IGO Ltd (IGO) – Well positioned for the end of the lithium winter
IGO is the lowest-cost lithium (Li) producer on the ASX. In the September quarter of FY24, its cost of producing lithium spodumene concentrate was A$262 (approximately $US173) per tonne, positioning it among the lowest-cost producers globally—lithium spodumene is currently trading around $US800. IGO last reported a net cash position of $259 million following their final FY24 dividend payment of $197 million. Additionally, the company has access to $720 million in undrawn debt facilities, which supports its liquidity position amidst challenging market conditions such as falling lithium and nickel prices.
The IGO story has been messy over the last two years, with its ill-fated purchase of Western Areas (WSA) being one of the worst acquisitions MM can recall. However, after plunging below $5, we believe the risk/reward is becoming exciting, especially with the company’s solid/resilient balance sheet. MM is adding IGO to its Hitlist for the Active Growth Portfolio. IGO will be one of the market’s significant beneficiaries when Li turns.
- Catching the proverbial falling knife has been a path to the poor house in 2024, but we do see deep-seated value in IGO if it plumbs new lows.
