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IGO Ltd ASX – Company Announcement and News

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Nova fire puts a dampener on IGO output


IGO Ltd ASX, a mining and exploration business, saw a 9% decrease in share price to $7.56. IGO Limited ASX: IGO owns and operates the Nova nickel-copper-cobalt operation in Washington. It is also a partner in a joint venture with Tianqi Lithium Corporation, which is focused on lithium and owns 100% of a downstream processing refinery at Kwinana that produces battery-grade lithium hydroxide. Tianqi Lithium Corporation owns a 51% stake in the Greenbushes Lithium Mine. 

Due to declining pricing for the essential ingredient in battery production and steelmaking, the IGO Ltd ASX Cosmos Project is the most recent nickel mine in Western Australia to close. Further delays in getting the mine to total capacity and increases in already high operational and capital expenditures were noted in an assessment of the Cosmos Project, which aims to optimize its operations and costs.

The reason for the decline of IGO Ltd ASX shares

IGO Ltd ASX saw a drop in its share price due to the Cosmos Project, which will undergo care and maintenance in response to the challenging market circumstances. The estimated loss on Cosmos and Forrestania assets is between $160 million and $190 million. As reports, IGO Limited acknowledged on Monday that production at the Greenbushes mine in Western Australia would likely be “marginally reduced” over the following five months, as the mine owners had ordered less than anticipated. 

Several factors, including the anticipated damage against its Cosmos nickel holdings, ongoing evaluations of the Cosmos Project’s future, and the impact on operations, have contributed to the recent decline in IGO Limited ASX: IGO shares, which has brought them to their lowest position since December. Due to unanticipated operating difficulties and capital and expense increases, IGO reduced the value of its Cosmos and Forrestania nickel mines by over $1 billion towards the end of the previous year. The business acquired the two assets in 2022 for its $1.3 billion acquisition of Western Areas. 

IGO announced a stunning 136% growth in net profit after taxes to $253 million for the three months ending September 30, along with a 54% increase in underlying EBITDA to a record $398 million. 

IGO limited news

IGO Ltd ASX reduced its initial production projections for its Greenbushes lithium project by 7%, from 1.4 million to 1.3 million metric tons in the fiscal year 2024. Due to market volatility, it did not sell any lithium hydroxide in the December quarter.

Despite growing employment losses in the industry due to an oversupply of low-cost Indonesian nickel, IGO is closing its struggling Cosmos nickel project in Western Australia. IGO must write off almost 90% of the $1.3 billion it spent about 19 months ago to acquire the nickel holdings in the Western Areas. The corporation revealed higher-than-expected capital and operating costs last July, which led to a nearly $1 billion slash in the value of the Western Area assets.

The December quarter and half-year report made public on Wednesday indicates that IGO is expected to experience a sizable interim deficit for 2023–2024. The report disclosed significant declines in income and payouts from its lithium investments, a second impairment of its nickel operation, and a reduction in cash flows and available cash. This leads to a gross loss of over $600 million, or a net loss of $1.128 billion to $1.158 billion for the half-year. Although there are no signals of a decline in Greenbush’s investment, the new price structure will result in a rapid decline in returns.

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