The IGO Ltd (ASX: IGO) share price is marching higher this morning as investors react to the company's full-year results for FY2024.
After a slow start to trading, shares in the metals miner are up 2.6% to $5.39. While not exactly shooting the lights out, it's a solid performance considering the weak numbers housed in the latest financial report.
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The numbers influencing the IGO share price today
IGO's results suffered the ramifications in a full year, headlined by falling metals prices. Here are the following highlights from the company's results for the year ended 30 June 2024:
- Spodumene production down 7% year-on-year to 1,383,000 tonnes
- Total revenue down 18% to $841 million
- Underlying EBITDA down 71% to $581 million
- Statutory net profit after tax (NPAT) down 99% to $3 million
- Net cash balance of $468 million, up 13% from FY23
- Total dividends of 37 cents per share, down 50%
The dramatic 99% reduction in net profits includes two significant impairment charges: a $200 impairment of Cosmos and Forrestania assets and a $120 million impairment to IGO's exploration assets. IGO's NPAT would have been $319 million without these charges (and two other small adjustments).
Cosmos was placed into care and maintenance in June with intentions to restart the project in the future.
What else happened in FY24?
Spodumene and nickel concentrate production fell in FY24 (7% and 19% respectively). The only area to see a boost in production during the year was lithium hydroxide, jumping 86% to 3,508 tonnes, following improvements in 'process design, engineering, and operating control for Train 1' at Kwinana.
In a common theme this reporting season, IGO experienced increasing costs in FY24. According to the report, spodumene production cost per tonne rose 35% to $330, and nickel production crept 9% higher to $6.16 per pound.
Furthermore, mining at Forrestania is expected to close earlier than initially anticipated. A June seismic event prompted the decision to cease mining at the Spotted Quoll in the September 2024 quarter and switch to care and maintenance.
IGO also had a new CEO for the 2024 financial period. On 11 December 2023, the company announced Ivan Vella as its managing director and CEO, making the leap from Rio Tinto Ltd (ASX: RIO). The IGO share price briefly rallied ~14% over the following two weeks, visible in the chart above.
What did management say?
Vella made no mistake in admitting the challenging market in which IGO operated in FY24. However, the CEO remained optimistic about the company's assets and positioning, saying:
Operationally, we have worked to adapt to the changing market conditions and the increased volatility in our markets. The quality of Greenbushes continues to shine through, with a solid production and cost result underpinning strong margins and cash flow, via our joint venture.
Within our nickel business, our low-cost Nova Operation continued to generate strong free cash flow despite the commodity price headwinds that contributed to our decision to put Cosmos into care and maintenance.
Building on this, Vella teased a refreshed strategy slated in the coming weeks:
[…] we have conducted deep reviews across our corporate and exploration teams to ensure we have the right team in place, with the right capabilities, to ensure we can deliver on this new strategic direction.
What's next for IGO and its share price?
Guidance for FY25 suggests a few shifts compared to the past financial year, including:
- Nickel production forecast to be much lower (16,000 to 18,000 tonnes)
- Copper production forecast to decline to between 6,250 and 7,250 tonnes
- Nickel cash cost to reduce to between $4.80 and $5.80 per pound
Meanwhile, some items are mostly expected to be unchanged from the FY24. For instance, forecast spodumene production of 1,350,000 to 1,550,000 tonnes compared to 1,383,000 tonnes. Similarly, the cost of spodumene is projected to be in the same ballpark ($320 to $380 per tonne).
The IGO share price is down 58% over the last year. For reference, the price of lithium carbonate is down ~63% over this period. Goldman Sachs recently assigned the miner's shares with a buy and a price target of $6.75.
