As expected, the double-play squeeze on nickel and lithium in the December half took a toll on IGO’s (ASX:IGO) interim result.
The operator of Australia’s oldest lithium mine, Greenbushes, in southwestern WA, saw a 53% fall in net profit to $288.3 million for the six months to December 31.
That was before the company took another hit from its embattled nickel business with a write-down of $172 million on top of the $968 million taken in the 2023-2023 financial year.
The write-down was taken against the value of the Cosmos and Forrestania nickel assets. The earlier write-down was taken against the Cosmos assets purchased in the $41.3 billion takeover of Western Areas.
The Cosmos Project is being placed in care and maintenance following a project review, as announced in January.
Despite the weak result, the company will still pay an interim dividend of 11 cents a share, down from 14 cents a share for the December 2022 half-year.
Revenue fell 19% to $438.2 million as the Nova nickel operation reported a 23% drop in revenue to $281.3 million due to lower nickel prices and sales volumes.
The killer was the financial performance of the Greenbushes mine and processing operation, which also sees Albemarle and Chinese giant Tianqi as fellow shareholders.
The lithium joint venture was impacted by falling spodumene prices and sales volumes.
Solid results from TLEA (the JV with Tianqi) delivered IGO a share of net profit of $495 million (down from $631.4 million for the December 2022 half-year) and dividends of $578 million for the period, which were up on the $440 million for the December 2022 half-year.
Those higher dividends boosted the company’s results and allowed the dividend to be paid by offsetting the slide in nickel revenues and the contribution from the stake in Greenbushes. The dividends also helped IGO keep a solid cash balance at the end of the half-year.
IGO had a cash balance of $276 million at December 31, 2023, with $720 million of undrawn bank facilities.