The share price of IGO Ltd (ASX: IGO), an ASX lithium share, is down another 2% after revealing a disappointing update.
IGO is an ASX miner which is involved in a number of green commodities, such as lithium, nickel, copper and cobalt.
What’s going on?
IGO announced an update regarding the Cosmos project and the project review that it has been carrying out in recent months.
This review started in the middle of 2023 after IGO decided to impair the assets acquired from Western Areas and has “been facilitated by a global team of expert consultants.”
The scope of the review was to look at the risks and opportunities of the life of mine plan, the capital cost estimates and schedule because of the challenges faced at Cosmos during the development phase.
What’s going wrong?
While the review has not yet concluded, and the company is also continuing to assess ‘life of mine’ scenarios for the project, it’s going to transition to an ore trucking operation “in the interim”, rather than using a mechanised materials handling system as previously planned.
As a result of that decision, construction on this part of the project has been halted.
This will “regretfully” mean an “impact” to some roles, though IGO is working on redeployments within the IGO business and providing “all the necessary support” to its people through this process.
The ASX miner said it expects to provide the market with a further update on the outcomes of the review in the December quarterly activities report which is scheduled for release on 31 January 2024.
IGO also said it’s “likely” to record a further impairment against the Cosmos assets in the company’s FY24 first half result. In other words, IGO is going to reduce the value of its Cosmos assets on its balance sheet, which will also hurt statutory net profit after tax (NPAT).
Final thoughts on the IGO share price
The fact it has fallen over 50% in just a few months makes me think it could be a turnaround opportunity if/when commodity prices recover, though that could take more than 12 months.
It’s not the sort of business I’d bet the house on, but I do like its diversified exposure to green commodities.
