Consensus community valuation
From DLI presentation - Resources Rising Stars
Quality Lithium Grade upto: 1.77% Resource size: Unknown.
A look at lithium in Australia:
To add SYA average Lithium Grade: 1.20%, Size:100Mt ( at Quebec - across 2 mines )
29/5/23 - IGO Has 25% ( St George 75% holding )holding in Mt Alexander Lithium Grade peak value of 1.77% and 1.49% , Size: unknown.
LTR & Albermarle still deciding on - Kathleen Valley ( Orange )
Production up on Spodumene (5% up), Lithium Hydroxide (200% up).
Production on Nickel concentrate down 26% due to fire
Announced 14 cent dividend
Apr/May-19: I recently trimmed my IGO holding at just over $5. I think $4.98 is a fair price target, but I'd only be a buyer below $4.50. You have to have a positive view on nickel and copper, and they do own 30% of Tropicana also (a gold mine, literally). They also produce cobalt and some lead. Nova is a world-class nickel mine, and there should be further exploration upside there also. A US-China trade deal, once done, should give base metals prices a nudge north, and IGO should benefit from that.
November 2019: IGO are now over $6 on the back of higher nickel prices. I no longer hold. Took my profits too early again, but at least I made some money on this one. Don't think I had it on my Strawman.com scorecard tho… I'd buy back in if they drop below $4.50, but that would also depend on why they dropped that far from over $6 of course - if it's just because the nickel price went down again, I'd likely be back in like Flynn.
01-May-2020: Time to update my IGO valuation. They did drop back below $4.50, but that was purely Covid-19-related and I was busy buying other companies that had fallen further than IGO did. They've dropped back below $4.50 again today, but I'm not holding them. I'm a little wary of nickel exposure with the current outlook for global growth having deteriorated somewhat. I think copper will bounce back before nickel, so I've kept my SFR shares, but I have no pure nickel exposure, other than through S32 who mine a variety of metals.
IGO remains one of my two preferred nickel exposures. WSA is the other one. Once I start getting more bullish on nickel, I'll likely get back into one or both of those. For now, I'm happy to leave the valuation at $4.98, but the upside from here to there isn't as attractive as other opportunities I'm seeing in the market at this point in time, so I'm staying on the sidelines with IGO for now.
30-Oct-2020: Update: IGO are currently reviewing their 30% holding in the Tropicana Gold mine that is 70% owned and operated by AngloGold Ashanti (based in South Africa). IGO have had an interesting journey, and I've been an IGO shareholder for much of it, and I am today. Only a few short years ago they were a zinc and lead miner, and they then bought the 30% stake in Tropicana and they also bought out Sirius Resources to get hold of the world-class Nova-Bollinger mineralised system that contains nickel, copper and cobalt, and now IGO are one of Australia's best nickel plays, producing high grade nickel (suitable for batteries) from Nova.
I have a feeling that the outcome of their current review is likely to be a sale of their 30% of Tropicana, and with gold prices where they are, it's not a bad time to be selling one third of a world-class gold mine. I think IGO are going to become a little more popular within the market as this outcome becomes clearer, and if the nickel price rises that certainly won't do them any harm either.
I'm not sure they are worth between $6 and $7 - where they were trading 8 to 12 months ago, certainly not with the nickel price where it is currently, but I don't see $5.25 as being too much of a stretch. Current levels (sub-$4.50) look good to be accumulating IGO - in my opinion, and so I am. Longer term, I think they will be back over $6, but for now my 12-month target price is $5.25.
30-April-2021: Update: Raising PT from $5.25 to $7.77, since they've now sold their 30% of Tropicana to Regis Resources (RRL) for A$903 million after going seriously into lithium in December via a $2 billion deal with Tianqi for a 25% stake in their Greenbushes lithium mine and also a 49% stake in the Tianqi Lithium Corporation's Kwinana lithium plant, which is the world's biggest and first fully automated lithium chemical manufacturing facility outside of China. The plant is another key part of IGO's bold play to get into lithium - and in a big way. The Greenbushes mine is widely regarded as the No.1 lithium project in Australia because of its size and ore type. The long-term goal is to have Greenbushes' spodumene processed at the Kwinana plant, which was designed to produce 24,000 tonnes of battery-grade lithium hydroxide for its first stage, and 48,000 tonnes once the second stage is completed. I was initially skeptical about IGO's move into lithium as I know that there are a LOT of lithium mines on C&M (care & maintenance) or lithium development projects that have been deferred until the lithium price rises, so I fully expect a rapid supply response to a demand-driven price rise in lithium, when that happens (when it rises enough). One example is MIN's (Mineral Resources') Wodgina mine, which is the biggest hard rock deposit in the world - with a mine life of at least 30 years - which is sitting there idle waiting for a higher lithium price, which will come. However, looking into this IGO/Tianqi deal a bit, it seems clear that the big strategic asset in this deal for IGO is actually the 49% of the Tianqi Kwinana lithium processing plant, which moves IGO up the value chain in the battery metals world. IGO have been clear about their battery metals focus for a few years now - in all of their company presentations (see my straws here for links to those). They have hinted for a couple of years that they wanted to add another significant battery metal to their list of metals produced - which already includes nickel, copper and cobalt (from Nova). This is that deal they've been waiting for, and at around $2 billion, it's a decent sized foray into lithium too, and gets them into the metal at various levels, not just at the bottom (at the mining stage). Mineral Resources Ltd (MRL or MinRes, ASX:MIN) were very strategic in October 2019 when they sold 60% of their Wodgina spodumene mine in Western Australia to Albemarle Corporation for US$1.3 billion, consisting of a cash payment of US$820 million, and the transfer to MinRes of a 40% interest in two 25 ktpa lithium hydroxide conversion trains being built at that time by Albemarle at Kemerton in Western Australia, just north of Bunbury, a city south of Perth that my wife and I lived in when we were first married. They said in 2019 that the 60/40 joint venture between Albemarle and MinRes (the JV was called MARBL) would manage the operation of the Wodgina mine and the Kemerton conversion trains, and that Albemarle would market 100% of the output from the Wodgina mine and the Kemerton lithium hydroxide conversion trains. Immediately after that announcement however, actually on the day of the settlement (when MinRes got their US$820 million), they announced they were shutting down and mothballing Wodgina, effective emmidiately, keeping about 35 staff on to provide C&M and the other couple of hundred were either redeployed into other MinRes roles at other sites or were made redundant. The point there however was that MIN's founder and MD, Chris Ellison knew that it was the right time to reduce MinRes' exposure to lithium, but to also guarantee some optionality for later when the lithium price was higher, by locking in 40% of a value-adding lithium processing facility, and using Albemarle's expertise and money to build it. While MIN did it from the POV of a successful lithium miner, IGO have done it from the outside, and have bought in to the lithium story, however they are both locking in access to various levels of the supply chain in terms of from in the ground to in the car or the battery or wherever else it ends up. It is common knowledge that the big money is not usually made by the people at the lowest level who are simply digging the stuff up and shipping it off, it's made in the processing; and both IGO and MIN have stakes in lithium processing facilities now, and both plants have been built by large corporations (Albemarle and Tianqi) who have done it before in other parts of the world. The market likes this. If you look at the IGO chart, this deal was announced in early December 2020, and look where the share price went - from around $5 to now around $7.50, a 50% rise. I think there is a little further to go, hence my $7.77 PT. Not enough upside from here for me to be buying in at current levels (I sold some in mid-December after the initial pop, then the rest in late January so fully exited IGO at that time). However, there's no denying they've done well, and they seem to have the wind behind them at this point with their chart heading North-East. They could easily overshoot my PT, but I think $7.77 is a fair PT. I am usually rather conservative with my price targets. They're still on one of my watchlists.
20-May-2022: New PT is $14, on the back of renewed positive sentiment towards lithium and IGO's core business of Nickel production. Nickel rose almost +9% overnight, and is up strongly this year, on previous years, even though it has recently been in a strong downtrend (which it may have broken last night).
See also: Tianqi Lithium delivers first battery-grade product - Australian Mining
[The first batch of battery-grade lithium has been produced by Tianqi Lithium Energy Australia (TLEA) from its plant in Kwinana, Western Australia, the first time the material has been produced in Australia in commercial quantities.]
[TLEA is a joint venture between one of the world’s top producers of lithium chemicals for electric vehicle batteries, Tianqi Lithium Corporation (51 per cent), and Australian miner IGO Limited (49 per cent).]
[TLEA owns the first lithium hydroxide plant in Australia and the largest in the world to be built and operated outside of China.]
20-May-2022: Tianqi Lithium delivers first battery-grade product - Australian Mining
The Kwinana lithium plant in Western Australia. Image: Tianqi Lithium
Tianqi Lithium delivers first battery-grade product
[20-May-2022, AustralianMining.com.au]
The first batch of battery-grade lithium has been produced by Tianqi Lithium Energy Australia (TLEA) from its plant in Kwinana, Western Australia, the first time the material has been produced in Australia in commercial quantities.
TLEA said it was a significant milestone for Australian mining as the sector expands to meet rapidly growing demand for rechargeable batteries, primarily from the electric vehicle and energy storage system industries.
TLEA’s Kwinana plant has successfully met internal certification processes, with the onsite laboratory confirming that battery-grade specification has been met on 10 tonnes of lithium hydroxide, produced consistently over several days. Samples have been sent for independent verification.
The next step in the plant’s ramp-up process is customer qualification, which will be completed over the next four to eight months. During this time, the plant will continue to focus on stable, consistent, and reliable production of battery-grade lithium.
Chief operating officer Raj Surendran said the company was pround to demonstrate that Australia could value add to its minerals onshore, enhancing its reputation as a critical contributor to the production of batteries for electric vehicles and energy storage.
“This is an exciting time for our shareholders, suppliers and service providers who have contributed to the construction and ramp-up of the Kwinana plant, and our employees who have worked so hard to turn the dream of producing battery-grade lithium hydroxide in Australia into a reality,” he said.
TLEA is a joint venture between one of the world’s top producers of lithium chemicals for electric vehicle batteries, Tianqi Lithium Corporation (51 per cent), and Australian miner IGO Limited (49 per cent).
TLEA owns the first lithium hydroxide plant in Australia and the largest in the world to be built and operated outside of China.
“More than 900 jobs were created during the construction phase of the plant, which is now being operated by about 200 people, as well as providing business opportunities for our numerous suppliers, many of whom are locally based,” Surendran said.
Lithium hydroxide produced at the Kwinana plant will be containerised and exported from the Port of Fremantle to customers around the globe.
Surendran said the first train will now continue its ramp up towards its nameplate capacity of 24,000 tonnes of battery grade lithium hydroxide per annum.
Lithium hydroxide is a lithium-based compound derived from spodumene, a lithium-bearing pegmatite mineral. Spodumene is sourced directly from the Greenbushes mine 250km south-west of Kwinana (Albemarle 50 per cent, Tianqi Corporation 25 per cent, IGO Ltd 25 per cent).
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Disclosure: I have held IGO in the past. I am not currently holding IGO shares. So far today, IGO is up 61cps (+5.5%) to $11.70 on the back of this news and a sharp rise in the nickel price overnight of almost 9%. IGO's revenue is still mostly from nickel sales at this point (from production out of their Nova mine in WA), but they have recently moved into lithium as well.
June 2018: Independence Group (IGO) is a smaller miner who currently mine nickel, copper, cobalt, gold, zinc and lead. IGO own 30% of the high grade Tropicana gold mine that is 70% owned by (and operated by) AngloGold Ashanti (AGG), but the main game for IGO is their 100% owned Nova nickel/copper mine (which also produces cobalt). All of IGO's 100% owned assets (which excludes the 30%-owned Tropicana gold mine) produce battery metals. Nova is a world-class, low-cost nickel mine, and there is enormous exploration potential throughout the Nova-Bollinger system and surrounding area (IGO's tenements), which could extend the life of the Nova mine even further. Nova was constructed and commissioned in the past couple of years, so is a very new mine that is only just hitting their straps now.
Good management, paying down their construction-related debt fast, just sold their aging Jaguar copper-zinc-silver mine to CopperChem, a wholy owned subsidiary of Washington H Soul Pattinson (SOL) for $73.2m, heaps of further potential upside at Nova-Bollinger, producing battery metals: nickel, copper, cobalt.
http://www.igo.com.au/IRM/content/default.aspx
AMEC Convention 2018 Presentation by Independence Group (IGO) 14-June-2018
Disclosure: I hold IGO shares.
