How IGO’s Half-Year Turnaround Signals New Momentum in Battery Minerals

A Financial Reset Amid Market Headwinds

IGO Limited’s half-year financial report for the period ending 31 December 2025 reveals a company in the midst of a cautious but clear turnaround. The mining and battery minerals specialist posted revenue of $194.1 million, down 32% from the previous corresponding period, primarily reflecting lower nickel sales volumes at its Nova Operation and the transition of Forrestania to care and maintenance. Despite this top-line contraction, the company has significantly reduced its net loss after tax to $34.1 million, a dramatic improvement from the $782.1 million loss recorded in the first half of 2025, which was heavily impacted by large asset impairments.

Operational Highlights and Cost Discipline

The Nova Operation continues to be a cornerstone asset, delivering an underlying EBITDA of $67.3 million and free cash flow of $97 million, despite lower sales volumes and nickel prices. Improved feed grades and reduced mining costs contributed to a nickel cash cost reduction to $5.62 per payable pound, down from $6.91 previously. Meanwhile, the Lithium Business, encompassing IGO’s 49% stake in Tianqi Lithium Energy Australia (TLEA), reported a modest share of net loss of $0.8 million, a significant improvement from the prior year’s $602.2 million loss, which included a substantial impairment of the Kwinana Refinery assets. Notably, no new impairments were recorded this period, and lithium hydroxide production increased, albeit still below nameplate capacity.

Strategic Asset Sales and Growth Focus

IGO is progressing with its strategic portfolio optimisation, with the Forrestania Nickel Operation assets under contract for sale to Medallion Metals, expected to complete by late February 2026. This divestment aligns with IGO’s focus on capital discipline and value creation in core battery minerals. Exploration and growth activities continue, with targeted drilling programs and geological mapping across several projects including Cosmos, South-West Terrane, and Kimberley, underpinning IGO’s commitment to organic growth in lithium and copper.

Balance Sheet Strength and Capital Management

IGO’s balance sheet remains robust, with net cash of $299 million and an undrawn $300 million debt facility. The company has elected not to pay an interim dividend, reflecting a prudent capital management approach amid recovering lithium markets and ongoing operational complexities. Cost discipline is evident across corporate and exploration expenditures, contributing to an underlying free cash flow of $28.7 million, a turnaround from prior outflows.

Lingering Legal and Tax Uncertainties

Investors should note ongoing contingencies, including a royalty claim by South32 related to the Tropicana Gold Mine, currently before the Western Australian Supreme Court, with the decision pending. Additionally, a tax review by the Australian Taxation Office concerning the internal restructure of Tianqi’s Australian operations remains unresolved, though Tianqi has indemnified IGO against potential liabilities up to $96.7 million. These matters inject an element of uncertainty that market participants will watch closely.