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Mining
IGO (ASX:IGO) has become the latest WA miner to pump the brakes on a major project, putting back the start date for concentrate production from its newly acquired Odysseus mine in the northern Goldfields to mid-2023.
The mine, part of the Cosmos nickel complex picked up in the $1.2 billion deal to acquire Western Areas, was originally slated to open by the end of this year.
It is the latest project to suffer delays in WA’s tight construction and labour market, with OZ Minerals (ASX:OZL) on Monday warning it could delay an FID on its $1.1b West Musgrave nickel-copper project on the WA-SA border amid labour shortages and massive inflationary pressure.
New costings for Cosmos are due to be presented to market in October this year, with IGO saying it will deliver a more resilient a robust mine plan for the early stages of the mine by completing additional mine development, finishing the shaft and expanding its processing plant from 750,000 to 1.1Mtpa.
“I think at a high level the strategy, as previously envisaged the focus was getting to concentrate production as quick as possible, and then to continue developing the mine while operating the mill,” IGO MD Peter Bradford said on a conference call.
“The problem with that is that there would have been insufficient working areas available underground, and therefore the mill would have been drip fed rather than fully fed, and therefore the economics of that would have been would have been not optimal.
“And we think a more optimal outcome is to spend more time in the development phase, get more working areas developed, allow the current shaft construction timeline to be completed and obviate any need for truck haulage of ore to surface which was originally envisaged, because that just gets a bit messy with mobilisation (and) demob of extra trucks and then the cost of doing that.
“We think the current plan makes a lot more sense and will deliver a more resilient operation and a better overall outcome for IGO shareholders.”
On the mining front, IGO banked $277.9m in sales revenue, up from $245.5m in the March quarter, with underlying EBITDA also increasing 11% from $232.6m to $258.4m to take its earnings to $716.9m for FY22.
NPAT totalled $107.2m, down 19% on the previous quarter of $133m, with full year NPAT expected to be $330.9m.
The result included the first cash dividend for IGO for the ~25% stake of the Greenbushes lithium mine it acquired from China’s Tianqi last year of $70.7m.
Long a laggard to spot prices in terms of realisation, the Albemarle-Tianqi-IGO owned Greenbushes is beginning to catch up to more nimble mid-tier operators like Pilbara Minerals (ASX:PLS) and Allkem (ASX:AKE), with the spodumene transfer price lifting from $1,770/t in the second half of 2022 to US$4,178/t in the first half of FY23.
Greenbushes produced 1.135Mt of spodumene in FY22, while the Nova nickel mine delivered 26,675t of nickel in concentrate (v. guidance of 25,000-27,000t), 11,483t of copper (guidance 11,500-12,500t) and 982t of cobalt (900-1000t) at cash costs of $1.95/lb (guidance $2-2.40/lb).
IGO has set guidance of 34,500-39,500t of nickel, 11-12,000t of copper and 900-1000t of cobalt at Nova and Western Areas’ Forrestania mines for FY23 at cash costs of $4.10-4.70/lb, with guidance for Cosmos due in October.
It looms as an interesting time for IGO, which has offtake contracts expiring soon at both Nova and Western Areas as it mulls a move downstream into nickel sulphate production in a potential JV with Andrew Forrest’s Wyloo Metals.
IGO has begun testwork and is eyeing a scale of around 24,000t of nickel metal to make a first train at the plant viable.
David Southam, whose exploits include restarting the mining operations of Kambalda nickel miner Mincor Resources (ASX:MCR), has stepped from the firm shortly after banking the company’s first cash in six years from its WA operations.
Southam’s rebuild of Mincor’s Kambalda nickel empire has received plenty of airtime in these columns, partly because it’s a town and commodity the writer loves to talk about.
Stepping into his shoes will be OZ Minerals exec Gabrielle Iwanow.
The head of OZ’s Prominent Hill mine and former general manager of Rio Tinto’s Paraburdoo iron ore operations will become one of a handful of female chief executives of major Australian mining companies alongside Lynas (ASX:LYC) boss Amanda Lacaze and outgoing Fortescue Metals Group (ASX:FMG) boss Elizabeth Gaines.
The All Ordinaries Gold sub-index is up a handy 1.29% today, making it a terrific day for a goldie to release some production results and guidance.
SLR caused a stir and roundly baffled the market when it blamed the unpredictability of Covid for its decision to withdraw FY22 guidance a couple months ago.
The Luke Tonkin-led miner churned out 65,844oz of gold and 235t of copper at an all in sustaining cost of $1979/oz in the June quarter, taking FY22 production to 251,887oz and 991t at $1756/oz including the first contribution from its new Sugar Zone mine in Canada.
Its WA production of 236,974oz was within SLR’s withdrawn guidance range with its costs slightly above at $1729/oz.
SLR expects to sell 260,000-290,000oz at $1850-2050/oz in the 2023 financial year.
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