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Highlights
- Revenue Decline and Losses: IGO reported an 8% drop in Q2 revenue to AU$131.8 million and a pre-tax loss of AU$79 million, excluding impairments.
- Kwinana Project Halts Development: Work on Lithium Hydroxide Plant 2 (LHP2) at Kwinana has been suspended due to economic concerns, leading to a substantial impairment in H1 FY25 results.
- Commodity Price Pressures: Despite strong production at the Greenbushes lithium mine, spodumene prices fell to US$736 per tonne, while cash costs at the mine surged 17%.
Shares of IGO Ltd (ASX:IGO) slipped nearly 3% to AU$5 in morning trade on Thursday after the lithium, nickel, and cobalt miner released its Q2 FY25 results. Investors reacted to weaker revenue, ongoing cost pressures, and project setbacks, sending the stock into the red.
Revenue Drops, Losses Mount
IGO reported a quarter-over-quarter revenue decline of 8% to AU$131.8 million, while its pre-tax loss stood at AU$79 million, excluding impairments. The company also revealed significant operational headwinds, particularly at its Kwinana site, which contributed a pre-tax loss of AU$105.5 million—nearly double the previous quarter's loss.
A key factor behind the disappointing financials was the halt in development at the Lithium Hydroxide Plant 2 (LHP2) in Kwinana, citing economic viability concerns. The decision will result in a substantial impairment charge in the company’s H1 FY25 financials.
Greenbushes Production Strong, But Prices and Costs Weigh
Despite the setback at Kwinana, IGO’s Greenbushes lithium mine exceeded production targets, processing 359,000 kilotonnes (kt) of ore and producing 33kt of chemical and technical grade spodumene. However, the average realised spodumene price dropped to US$736 per tonne, down from US$872 per tonne in the previous quarter.
Adding to concerns, cash costs at Greenbushes rose 17% to AU$324 per tonne due to lower volumes, increased maintenance expenses, and deferred stripping adjustments. Rising costs, coupled with falling commodity prices, could continue to pressure IGO's profitability in the coming quarters.
Looking Ahead: FY25 Guidance and Market Sensitivity
For the remainder of FY25, IGO’s share price will likely be influenced by global commodity prices, as well as the company’s ability to control costs. Production guidance for the fiscal year includes:
- Nickel: 16,000–18,000 tonnes
- Copper: 6,250–7,250 tonnes
- Cobalt: 550–650 tonnes
At Greenbushes, spodumene production is expected to range between 1.35 million tonnes and 1.55 million tonnes, with cash production costs between AU$320 per tonne and AU$380 per tonne.
Meanwhile, IGO forecasts capital expenditures at Kwinana to be between AU$80 million and AU$100 million, as the company reassesses its investment strategy following the LHP2 suspension.
