Kwinana Refinery Setbacks and Executive Resignations Cloud IGO’s Outlook

Solid Operational Performance Anchored by Greenbushes and Nova

IGO Limited’s quarterly report for the period ending 31 March 2025 reveals a company navigating a complex operational landscape with notable strengths and emerging challenges. The lithium giant posted an underlying EBITDA of $34 million and a free cash flow of $49 million, signaling a return to profitability after a loss in the previous quarter. This rebound was largely driven by the Greenbushes lithium mine and the Nova nickel operation, both of which delivered strong results despite some headwinds.

Greenbushes continues to stand out as a world-class asset, boasting an impressive EBITDA margin of 68% year-to-date. The mine’s ability to generate cash flow at the bottom of the cycle underscores its operational resilience. Production dipped 13% quarter-on-quarter due to planned lower mill throughput and feed grades, but sales volumes rose 17%, aided by delayed shipments clearing port congestion. The Chemical Grade Plant 3 (CGP3) expansion remains on schedule, with first concentrate expected in the December quarter of 2025, promising future growth potential.

Nova Operation Shows Significant Improvement and Extended Life

Nova’s nickel production surged 23% quarter-on-quarter, reaching 4,179 tonnes, supported by enhanced mining volumes, improved grades, and better plant availability. This operational uplift translated into an 8% increase in sales revenue, buoyed by higher realised nickel, copper, and cobalt prices. Notably, IGO provided clarity on Nova’s remaining life of mine, confirming production will continue until the end of 2026, delivering an additional 15,000 to 18,000 tonnes of nickel beyond FY25. This extension offers investors a clearer horizon for cash flow generation from this key asset.

Kwinana Refinery Underperformance and Strategic Shift

In contrast, the Kwinana Lithium Hydroxide Refinery faced operational setbacks, including an unplanned shutdown and equipment failure that constrained production to 26% of nameplate capacity. Conversion costs improved quarter-on-quarter but remain elevated. Importantly, IGO and its joint venture partner Tianqi Lithium Energy Australia (TLEA) have permanently ceased all works on Lithium Hydroxide Plant 2 (LHP2), citing economic inviability after a detailed review. Discussions continue regarding the future pathway for Plant 1, reflecting a cautious approach to capital deployment amid ongoing operational challenges.

Exploration Overhaul and Corporate Changes

IGO has implemented a new exploration business model focused on prioritising high-value targets and rationalising its tenement portfolio. This strategic pivot has led to a more than 50% reduction in exploration staffing and a significant cut in exploration expenditure, expected to fall to $35-40 million in FY26. The company remains committed to growth through exploration but is adopting a more disciplined and focused approach. Leadership changes also marked the quarter, with CFO Kathleen Bozanic and Chief People and Sustainability Officer Sam Retallack announcing resignations, signaling a period of transition at the executive level.

Financial Position and Outlook

IGO’s balance sheet remains robust, with a net cash position of $284 million, up $38 million from the prior quarter. The company paid a US$110 million dividend to Windfield joint venture partners in March, reflecting strong cash generation from Greenbushes. Capital expenditure guidance for FY25 has been revised downwards for Greenbushes and Kwinana, reflecting project optimisation and cost control measures. Despite the challenges at Kwinana, IGO maintains its FY25 production and cost guidance across its key operations, underscoring confidence in its portfolio’s resilience.