Shares of IGO Ltd (ASX: IGO) have experienced a notable increase, rising by 3.4% to $5.86 in Tuesday morning trading, up from the previous close of $5.67. This positive movement comes amidst a broader market downturn, with the ASX 200 Index (ASX: XJO) declining by 1.2% at the same time.
The surge in IGO’s share price, an ASX mining stock, follows the company's recent quarterly results, which revealed significant improvements in its financial performance. For the quarter, IGO reported underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $88 million, a substantial turnaround from a loss of $15 million recorded in the previous quarter. Additionally, the company's underlying free cash flow saw a remarkable 154% increase quarter on quarter, reaching $201 million.
Production metrics also showed positive results. IGO's nickel production increased by 16% from the previous quarter, reaching 7,600 tonnes. Spodumene concentrate production rose by 19% to 332,000 tonnes compared to the prior quarter. As of June 30, IGO reported a net cash position of $468 million, up 70% from the March quarter.
Despite these strong results, IGO had previously announced an expected non-cash impairment of between $275 million and $295 million for FY 2024. This impairment relates to a revaluation of its Silver Knight and Mt Goode nickel exploration projects, along with an ongoing review and turnover of its exploration portfolio. However, this impairment is not anticipated to impact the company's FY 2024 EBITDA.
CEO Ivan Vella commented on the company's performance, highlighting the strong free cash flow of $201 million and the substantial cash balance of $468 million as indicators of the company's solid financial position. He attributed the improved earnings margins to the Greenbushes lithium project, noting its world-class cost position and its contribution to outstanding EBITDA margins of 67% for the quarter and 85% for FY 2024. Vella also highlighted the significant dividend payments made from TLEA during FY 2024, reflecting the value generated by the company's lithium business.
In terms of nickel operations, Vella emphasized the focus on maximizing cash generation from the Nova project for the remainder of its life. Looking forward, he noted that exploration activities would continue, guided by a renewed strategy and focus to support future organic growth.
Despite the positive quarterly results and recent share price gains, IGO's shares are still down 56% over the past 12 months, reflecting the broader challenges faced by the lithium sector due to falling lithium prices.