Diversified miner IGO Group [ASX:IGO] reported an improved September quarter with ‘record sales revenue and EBITDA’.
IGO’s net profit after tax rose by 136% quarter-on-quarter (QoQ) to $253 million, while net debt was reduced by 26% QoQ to $396 million.
IGO shares are up by 30% year to date.
Source: tradingview.com
IGO September quarter: record sales revenue and EBITDA
Here are the key results from IGO’s 1Q23:
- A Group record underlying EBITDA went from $258 million to $398 million, up 54% QoQ
- Sales Revenue increased by 3% from $278 million to $285 million
- ‘Record sales revenue from Nickel Business following first quarter’s contribution from Forrestania’
- ‘Net debt reduced to $396M following $194M underlying free cash flow and $220M repayment of revolving credit facility’
- ‘Increased TLEA dividend paid to IGO of $106M for the Quarter’
- ‘Payment of FY22 final dividend of $0.05 per share, fully franked’.
Source: IGO
Operations
- Group nickel production went up 50% QoQ to 9,761 tonnes
- Spodumene Concentrate Production improved 7% totalling 361 kilotons
- ‘Full year production and cash cost guidance maintained for Nickel and Lithium businesses’
- ‘Record quarterly spodumene production at Greenbushes and a continued ramp-up in lithium hydroxide production at Kwinana’
- ‘Cosmos revised development plan announced with revised capital estimate and project schedule prepared’.
Source: IGO
IGO hit record nickel revenue thanks to the first contribution of Forrestania, which offset decreased Nova revenue with ‘lower realised nickel prices.’
Spodumene prices at Greenbushes were driven higher both by production and strong pricing, as well as solid unit COGS.
The lithium business contributed the most to IGO’s profits for the quarter.
IGO’s acting CEO, Matt Dusci, commented:
‘The IGO family continues to mourn the recent loss of our Managing Director and CEO, Peter Bradford, who was a passionate, engaged leader who put our people first and helped to create IGO’s unique culture. Peter was recognised across the entire mining industry as an inspirational leader, an innovative and strategic thinker and a compassionate mentor.
‘Despite our loss, we are proud to have delivered another strong result this Quarter. Group EBITDA of $398M represents a quarterly record for IGO, thanks to strong operational performance from both our lithium and nickel businesses.
‘Stronger production and higher spodumene prices drove outstanding earnings within the TLEA joint venture and led to IGO receiving its second quarterly dividend of $106M.
‘Within our nickel business, Nova and Forrestania performed to plan, and we are also pleased to announce our Cosmos revised project plan, which lays the roadmap for the successful delivery of this project over the coming year.’
IGO’s outlook
For its lithium business, IGO expects spodumene production and cash costs next quarter to mirror 1Q23.
IGO’s FY23 lithium production and cost guidance remains unchanged but will be reviewed in the December quarter.
As for its nickel business, IGO expects nickel production at Nova to be lower in 2Q23 due to mine sequencing contributing to lower grade and recovery. This will also raise cash costs.
However, nickel production at Forrestania is expected to ‘trend higher’ in 2Q23.
FY23 nickel production at Nova is forecasted to be within guidance.
FY23 production at Forrestania is now expected to be ‘at the top end of the guidance range’.
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Regards,
Kiryll Prakapenka,
For Money Morning
