Metals miner IGO Limited has more than tripled post-tax profit to $549 million for the year to June, thanks to the sale of its 30% stake in the Tropicana gold mine to Regis Resources which was just one deal in an eventful year for the company.
IGO also took a major position in the Australian lithium mining and processing sector and after the June 30 balance date, stalking rival nickel miner Western Areas.
IGO reported a 12% rise in revenue from continuing operations to $671.7 million (which excludes the sale of its 30% in the Tropicana mine), saw a 2% rise in earnings before interest, tax, depreciation and amortisation to $474.6 million and a net profit from continuing operations of $116.8 million.
Including the proceeds from the sale of Tropicana (an after-tax gain of $384.8 million after the sale to Regis Resources), statutory net profit attributable to parent was up 254% to $548.7 million
However, it declared a final fully franked dividend of 10c cents a share which was 1c lower than last year’s final dividend.
The lower dividend was due to a revised shareholder returns policy from IGO that will now see shareholders getting between 15% and 25% of free cash flow whenever liquidity is less than $500 million. When liquidity exceeds that, shareholders could get more. Net operating cash flow for the year was $446 million.
Higher gold prices offset lower production and sales volumes to boost associated earnings during the year. IGO reported sales of 2,051 tonnes of nickel, 10,752 tonnes of copper, and 454 tonnes of cobalt from its Nova mines in WA in the year to June.
The group reported average realised prices per tonne on each commodity of $A21,986, $A10,974, and $A52,057, respectively.
IGO previously had previous forecast that its Nova Operation was targeting 25,000 to 27,000 tonnes of nickel, 11,500 to 12,500 tonnes of copper, and 900 to 1,000 tonnes of cobalt in 2021-22.
In late 2020, IGO did a US1.4 billion deal with Chinese group Tiangqi covering the Greenbushes mine and Kwinana lithium refinery
The deal saw IGO purchase a 49% stake in Tianqi Lithium Energy Australia for $A1.9 billion.
That gave IGO with a 25% interest in the Greenbushes lithium mining and processing operation in Western Australia – the largest operating lithium mine globally.
The company also received an interest in Tianqi’s Kwinana lithium hydroxide plant, also located south of Perth.
In effect IGO’s $A1.9 billion deal bailed out the Chinese company which was struggling to remain afloat in late 2020.
The shares were up 1.3% to $9.65.
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Meanwhile Regis, the buyer of 30% of the Tropicana operation from IGO cut dividend after revealing a full-year net profit after tax of $146 million.
While that was slightly better than market forecasts, it was down 27% from the $200 million earned in 2019-20.
The fall was blamed on higher cost of sales and administration costs.
Revenue totalled $811.1 million and Regis reported gold sales of $819 million after selling 367,000 ounces of gold (a rise of 8% year on year) at an average price of $A2,229 per ounce.
Revenue was up 8% year on year because of the higher gold price in Australian dollar terms and the 8% rise in output.
Profit before interest and tax of $212 million was down from $285 million in 2019-20.
It declared a fully franked final dividend of 3 cents a share, its lowest dividend since 2015. This takes total dividends to 7c, down 56% from 16c the year before.
“Level of future dividends will continue to be assessed in the context of gold price, operational performance and planned capital expenditure,” the company told shareholders on Tuesday.
Regis Resources offered guidance for 2021-22 of between 460,000 and 515,000 ounces of gold, mostly from its Duketon mine, at an all-in-sustaining-cost of between $A1,290 per ounce and $A1,365.
Regis had $269 million worth of cash and bullion at June 30.
The shares lost 3.5% to $2.47.
