In the case of Tennessee, we don’t currently intend to publish an interim updated study. I think what we intend to do is, kind of announce – maybe announce that contemporaneous with our funding probably later next year.
Joseph Reagor: Okay, fair enough. And then just real quick. What’s the expected timing on the key release?
Michael White: This is Michael. We expect to – we have until this Thursday, so we will file right either tomorrow, Wednesday or Thursday.
Joseph Reagor: Okay, perfect [technical difficulty].
Operator: And we’ll take our next question from Matt Summerville with DA Davidson. Your line is open.
Matt Summerville: Thanks. Just a couple of quick questions. One more in the near-term. Based on the price dynamic you mentioned between contracted and spot and you started selling material under the contractual type of arrangements. Can you remind us what type of lag we should be thinking about between spot and how that rolls into ultimately become the realized pricing through your contractual agreements?
Keith Phillips: Yeah. Thanks, Matt. I can’t remind you, because I don’t think we’ve ever provided that guidance. And so I’m really not in a position to. We’re going to work hard as a company to be pretty transparent in terms of our realized pricing and realized costs, we’re not going to – we’re going to do our best to keep customer arrangements confidential. Ultimately, I would say, our contracts do have customary pricing with respect to lags. Ultimately, our shipments under these contracts are likely to begin in 2024 and kind of ramp up. So whatever lags are in, unfortunately, we’ll not get the benefit of the prices of say, early in Q3. We’re in the spodumene world of all the folks in Australia who announced earnings last week, those have been producers who’ve been producing for longer had shipments through the quarter, many presumably under contracts and we’re able to realize lags.
We had our two shipments sort of at the back end of the quarter with pricing determined in the fourth quarter based on current levels. And so that’s the way we think about it.
Matt Summerville: Well, that’s perfect. Yeah, you answered my question. I was more curious whether or not you would get any of that good or better, I should say, early Q3 pricing. At some point, it sounds like that’s probably not going to happen. So the 27,000 tons of material being shipped in Q4, all of that we should assume is shipped into the spot market then?
Keith Phillips: Yeah, that’s correct. And I should mention, 27,000 is the estimate, our agreement this year, as people know, is to get 56,500 tons from the joint venture. When you’re loading a ship, some things can be imprecise. It could be a little more, a little less than that, depending on the size of the ship, the size of the hold, et cetera. But that’s the rough guidance. And yes, those shipments in the second – in the fourth quarter will be at spot.
Matt Summerville: Got it. And then just lastly, Keith, just real quickly, do you have an updated timeline kind of go-forward cadence for Carolina at this point in terms of, at least in the near-term what you expect out of the permitting side of things? Thank you.
Keith Phillips: Thanks. No, I think conversations – we feel conversations are going well on the permitting front, we’re in year three of that process, it seems like a very long time. It might be in some jurisdictions is not really from an American perspective. We’re hopeful we’ll have significant progress next year, hopefully in the first half of next year. But we haven’t – have no more guidance than that. We do intend to respond to the ADI 3 in this quarter. And we’ll have more on that into 2024. But just as you think about modeling that and think about Carolina. Tennessee and the DFS is an $809 million capital project, it’s probably going to be a little bigger. Carolina is going to be bigger still, because it’s the chemical plant plus the mine.
We’re not going to have the capacity to do both at the same time. So, in our minds, Carolina is a year behind Tennessee. That could shift. But that’s our current way kind of we think about it, which gives us time on the permitting side and takes pressure off from that perspective.
Matt Summerville: Understood, that’s helpful. Thank you.
Operator: And we will take our next question from Austin Yun with Macquarie Bank. Your line is open.
Austin Yun: Good morning, Keith and the team. Congratulations on the first revenue and profit report in the quarter. The questions that follow-up on the pricing, just wondering if you could just shed some light on the contract and how often you will build the kind of the pricing model because as you kind of highlighted during the presentation, there was a shift on the pricing kind of mechanism in the September quarter. Should the lithium price rebound in early 2024? Do you see a risk of your customers kind of pushing back for another change from N+1 back to N-1? Thank you.
Keith Phillips: Austin, I’m not sure I understood the question. But let me try it. I think what you’re saying is, if prices rebound in 2024, do we see our – whether the spot market or our existing contracts looking to kind of change the framework?
Austin Yun: Yeah –
Keith Phillips: Is that what you’re asking?
Austin Yun: Just you know kind of quarter – in the September quarter, right that the price has kind of been trending down. So what happened in the market was that, all the downstream was pushing for price on delivery instead of the project. If the price curve kind of invert and rebound, do you see a pushback from your customers to change how the price is determined?
Keith Phillips: Now it’s a great question. To be honest, I hadn’t thought about that a lot. We think about this in the context of Tennessee. So, we’re going to build Tennessee as a lithium hydroxide plant, essentially a conversion plant like the Chinese conversion plants, but better with – that’s a lot of tech flow sheet. And we’re going to supply that from – a split from Ewoyaa, that’s our plan. But we’re going to treat each of those businesses as independent entities. So we’re going to be doing transfer pricing at market. And as we think about it, we think the current market dynamic is actually quite sensible. On one of the earnings calls last week, somebody mentioned that it takes four to six months to get rock from the mine into a chemical that you can sell.
So if you’re the converter, it’s really important to have the price of the raw material aligned with the price of the material you’re going to sell. So, we actually think the current formulation makes sense. That doesn’t mean shifting market that converts might try to backtrack and go the other way. I think presumably prices are ramping up, that means, it’s a tighter market. And there’s competition for the material. And I think they’d be maybe unsuccessful with that. But it’s hard to say. Again, in a competitive market where prices are rising, I don’t think – yeah, I think we’ll have a lot more negotiating leverage. Any spots however will at that point.
