Lithium dividends help drive IGO free cash flow

30th October 2023 By: Mariaan Webb - Creamer Media Senior Deputy Editor Online

Lithium dividends help drive IGO free cash flow

Despite a weaker performance from the IGO nickel operations, acting CEO Matt Dusci said the mining company had kicked off the 2024 financial year with a strong start, helped by dividends from its lithium business.

In its September quarterly report, Dusci described the free cash generated by the lithium business as a “clear highlight” for the company during the quarter.

Cash inflows from operating activities increased by 33% to A$634.70-million, driven by a record dividend from Tianqui Lithium Energy Australia (TLEA), the joint venture (JV) that owns the Kwinana lithium plant and is the majority shareholder in the Talison mine in Greenbushes.

Together with the most recent dividend of $577.6-million, the cumulative dividends received from the JV to date equates to more than A$1.8-billion.

IGO ended the quarter with cash of A$804.5-million, leaving the company in a net cash position of $444.5-million, including A$360-million of drawn debt. Subsequent to the quarter end, the company repaid the $360-million of debt.

However, underlying earnings before interest, taxes, depreciation and amortisation reduced to A$362-million, owing to lower prevailing spodumene pricing and a softer performance from the nickel business.

Dusci reported that difficult conditions impacted on production rates and led to higher cash costs at the Nova and Forrestania nickel operations. The group’s nickel production fell by 25% to 7 131 t at a cash cost of A$6.66/lb.

Commenting on the volatility in the lithium market, Dusci said Greenbushes shareholders were working on mechanisms to manage surplus volumes to minimise any impact to operations.

However, he stressed that December quarter spodumene sales from Greenbushes were likely to be lower than production, owing to the deferral of some product shipments during the current quarter.