Ann: June 2023 Quarter Presentation, page-13

https://thewest.com.au/business/min...controls-at-cosmos-after-writedown-c-11438961


IGO confident in Kwinana outlook despite production hit

Danielle Le MessurierThe West Australian
Mon, 31 July 2023 5:05PM



Tianqi and IGO’s lithium hydroxide plant in Kwinana. Credit: Robert Garvey

IGO says it is confident the second production train planned for the troubled Kwinana lithium hydroxide plant it shares with China’s Tianqi will not experience the same issues as the first after revealing more problems with the ramp-up.

It comes as the company reported a $180 million blowout on the expansion of the lucrative Greenbushes mine, the main source of IGO’s profits after hooking up with Tianqi nearly three years ago.
IGO in its production report for the June quarter said Kwinana produced just 142 tonnes of lithium hydroxide, down 85 per cent from 963t the previous quarter.

It said output was lower than expected due to “ongoing technical challenges” at Train 1 following a scheduled shutdown in May.
The plant has since returned to pre-shutdown production levels of about 20 per cent of nameplate capacity.

It is the latest in a string of setbacks at the complex project, which suffered budget overruns and construction delays before falling lithium prices saw it mothballed on completion in late-2019.
Since being recommissioned, it has suffered protracted delays as IGO and Tianqi ramp up to commercial production.

The partnership is weighing a final investment decision on Train 2, but IGO acting chief executive Matt Dusci on Monday fielded a range of questions from analysts on whether further trains should be constructed given ongoing challenges.

“We’ve got to remember that Train 1 is legacy — that was built a specific time under a different engineering group without the rigour and the studies,” he said.
“Although we face challenges on Train 1, and we acknowledge that, when we make the financial decision on Train 2 the challenges . . . will not be like Train 1.”​

IGO owns 49 per cent of the Kwinana plant after striking a lithium joint venture with Tianqi in late 2020, which also delivered it a 51 per cent stake in Greenbushes, 250km south of Perth.

The company gave no production guidance on Kwinana for the 2024 financial year but said it would aim to reach 50 per cent capacity by the end of 2023. In May, Mr Dusci said he hoped to reach 60-70 per cent of its target capacity by the end of the year.

IGO previously flagged an increase in costs at the third chemical grade processing plant at Greenbushes — dubbed CGP3 — following industry cost rises and challenges with earthworks and civil design.

The miner is expecting an increase in the total remaining capital to fall between $555m to $605m subject to approval by the board of Talison Lithium, which runs Greenbushes.

A strong performance from Greenbushes in the June quarter helped drive IGO’s full-year production to 1.49 million tonnes over the 2023 financial year, exceeding guidance of 1.35-1.45Mt.

Mr Dusci also vowed to take on board the learnings from big writedowns on the value of two WA nickel projects it bought off Western Areas last year for $1.3 billion.
IGO shocked the market earlier this month when it said it was slashing up to $980m from the Forrestania and Cosmos nickel projects in the wake of higher capital and operating costs, as well as “challenges to the mine production schedules and delays in development” at Cosmos, 30km north of Leinster.

Prior to the impairment, IGO said net profit for the quarter was approximately $525m.
The company is working to finalise the hit ahead of its full-year results on August 31.
“We’ve got to take those learnings and do better, and in parallel to that we’ve got to work to deliver Cosmos value,” Mr Dusci said.

IGO also said it had introduced an extra approvals process for capital expenditure for Cosmos, which has been placed under review, and announced a new capital management policy.
The policy promises to pay 20-40 per cent of its underlying free cash flow in dividends when it has less than $1b in available liquidity.

The stock closed 4.63 per cent, or 67¢, lower at $13.80.