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IGO posts record earnings

31st January 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Battery metals miner IGO has reported record earnings for the half-year ended December, driven by a strong December quarter.

The ASX-listed miner on Tuesday announced record underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) of A$834-million for the half-year, compared with the A$226-million reported in the previous corresponding period.

Net profits after tax also reached a record high of A$591-million, compared with the A$91-million reported in the first half of the 2022 financial year, reflecting the growth in IGO’s share of net profits from the Tianqi Lithium Energy Australian (TLEA) joint venture.

Revenue for the half-year increased by 43%, to A$542-million from the A$378-million achieved in the first half of 2022, with the first revenue contribution received from the Forrestania operations.

“The loss of our MD Peter Bradford, during the first half came as a devastating shock to the IGO family. While we continue to mourn his loss, our people remain determined to deliver on Bradford’s aspiration to make a difference and make the planet better for future generations,” said acting CEO Matt Dusci.

“Despite our loss, we are delighted to report a highly successful and profitable half-year result, with the strength of our lithium business helping drive record earnings, record net profit and declaration of a record interim dividend.

“Strong lithium prices combined with a growing production profile at Greenbushes, generated outstanding financial returns for shareholders, while the team continues to focus on expanding the mine and processing capacity to deliver on future production growth. At Kwinana, the declaration of commercial production from Train 1 was a key milestone for the half-year and we remain focused on progressing the ramp-up of Train 1 and financial investment decision on Train 2 over 2023,” said Dusci.

The Greenbushes operation, in which IGO holds a 24.99% interest, recorded sales revenue for the half-year of A$4.2-billion and underlying Ebitda of A$3.7-billion on a 100% basis. Total spodumene production for the period increased 41% to 740 373 t, while unit cost of goods sold before royalties of $258/t of spodumene sold was 13% lower than the prior period, benefitting from higher sales volumes.

During the three months to December, the Greenbushes operation produced 379 000 t of spodumene on a 100% basis, a 5% increase on the previous quarter, while spodumene sales increased by 14% over the same period to 386 000 t.

Unit costs at Greenbushes for the quarter were also 4% higher at A$263/t, reflecting greater material mined and mill throughput together with a large inventory adjustment owing to the higher sales during the quarter.

Greenbushes is undertaking several capital expansion projects which IGO expects will increase installed production capacity from the current 1.5-million tonnes a year to 2.5-million tonnes a year over the next four years.

Construction of Chemical Grade Plant 3 (CGP3), which will have production capacity of 500 000 t spodumene concentrate, continued during the quarter

A number of value-enhancing studies are also being executed, including options for ore-sorting both in-pit and into the feed stream for CGP2.

The Kwinana lithium hydroxide refinery produced 585 t of finished lithium hydroxide during the quarter, following commercial production at Train 1. During the Quarter, the TLEA team progressed the early works on Train 2, including inspection of on-site materials and equipment from original equipment manufacturers and works on project administration buildings and service infrastructure. A total of $8.3-million was spent in relation to the early works for Train 2 during the quarter.

Based on the technical review and scheduling of required works, TLEA has adjusted the ramp-up profile for Train 1 by approximately six months, with Train 1 now expected to be operating between 60% and 70% of throughput capacity by the end of 2023, with final optimisation toward nameplate production to progress thereafter.

TLEA has also identified several key process modification and rectification capital projects which will be committed to over the next 12 months. Accordingly, IGO expects the sustaining and improving capital cost estimate provided for Train 1 to trend higher in the second half of 2023 and be between A$35-million and A$45-million for the 2023 financial year, compared with the previous budget of between A$15-million and A$20-million.

Meanwhile, nickel production during the quarter and the half-year ended December was impacted by a fire at the Nova power station in December.

Nickel production declined by 22% in the half-year ended December, from 13 876 t to 10 800 t, and by 36% in the December quarter, from 6 572 t in the first quarter of 2023 to 4 229 t of nickel in concentrate.

Contained copper metal for the half-year also declined by 19%, from 5 906 t to 4 758 t, and contained cobalt metal by 24% in the same period, from 512 t to 387 t. In the quarter ended December, contained copper in concentrate declined by 30% from Nova, from 2 805 t to 1 953 t, while cobalt in concentrate declined by 39% from 240 t to 146 t.

IGO told shareholders that grades and recoveries at Nova were also generally lower compared with the prior period. Revenue for the half-year was broadly steady, with lower sales volumes being partly offset by higher realised nickel prices. Nova cash costs increased to A$3.99/lb from the A$1.86/lb reported in the previous corresponding period, primarily attributable to higher production costs and lower metal production during the period, together with the impact of the fire to the power station.

The Forrestania operation contributed 6 139 t of nickel in the half-year period, including 2 950 t of nickel in concentrate during the December quarter.

“Our group nickel business result was impacted by a fire at the Nova operation in December, offset by improved nickel prices during the period. At Cosmos, we delivered a revised development plan in September and project development activity is progressing well,” said Dusci.

“Finally, we have continued to focus on building a sustainable business through our culture of care and commitment to our people, the environment and our communities. While we are pleased with the progress we have made on improving safety and wellbeing, there is still much to be done to ensure we minimise harm to our people. Meanwhile, we have retained our commitment to decarbonisation, engagement with local communities and ensuring the highest level of governance.”

Looking ahead at 2023, IGO expected nickel production to reach between 23 000 t and 25 000 t, while copper production is targeted at 10 000 t to 11 000 t, and cobalt production at 800 t to 900 t.

Edited by Creamer Media Reporter

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