IGO (ASX:IGO) share price lower as revenue slides 18%

Rising nickel prices helped lift half year profits.

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Key points

  • The IGO share price is more than 3% lower on Monday
  • Revenue is down compared to the corresponding half year
  • Profit is up

The IGO Ltd (ASX: IGO) share price is down 3.04% in lunchtime trade following the release of the company's half year results for the 6 months through to 31 December.

The mining and exploration company's shares closed on Friday at $11.85 per share and are currently trading for $11.49 per share.

What did IGO report?

  • Sales revenue of $377.2 million, down 18% from the corresponding half year
  • Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $225.9 million, down 7% half-on-half
  • Net profit after tax (NPAT) increased 67% from 1H 2021 to $90.7 million
  • Cash and net cash holdings of $569.8 million, down 52% from the 1H 2021

What else happened during the half year?

IGO reported that sales revenues were impacted by a decrease in nickel and copper sales. However, this was offset by higher nickel prices.

The IGO share price was supported during the past quarter by a 36% lift in NPAT and 19% boost to EBITDA compared to the first quarter of 2021. The company said the quarterly performance was lifted from a higher contribution from its Nova operations along with a 56% improvement in profitability from its Lithium Joint Venture.

Overall, the half year results were lower as there was no contribution from the divested Tropicana project.

The company paid $45 million during the reporting period to Creasy Group as consideration for its Silver Knight acquisition.

IGO declared a 5.0 cent per share (cps) interim dividend, fully franked. The record date is 4 March with a payment date of 18 March.

What did management say

IGO also provided its annual resource and reserve update this morning. There were significant changes, with the company having divested its Tropicana project while forming the Lithium Joint Venture.

Among other highlights, it reported a 52% increase for its Greenbushes Mineral Resource and a 20% increase for its Ore Reserve with the inclusion of the Kapanga Deposit.

Commenting the the update, IGO's CEO Peter Bradford said:

Our portfolio has significantly changed during the year as we continued to execute our strategy of being a globally relevant supplier of products that are critical to clean energy.

The key changes are associated with the divestment of IGO's 30% interest in the Tropicana Gold Mine and the formation of a new lithium Joint Venture (JV) with Tianqi over its Australian lithium assets. This JV included a 24.99% indirect interest in the Talison Greenbushes Operation delivering exposure to a truly world-class asset with low cost, scale and longevity.

What's next?

Looking ahead, IGO expects the Mineral Resource and Ore Reserves will support continued growth projects at Greenbushes.

According to Bradford:

Greenbushes is the premier hard-rock lithium mine globally, and the expanded Mineral Resource and Ore Reserve supports the continued investment to expand the production capacity to meet the rapidly increasing demand for lithium as the world transitions to clean energy.

Bradford also pointed to Nova's strong production performance and said, for the year ahead, "We continue to invest in exploration in the near-mine environment with several highly promising exploration targets."

IGO share price snapshot

The IGO share price has gained 81% over the past 12 months. By comparison the S&P/ASX 200 Index (ASX: XJO) is up 4% over that same time.

So far in 2022, IGO shares are down just under 1%.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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