Ann: Impairment of Western Areas Assets, page-17

https://thewest.com.au/business/min...ected-to-be-as-much-as-980-million-c-11298627

IGO flags writedowns of up to $980m on Western Areas assets
Danielle Le Messurier and Jordan MurrayThe West Australian
Mon, 17 July 2023 9:30AM



The nickel operations at Forrestania. Credit: KIM CHRISTIAN/AAPIMAGE

IGO shares have taken a hit after the WA miner said it expected to slash up to $980 million from the value of two nickel mines it bought for $1.3 billion from Western Areas a year ago.
The stock was trading at $15.22 — down 5.6 per cent, or 90¢ — shortly after 9am after IGO told the market it was expecting to write between $880m and $980m off its Cosmos and Forrestania mines.

IGO’s board and management acknowledged the quantum of the impairment was “significant” and said it was based on a reassessment of operating and capital costs.

The miner has also withdrawn guidance for Cosmos, located 30km north of Leinster, flagging “challenges to the mine production schedule and delays in development”.

IGO said it had engaged a group of independent consultants to assist with a “comprehensive review” of Cosmos “to better understand risks and opportunities to the current life of mine plan, capital cost estimates and schedule”.
“The review is underway and expected to be completed in the December quarter, and will result in a revised plan which will detail how IGO will drive optimum value in Cosmos,” IGO said in a statement to the ASX.

The company will release further detail of the review in its June quarter results, slated to be released on July 31.
It comes after IGO last month revealed it had successfully poached Rio Tinto executive Ivan Vella to become its new CEO from December following the sudden death of Peter Bradford in October last year.

Acting chief executive Matt Dusci said recording a significant impairment against the Western Areas assets was “disappointing”.
IGO informed the market in April was expecting to book a non-cash impairment for the period.

“While the project development team has made solid progress to advance Cosmos towards first production, capital and operating cost escalation and unforeseen operational challenges have impacted the value of the project,” Mr Dusci said.
“A detailed, independent review of the project development strategy and mine plan has now commenced and will provide a comprehensive assessment of the risks and opportunities for Cosmos.
“We will keep the market updated as this review progresses.”

IGO said the impairment would be reflected in its results for the 2022-2023 financial year, due to be released on August 31.

IGO acquired Western Areas in June last year following a protracted takeover bid which at one stage featured murmurs of a possible competing bid from Wyloo Metals.

IGO and Wyloo have been exploring opportunities for a battery metals processing plant potentially worth up to $1 billion at the Kwinana industrial strip, south of Perth.