IGO shares lift on Kwinana plant closure
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More news: IGO shares gained in the morning trade on the ASX after the miner announced that all works at train two of its Kwinana lithium hydroxide plant will cease.
IGO shares were up 3.1% to $5.37 by 11am AEDT, extending gains of nearly 13% since the start of January.
Citi said that news of the plant closure was unsurprising, with IGO facing a key question of how much time it will give to Kwinana's train one to perform.
IGO holds a stake in Kwinana through its 49% interest in the Tianqi Lithium Energy Australia (TLEA) joint venture with China’s Tianqi Lithium. TLEA also operates Greenbushes, Australia’s biggest lithium mine, which it part-owns along with global producer Albemarle.
What they said: "Investor sentiment towards Kwinana is weak with cash from Greenbushes been consumed by Kwinana; cessation of downstream would, in our view, enable a much simpler capital return story," Citi's analysts said.
IGO confirms plant closure at Kwinana lithium hydroxide refinery
The news: Lithium and nickel miner IGO has confirmed that all work and activity will be terminated at a plant at its part-owned Kwinana lithium hydroxide refinery in Western Australia.
The numbers: IGO holds a stake in the refinery through its 49% interest in the Tianqi Lithium Energy Australia (TLEA) joint venture (JV) with China’s Tianqi Lithium.
The context: The critical minerals producer said it is continuing an impairment testing process at the Kwinana refinery, flagged last month.
It expects to recognise an additional share of net loss from TLEA in respect of a "substantial" pre-tax impairment in its financial results for the half year ending 31 December.
IGO will provide full details of the final impairment value when it announces those results on 20 February.
Last month, IGO warned investors not to expect a dividend from its TLEA joint venture, following a slump in global lithium prices.
The sources: ASX announcement, Citi research
