IGO (ASX:IGO), the Perth-based lithium and waning nickel miner, is intensifying its strategy revamp ahead of its reveal in late August.
The company indicated in its June 30 quarter and annual production and sales report on Tuesday that more job cuts are coming, on top of those already made this year, especially in the weak nickel business, which will end sooner than thought.
Now, IGO will slim down its executive team as CEO Ivan Vella looks to leave the nickel side of the business behind and head deeper into the already crowded lithium sector. The company already has a significant advantage with an indirect share in the huge Greenbushes mine, in the southwest of WA, which is keeping the company afloat.
IGO received a dividend of $761 million in 2023-24 (including $159 million in the June quarter) from its indirect stake in Greenbushes. This allowed the company to avoid losses and maintain cash on hand of around $201 million at the end of the quarter and $468 million for the full year.
The company confirmed that it will make up to $298 million in impairments against its exploration interests in the June 30 accounts. These were flagged in a statement to the ASX earlier in the month. They relate to a revaluation of its Silver Knight and Mt Goode nickel exploration projects, along with an ongoing review and turnover of the company's exploration portfolio.
With continuing losses and impairments in nickel—and now its exploration efforts—IGO has depended on the Greenbushes mine to survive. However, even there, the plan to push up the production chain with a hydroxide refinery at Kwinana, south of Perth, is also faltering due to production problems. The plant will now close in 2025 for a rebuild to improve performance.
This is all part of the refreshed strategy to be unveiled at the company's annual results on August 29, IGO said on Tuesday in the quarterly report.
The company confirmed that its nickel business will fade away this financial year with Cosmos already closed, Nova heading towards its end of life, and a seismic event at the Spotted Quoll mine shortening its life. The impact of this is being assessed, and the mine is likely to close sooner than expected. Care and maintenance planning is underway.
IGO said the Forrestania mine is on the way to being placed on care and maintenance. Therefore, there is no overall guidance for nickel.
One quote from the CEO in Tuesday’s statement highlights the new strategy for IGO: lithium.
"Greenbushes’ world-class cost position continues to drive outstanding EBITDA margins which were 67% for the quarter and 85% over FY 2024. This enabled the payment of over $761 million in dividends from TLEA (49% owned by IGO, which gives it an indirect holding of 24.99%) during FY 2024, demonstrating the value our world-class lithium business can generate through the cycles."
Now, the challenge is how to turn that indirect interest into the future.
