IGO (ASX:IGO) already revealed the major embarrassment from its production and financial results — the excess $880-980 million it paid for Western Areas’ Cosmos and Forrestania mines to be registered as an impairment in its upcoming full year financials.

Its operational performance gave investors a little more to sing about, even though a broader run against the battery metals sector was compounded by the release of the report, sending IGO (ASX:IGO) shares down 4.63% today.

If the purchase of Western Areas turned out to be a profligate one, the same could not be said of its counter-cyclical acquisition of the minority stake in the Tianqi Lithium Energy Australia business.

That gave IGO a 24.99% stake in the world’s biggest lithium mine, Greenbushes.

With $423m in dividends in the June quarter, it delivered $1.18b for IGO in FY23, with spodumene concentrate production of 1.491Mt coming above the top end of its 1.35-1.45Mt guidance range at costs of just $279/t (slightly above $225-275/t guidance).

On the downside TLEA’s new Kwinana lithium hydroxide plant demonstrated the ongoing difficulties encountered by companies setting up downstream processing in Australia.

IGO and Tianqi saw production fall 963t in the March quarter to just 142t in the June quarter. It came after Mineral Resources (ASX:MIN) last week dumped plans to move into hydroxide processing to instead focus on studies on a mid-stream product for US and European carmakers in a hint some miners were becoming less enamoured by the supposedly stronger margins that could be found downstream.

““We are pleased to have recorded another strong set of underlying financial results for the Quarter, with quarterly record EBITDA of $636 million and record underlying free cash flow of $381 million,” IGO acting CEO Matt Dusci said.

“Greenbushes continues to perform above expectations, with a record quarterly production result driving full year production to 1.49Mt on a 100% basis, which was above our guidance range. Despite a modest increase in the cost of goods sold, EBITDA margins at Greenbushes remain more than 90%, demonstrating the world-class nature of this asset.

“At Kwinana, the ramp up of Train 1 experienced ongoing technical challenges following the scheduled shut down during the Quarter, which resulted in a lower than expected quarter of production. TLEA is now working towards reaching approximately 50% production capacity rate by the end of 2023.”

In its nickel business IGO produced 34,846t in FY23 and 10,266t of copper, within its 33,500-37,500t guidance range at full year costs of $5.63/lb, within the $5.30-5.90/lb range.


New dividend policy for IGO investors

With the profitability of IGO’s lithium business, which saw it boost its cash by 76% QoQ to $775.2m, IGO will adopt a formal dividend policy, planning to pay shareholders 20-40% of underlying free cash flow when its liquidity is below $1 billion.

If liquidity is above $1b, IGO will consider a payout in excess of 40%, with remaining funds expected to be put to special divvies, buybacks, debt repayments and/or inorganic growth.

“We are pleased to provide our shareholders with a
comprehensive Capital Management Policy which provides a clear pathway to returning capital to shareholders
while balancing the needs of our business to grow and invest,” IGO CFO Kath Bozanic said.

“While IGO is highly focused on delivering growth across our lithium and nickel businesses, we have been careful to ensure our business can withstand market volatility and the cyclicity of the sector while also sharing in the exceptional returns currently being generated as a result of strong lithium prices.”



IGO (ASX:IGO) share price today:




Miners just about on top as goldies rise

A couple of reporting gold stocks saw big lifts, with Emerald Resources (ASX:EMR) and Gold Road Resources (ASX:GOR) up 6.5% and almost 2% respectively.

Emerald produced 27,200oz at its Okvau mine in Cambodia at AISC of US$789/oz, well into the lowest cost quartile in the industry.

For the full financial year it produced 108,900oz at US$799/oz, with guidance for next year of 25-30,000oz per quarter at AISC of US$780-850/oz and cash in hand of $90m.

Gold Road produced 76,053oz at its 50-50 JV with Gold Fields at Gruyere at AISC of $1620/oz, with 2023 production guidance revised to 320,000-350,000oz at the upper end of cost guidance of $1540-1660/oz after mining delays from drill and blast issues in the pit in the June quarter.

But Gold Road is now fully unhedged, with its sale price of $2961/oz implying an AIC margin of over $1000/oz and free cash flow of $30.4m following on from $44.2m in the March quarter, seeing its bank balance rise from $127.9m to $157.2m in the quarter.

Gold Road also has $416.1m in listed investments, most of that from its ~19.9% holding in De Grey Mining (ASX:DEG).

The materials sector lifted 0.1%, with Lynas Rare Earths (ASX:LYC), bulks and gold miners (aside from a woefully misfiring Silver Lake Resources (ASX:SLR)), cancelling out a bad day for battery metals.



Monstars share prices today: