IGO Limited (ASX: IGO)Share Price and News
Overview of IGO (ASX:IGO)
IGO (ASX:IGO) is a leading Australian mining company focused on battery metals - particularly nickel and lithium.
The company’s assets include the Nova nickel-copper-cobalt operation in Western Australia, a 25% share in the world-class Greenbushes lithium mine, and a 49% share in Kwinana. Greenbushes lies just 90km from Bunbury and is the world’s largest and highest-grade hard lock lithium operation.
IGO's Company History
IGO was founded in 2000 as a mineral exploration company and it listed in 2002. Over the years, it has grown into a significant player in the Australian mining sector, through acquisitions of projects and developing them. Key to its early years was the Tropicana Gold Mine which it eventually sold to Regis Resources.
One of its most important milestones came in 2015 when IGO acquired the Nova nickel-copper-cobalt mine in Western Australia, following its discovery by Sirius Resources.
In 2020 when IGO bought a 49% stake in the Greenbushes lithium operation, a world-class asset that supplies one of the world’s highest-grade lithium deposits. Then in 2022, it bought Western Areas, a deal that put the Forrestania and Cosmos mines into its lap.
The company rode the waves of the 2020-2022 lithium boom. After its profit peaked at $549m in FY23, it shrank to just $3m. IGO has recorded a ~$900m impairment against Western Areas less than a year after buying it for $1.3bn. Making matters worse was the death of long-term boss Peter Braford, which saw the company enter a new era.
Future Outlook of IGO (ASX: IGO)
IGO future revenue and earnings growth are closely tied to the markets for for battery metals, particularly lithium and nickel. Despite growing demand for their end uses (i.e. electric vehicles), prices have stagnated for a couple of years.
Other risks IGO faces include regulatory changes (one of which is US laws about foreign entities of concern), and operational challenges. Plus, IGO is only a minority partner in Greenbushes and did a deal based on backward-looking benchmark prices.
IGO’s copper ambitions are admirable, although it’ll be a long game. The company will either have to find projects via M&A – which is quick but expensive – or exploration, which is a cheaper but ardeous and painstaking process. IGO has been working on a a deal to sell Forrestania to Medallion Metals, which will see it get a 1.5% net smelter royalty, but will get little else.
Is IGO (ASX: IGO) a Good Stock to Buy?
IGO’s position as one of the few battery metal miners may make it appealing at first glance
However, the company’s growth prospects are tied to prices for lithium and nickel. Yes these risks are typical of the mining sector, particularly commodity price volatility, but prices have been down in the doldrums for years and it isn't clear just when prices will rebound. So we'd avoid IGO for the time being.
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Frequently Asked Questions
IGO Limited has a competitive dividend yield, which is attractive for income-focused investors. The company’s dividend policy reflects its strong cash flow and commitment to returning value to shareholders. The yield varies, so investors should check recent reports for the most current figure.