IGO share price lifts on news of record quarterly profit

A mining worker clenches his fists celebrating success at sunset in the mine.A mining worker clenches his fists celebrating success at sunset in the mine.

The IGO Ltd (ASX: IGO) share price is currently up 1.8% trading at $13.73 following news today of a record quarterly profit.

IGO is a diversified metals miner and one of very few ASX lithium shares actually producing lithium. The rest are still in the exploration and development phases. IGO is also a nickel producer.

The company released its March quarter activities report as well as an investor presentation today.

Let’s look at the detail.

IGO share price goes green on good news today

The highlights of the March report are record earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $533 million and net profit after tax (NPAT) of $412 million.

The company said these records were primarily the result of a 30% increase in IGO’s share of net profit from the Tianqi Lithium Energy Australia lithium hydroxide operation (TLEA).

TLEA is a joint venture with Chinese miner Tianqi Lithium Corporation.

A 45% increase quarter-over-quarter (qoq) in the realised spodumene price also helped.

Here’s a snapshot of the numbers:

  • EBITDA of $533 million, up 22% qoq
  • NPAT of $412 million, up 22% qoq
  • Net debt of $9 million, down 95% qoq
  • Cash on hand of $441.1 million, down 14% qoq
  • Paid a record FY23 interim dividend of 14 cents per share, totalling $106 million
  • Repaid a $240 million revolving credit facility in full.

What else happened during the quarter?

IGO reported nickel production of 8,358 tonnes, up 16% qoq and spodumene concentrate production of 356 kilotonnes (kt), down 6% qoq.

The company said it also made “significant progress on various growth projects” during the period.

Operationally, it reported consistency at Greenbushes and a steady increase in lithium hydroxide production at Kwinana. This is where the Western Australia Government has granted it land for an integrated battery materials facility adjacent to TLEA.

IGO said the Nova nickel-copper-cobalt mine had a strong recovery after its power station fire in December.

Activities advanced at the Cosmos nickel development mine, including completion of the first stage of the shaft, paste plant, and aerodrome. IGO anticipates first nickel production in the September quarter.

What did management say?

Acting CEO Matt Dusci said it had been “another strong quarter demonstrating the financial strength of the company”.

In its statement, the company also commented on the outlook for lithium demand.

As widely reported across the industry, the lithium market is currently experiencing a high level of volatility, which has resulted in the emergence of a price disparity between lithium product streams.

IGO does not anticipate this will impact FY23 Guidance.

What’s next?

IGO is continuing its search for a new CEO following the sudden death of Peter Bradford in October.

Shortlisted candidates — all from outside the company — have gone through the first interview stage. The board will conduct the final interviews in the coming weeks.

IGO hopes to name its new CEO in the June quarter.

In other news from the March quarter, former Transurban Group (ASX: TCL) CFO Samantha Hogg joined the IGO board as a non-executive director.

IGO was also included in the 2023 S&P Global Sustainability Yearbook for a third consecutive year.

The Yearbook acknowledges companies within the top 15% of their industry based on key sustainability criteria. IGO is one of three Australian mining companies included in the 2023 Yearbook.

IGO share price snapshot

Falling lithium prices have affected the value of many ASX lithium shares over the past six months.

The IGO share price has lost 10.4% of its value over this period.

This represents an outperformance of IGO’s key peers, Pilbara Minerals Ltd (ASX: PLS) and Allkem Ltd (ASX: AKE), whose share prices have declined by 18.3% and 15.5%, respectively.

The post IGO share price lifts on news of record quarterly profit appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Allkem. 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 Scott Phillips.

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