Perth-based IGO (ASX:IGO) has revealed a second round of impairments for the year ending in June.
After $968 million in write-downs in 2022-23 on nickel assets acquired in the takeover of Western Areas in a $1.3 billion deal in 2022, the company added another $171.8 million in write-downs of its Cosmos and Forrestania nickel assets in the December half of 2023-24.
IGO said at the time it was reviewing its exploration assets, especially for nickel.
On Tuesday, IGO revealed a separate impairment of between $275 million and $295 million in the value of some exploration assets.
Including the earlier impairment, write-offs will top $440 million for IGO in its annual results and take the two-year total to more than $1.4 billion.
The company explained that the decision was made after “a detailed review of the Company’s exploration portfolio.”
“As announced previously, IGO has been undertaking a comprehensive Exploration Business Review, which has included a detailed examination of its portfolio of exploration tenement holdings and land positions. The review is focused on rationalising the portfolio and ensuring that the Company’s resources are allocated effectively to the targets which are most prospective for commercial success.
“While the determination of the final impairment value is incomplete and will be subject to audit review, IGO expects the impairment range of exploration assets to be between $275M and $295M for the full year.
“The impairment relates to the revaluation of the Silver Knight and Mt Goode nickel exploration assets as well as the broader exploration portfolio rationalisation,” IGO said.
“The non-cash impairment will not impact IGO’s FY24 EBITDA and will be recorded in the Company’s FY24 Audited Financial Results due to be released on 29 August 2024,” the company added.
On June 28, the last business day of the 2023-24 financial year, IGO told the ASX that it had received a dividend from its lithium business of $159.3 million.
The payment came from Tianqi Lithium Energy Australia (TLEA) “with respect to the June 2024 Quarter.”
IGO said the payment took total dividends received from TLEA (which is 49% owned by IGO) for the 2023-24 financial year to $761.4 million.
“The release of cash reserves maintained by both IGO and TLEA follows the drawdown of spodumene concentrate stockpiles at Greenbushes, the amendment to the spodumene concentrate pricing mechanism during the March Quarter, and the reduction in volatility across the broader lithium market in recent months.
“Further, the recent refinancing of the Windfield debt facility has provided funding to support the ongoing capital expenditure and growth program at Greenbushes,” IGO said.
The most recent dividend of $761.4 million, while impressive, is down 37% from the $1.184 billion paid in 2022-23, according to IGO’s accounts for that year.
NB: Windfield Holdings is a joint venture between TLEA and Albemarle Corporation of the US, which wholly owns Talison Lithium (Talison), the operator of the Greenbushes Lithium Mine. Tianqi is a Chinese lithium company and a significant investor here and in Chile.