IGO shares surge on inventory drawdown despite weak earnings
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The news: IGO shares climbed at the start of trading on the ASX, despite the mining company reporting March quarter results hit by "subdued" nickel and lithium markets.
The numbers: Underlying EBITDA sunk 110% quarter on quarter to a $15 million loss, with IGO attributing the result to lower spodumene sales and prices at its Greenbushes lithium mine in Western Australia.
However, IGO's net cash position of $276 million remained unchanged from the previous quarter and underlying free cash flow grew to $79 million.
IGO shares jumped 6.2% to $7.83 at the start of trading on the ASX.
The context: RBC Capital Markets analysts said that while operational metrics across IGO's key assets were weaker than expected for the third quarter, there were positives in the shape of the miner's sale of 200 kilotonnes of spodumene concentrate to Tianqi Lithium Corporation (TLC) and maintaining its full-year guidance for Greenbushes.
The analysts also noted that the free cash flow result, partially driven by a $25 million dividend received from TLC, beat expectations. They said this, in addition to a drawdown of inventories, will "likely be the focus of the result".
The source: ASX announcement
