven of the largest OEMs to jointly develop charging networks throughout the market. EVs can complement sustainable power generation. Without going any further, we can see that companies like SQM are investing in our U.S. startup, Electric Era, which is going to create fast-charging networks backed by stationary lithium batteries so that electricity can be purchased at times of lower cost and then stored for a car to be charged during the day. All of this helps to alleviate the demand and optimize grid generation and distribution.

Finally, and I think this is very interesting, but lastly, what do you think about lithium demand in the long-term? How do you think the supply can respond to this potential demand?

If we look at 10 years from now, I think that for 2023, it's reasonable to believe that more than 50% of new car sales worldwide should be EVs. It is also reasonable that average batteries will be more powerful than the current ones. We must not forget the increase we are seeing and expecting in battery storage systems due to their role in the energy transition goals that different countries have set. This together with batteries going into buses and trucks could add another 600,000 tons to demand. So if we consider all of this, it would seem reasonable to think of something near 4 million tons of lithium carbonate equivalent, which is kind of a fourfold increase from last year's demand. We’re at the beginning of an EV revolution, and their performance has greatly exceeded expectations. A significant portion of the market was waiting for some important issues, like range and charging times, to stabilize at a point where they felt comfortable. And I think that's already been achieved. We've reached levels where people are getting excited. Just look at how everyone, everywhere is talking about EVs. It is now a mandatory conversation topic. Therefore, in the medium term, we should continue to see demand growing. Lithium batteries are extraordinary. There may be technologies that are better in certain aspects, but when we consider all the qualities together, lithium is clearly the unquestionable leader and has the extra advantage of a well-developed ecosystem that supports its production. Additionally, if we look ahead and also consider some comments from battery manufacturers, we should expect prices to continue trending downward. Should we expect lithium to be replaced? Maybe for some niche uses, but not in a relevant way. Now, to answer the last part of the question, based on the behavior we have been able to observe in the market in recent years and all the announcements of projects that plan to enter, I believe that we should have lithium supply for those volumes. However, I also think that it’s reasonable to expect that the total cost of those last tons produced will be much higher than the current prices. The demand should grow to 2 million, 3 million, 4 million, and each step should require supply entering the market. Therefore, there will be a variety of projects of different costs to supply this product in the market.

Thank you, Gonzalo. Please stay with us because you will likely receive some questions during the Q&A. I hope you will receive some challenges to your assumptions. I hope it will be the case. Irina, that’s it. We can go to the Q&A now.

Perfect. Thank you, Gonzalo. Thank you, Ricardo. Chris, we can open the line for questions.

Thank you. We will now begin our question-and-answer session. Today’s first question comes from Joel Jackson with BMO Capital Markets. Please proceed.

Hi, good morning. I have a few questions. I’ll ask one at a time. Can you help us understand the math of your sales guidance, your volume guidance, when it relates to the lithium sulfate business, or sulfates to China upgraded to hydroxide? When you say that you did 170,000 tons in 2023, was that all that excluding sulfates? And when you say volume will be up five, when do you expect you’d be able to do 5% to 10% higher volume in 2024, that’s 180 something thousand tons. Is that excluding sulfates? We want to add sulfates to all these numbers. And how much of sulfate should we add?

Hello, Joel, this is Carlos Diaz. Yes, the lithium sulfate is already included in the sales that we're reporting for the fourth quarter. It’s included as lithium hydroxide. You have to remember that we do a refining in China, feeding the plant with lithium sulfate, and we produce lithium hydroxide. Those lithium hydroxide sales are already included in Q4, and you…

Okay, okay. Great.

Sorry. It’s also included in our guidance for the next year; we considered all the lithium we’re going to sell worldwide.

Yes.

Okay. So let’s follow on that. So if you’re going to sell 180 something thousand tons this year, and you were supposed to do 20,000 to 25,000 tons of sulfate, and you're supposed to produce your ponds now 210,000 tons, which ignores the sulfate opportunity. Does that mean you're going to be building something like, I don't know, 50,000 or 60,000 tons of inventory? So your guidance suggests you will build 50,000 tons or so of inventory this year. Is that fair?

Yes. Well, regarding the capacity, we're already closing in on reaching the capacity of 210,000 in Chile. In addition to that, we have our capacity in China to transform lithium sulfate to lithium hydroxide and the new production that is coming from Australia. Therefore, in total, we expect to produce this year around 220,000 to 230,000 metric tons. However, this capacity cannot necessarily be reflected in sales, given the need to qualify the product from the new plant with customers. On the other hand, our strategy has been to produce at full capacity, to ensure we are always prepared to supply more products to the market when needed. So that was just a deal in the fourth quarter.

Yes. Let me add something. Yes, we will increase inventories, for sure. Probably it will be lower than 50,000, not as significant as 50,000. But keep in mind that with the agreement with CODELCO, we have a significant challenge in selling additional tons until the year 2030. Having an additional inventory is going to be very beneficial in order to face what is expected for the year 2025 onward. Again, as we said in the press release, and now we comment, our guidance is dependent on the specific situation of this year. If the situation is slightly better, we will have the advantage of the volume inventory to move forward.

It's my last question, which is kind of on the same question. I'll pass it on, is – are your economics on the hydroxide being produced from lithium sulfate? Is that pretty much similar economics as your normal hydroxide, your legacy hydroxide production? And please include royalty payments as part of that economics.

It's quite similar to both economics.

Thank you very much.

Thank you. Good morning, gentlemen. Thank you for the call and great presentation on EVs. My question is still on the lithium sales dynamics. If I recall correctly, in Q3, you mentioned that you were looking for actually lower volumes in Q4, when actually volumes were record, right, last quarter. So I wonder if you could explain a little bit more about the strategy you followed during the quarter in terms of sales and how are you seeing, I think, inventories down the chain, right? I think that's the trickiest part to track at this point, is how much volume there is overseas and out there, and trying to figure out a little bit the supply and demand balance. My second question is, this is the first call post the agreement with CODELCO, right? So I wonder if you could tell us a little bit more about the strategy of capital allocation going forward, right, considering that you already know what is going to happen beyond 2030. How do you see SQM's operational footprint on lithium globally, right? You did that investment in Australia recently, so I was wondering how do you see the geographic exposure for the company over the years, considering that you already have the agreement in place? Thank you.

Okay, I will answer the first question. As Carlos commented just before, our strategy is to always be prepared to meet the needs of our clients. At the end of Q4, significant demand was generated for different reasons, such as restocking needs prior to the Chinese New Year or potentially some price speculation from customers. What I can comment is that, despite a better than expected Q4 2023, we are also expecting Q1 2024 volume to be higher than Q1 2023. About the second point of your question and the CapEx allocation considering CODELCO's agreement, I can say, Ricardo Ramos speaking, that we have a full agreement with CODELCO regarding our challenge in the Salar de Atacama and our CapEx. As you know, we are investing in the Salar de Atacama, first in increasing capacity. We want to reach at least 240,000 metric tons of total production capacity. We’re increasing our production of lithium hydroxide to have more alternatives at our facilities in Carmen, Chile. And, of course, we are committed with CODELCO to move forward with the Salar Futuro project. This new project aims to significantly improve quality, cost position, environmental footprint, and overall deal processes. Nevertheless, we don’t expect to change our CapEx in the near future in Chile. We are fully aligned with CODELCO in strategy. Our strategy of CapEx allocation outside Chile depends on opportunities. We have been clear that if we foresee an opportunity to take a position in mining resources that will be favorable for the company and allow us to be competitive in the lithium industry, we’re ready to go. As you know, we are in the Mt. Holland project that started two months ago, and we are producing. We are very happy about that. Now, we have this new joint venture, potentially with Hancock, to go to Azure, which we think is a very good project, and we will move forward with this as well. If more alternatives arise in the future, you never know; I’m more than open to good opportunities in the lithium industry.

That’s clear. Thank you.

Thank you very much, and good morning, everyone. I have three questions. The first question is just trying to reconcile two comments that you made. On the one hand, you said that you expect oversupply of lithium to persist throughout 2024, and we’ve seen what that’s done to pricing. But on the other hand, you’ve stated that you expect average realized prices for lithium to be similar to last year, which I believe averaged about $30,000. In order to achieve $30,000, if we assume Q1 is going to be the same as Q4, we would need to see prices exceeding $40,000 at some point throughout the year. How can we achieve that if you expect there to be oversupply for the rest of the year?

Hello, Ben. As we have always explained in the past, we cannot predict what is going to happen with the price in the coming months. This will be the result of the supply-demand balance. You know that most of our sales are linked with indexes, so spot price movements should influence our realized prices with a certain lag. We have seen stable prices in the last three months, and we do not have information today that allows us to foresee significant changes in the coming three months. However, we may see some upside based on the timing of new supply entering the market, as commissioning phases sometimes take longer than expected. We could also see some impacts from less competitive producers at current prices. Regarding total demand, we maintain an expected growth of 20% and do not anticipate major changes. There is less uncertainty than in the supply.

Ben, Ricardo speaking. I want to be very clear that our estimate for the year 2024 is, yes, a lot of uncertainty, but we don’t expect that the average price of 2024 will be the same as the previous year. What we think is some price stability considering what we have been facing in the market in the last five to six months. But we are not saying that the whole of 2024 will be an average the same as 2023.

I understand. Thank you. I misunderstood that. So I just have two more questions. Second is on your costs of producing lithium. I know you don’t disclose exactly what the cash costs are, but can you talk about how inflation has impacted those cash costs over the past year?

Hi Ben, this is Gerardo Illanes. Of course, we have seen some pressure from inflation that is higher in Chile and all over the world than it was before the pandemic, but also, we're seeing that sort of net out with the effect of a weaker Chilean peso compared to what we saw about a year ago. So both together make us think that it's more or less even.

Okay. Thank you for that, Gerardo. And then my last question, I don't want to challenge the EV speaker, but I do have a question, which is if Trump is elected and he kills the IRA. I don't think there's any doubt that EV demand is still going to be there. But if EV demand slows down in the U.S. and everything gets pushed out, really what that speaks to is a higher probability of there being oversupply in lithium for the next several years. Can you just address that risk, please?

Hi Ben. This is Gonzalo here. Yes. Today, as I mentioned earlier, the EV demand in the U.S. is currently close to 10%. So yes, probably all of this is factored into forecasts, not only ours but in everyone's forecast. There will be some growth in the future. In the long term, I think there will be no impact at all. While I think everyone is expecting some fluctuations, demand will continue to grow, and it will not be a major impact.

Thank you very much.

Good morning, everyone. I would like to revisit the recent pricing. You mentioned that you expect pricing to be relatively stable this year. Could you clarify if you mean stable compared to Q4, which had about $15,000? That is part of my first question. My second question is about lithium; Q4 realized pricing was much lower than anticipated and closer to the spot price. Can you explain whether there was a shift in your volume being more aligned with the spot price compared to some benchmarks, or what occurred in Q4?

Yes, as I mentioned before, we only commented on the coming three months, Corinne. According to the information we are handling today, we see more or less stable prices, okay? What could happen later is, of course, uncertain. I could not comment on that. Regarding our contract base, I can add that all our contracts today are linked to indices, just with a certain lag. It also depends if your sales are in China, where you may use different indices than when you are selling outside China. Thank you.

Okay. Thank you. And maybe for a follow-up, can you give an idea of the volume cadence for the year? I mean, Q1 is normally seasonally low, and then we should see a better improvement in Q2 and Q3. But yes, if you can just talk a little bit about that, that will be very helpful. Thank you.

Yes. I could comment that probably the second-semester volumes will be higher than the first-semester volumes. And yes, that's all I can comment on, because as we mentioned before, there are also factors that could happen in supply potentially that might change. We have a strategy of having stocks and being ready to sell if the market needs at any time. So please take my comment as considering everything keeping as usual, but things could change as well.

Hi, all. Thanks for the presentation and for taking my questions. My first question is about the Mount Holland project. Given that you recently started production, it would be interesting to have an update on the project and your expectations for this year. So I'd like to understand better what the strategy is for this spodumene production, given that your refinery is not expected to start up until next year, right? Do you plan on tolling and selling lithium directly, selling spodumene directly, or building inventories for when the refinery starts? You mentioned your guidance already includes all your lithium sales globally. Could you break down how much could come from Australia versus Chile and others, right? Given this strategy? The second question is taking advantage of Gonzalo's presence; it would be interesting to hear more about your outlook for lithium prices in 2024. I know we've discussed this a little bit; I just wanted to understand that. You mentioned prices are expected to remain flat, while demand should grow around 20%. In terms of supply, how do you expect this equation to behave going forward? Is this stable price related mostly to supply additions in 2023, or are you also mapping significant additions for 2024? If you could give us some projects that you're tracking closely, that would be interesting as well. Also, what are you observing in terms of the cash cost curve for the segment, given the addition of new suppliers here? In that scenario, would you expect stoppages for older projects with higher costs if current prices remain?

Sorry, I'm just a little confused with many questions, but let me try with the first one, and we can address the other questions to be clearer. Regarding Mt. Holland, the project's aim is to achieve a capacity of 50,000 metric tons equivalent of lithium hydroxide. We're very positive after two months of production, and we think that this year, even though it’s the starting year, the commissioning of some facilities for the production of spodumene will yield an output close to 300,000 metric tons, which, when converted to lithium hydroxide, is nearly 40,000 metric tons—very close to our expected final production capacity in this first step of the project. I hope that by the second semester of this year, we will align with our 50,000 metric tons per year capacity. We are looking forward to positive outcomes in this project. Regarding our strategy, we will engage in both tolling in China to transform some spodumene into lithium hydroxide and retain inventory of the remaining spodumene to increase supplies when the facilities we are building in Australia to produce lithium hydroxide are ready next year. We aim not to sell spodumene to the market as that is not our business. If we do something, it’s to transform and maintain a comprehensive agreement to convert it into lithium hydroxide. But it’s also not going to be so relevant, as our estimates for total volume sales for this year should be around 200,000 metric tons. And for this total amount, the contribution from Mt. Holland as spodumene will not be substantial. The good news is that the project is proceeding very well, and the production quality, volumes, and equipment are all functioning optimally, which we are very happy about.

Sure. Thanks for the answer. Actually, the second question is more about the outlook for prices, right? You mentioned that you expect prices to remain flat while demand should grow by 20%. This is probably due to the oversupply you referenced, right? I wanted to know whether most of this oversupply comes from projects added late in 2023, or if you're also mapping significant additions in supply for 2024. Please give us some projects you are closely monitoring that could be important for us to track as well. And also, regarding the market, could you talk about the cash cost curve? How has that curve changed given the new suppliers and projects that have joined the market? In that scenario, with a renewed cost curve, do you expect stoppages for older projects with higher costs if prices remain low?

One essential point is that we do not wish to comment on specific projects from our competitors. We have forecasted figures for various projects and have put them together to form our averages for the market. But we will not comment on specific projects—whether we think one will advance or not, be good or bad—whatever that might be. What I want to reiterate is that we foresee stable prices in the short term. We are more optimistic for the second half of this year. Yes, we are more positive, but in the short term, we expect to see stability in price. There will be some announced projects that everyone knows about, as well as some new projects entering the market that are public knowledge. We are the ones manufacturing and attempting to produce lithium, which happens to be an average we've compiled, in addition to having a solid outlook on demand for this year and the future. Regarding the cash cost, I don't believe that cash cost becomes incredibly important in a market that is growing more than 20% per year. If you have a market of that growth rate, you need to account for total costs because new projects, completely new ones, will be needed every year to meet demand. That's why it’s essential to monitor the total cost of new production entering the market—because that will determine the equilibrium price of lithium carbonate and lithium hydroxide.

Good morning everyone or good afternoon. Two questions here. On your iodine market assessment, you foresee demand growth in 2024, but your volumes, as you mentioned in the press release, will be flat. Is this because your production and global market share actually increased a lot in 2023 on the inception of Pampa Blanca? My second question relates to the Azure Minerals Transaction. You received competition law approval earlier this week. Can you please comment on the next milestones and subsequent filings that you need to make in that market, including your new report on the transaction? Thank you.

Hi César, this is Juan Pablo. As we explained in the past, improving capacity in iodine is really hard. Last year, even with a weaker demand than expected, we were able to bring up capacity and meet the supply from our competitors, which were below our expectations. That’s why during last year, we increased our volumes even though demand went down. We're expecting for 2024 to maintain our production capability because of Pampa Blanca, but we may expect some of our competitors to recover their supply, and that’s why we predict flat sales even with growing demand.

César, Ricardo talking about the Azure project. If you have any further questions about iodine, please feel free to proceed.

No, no, that was my question actually on why volumes were flat. Thank you.

Okay. About Azure, as you know, this kind of transaction in Australia is fully regulated by law, and there's a very specific procedure to follow. We have been under the procedure. We informed the Board of Azure of everything on time and the authorities on time. The next steps will adhere to the legal procedure. I won't comment on that because there’s a formal process we must follow. You can be assured that we will inform the market on time as we progress in the project, but we are fully committed with our partners. We believe it’s a great project, and we have a strong relations with Hancock, together we’re excited about the project moving forward.

Okay. That's fair enough. Thank you, Ricardo.

And at this time, there are no further questioners in the queue, and this does conclude our question-and-answer session. At this time, I would like to turn the conference back to Irina Axenova for any closing remarks.

Thank you, Chris, and thank you everyone for joining us today. We look forward to having you on our next call. Have a great day. Goodbye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.