IGO nickel returns rise as newly acquired Forrestania operation comes into fold

IGO’s nickel assets have delivered the company record revenue in the September quarter, with the newly acquired Forrestania operation now complementing the Nova mine.

The company told the ASX this week record revenue for the nickel business of $285.2 million was achieved for the quarter, with the contribution from Forrestania of $83.4m more than offsetting 27 per cent lower revenue at Nova, which was driven by lower realised nickel prices

IGO took over Forrestania, south of Southern Cross and east of Hyden, in June as part of the $1.26 billion deal to acquire Western Areas.

IGO said the $83.4m in sales revenue was 20 per cent higher than in the June quarter, even though the average nickel price decreased to $31,007/t from $34,682/t in June.

The company said total ore mined was 110,000 tonnes from Flying Fox and Spotted Quoll at an average grade of 2.76 per cent nickel, up from 107,000t in the June quarter. The processing plant milled 154,000t of ore for the quarter at an average nickel grade of 2.52 per cent, up from 147,000t at 2.3 per cent grade in June.

Payable nickel sold was 2735t, up from 1899t in June.

Cash cost of $8.70/lb was 6 per cent lower compared with the June quarter ($9.24/lb) because of higher grade and ore feed tonnes, offset by an increase in cash production costs, primarily due to rise and fall on the mining contract.

IGO said sales revenue at Nova in the Fraser Range near Balladonia was 27 per cent lower at $201.8m, compared with the June quarter figure of $277.9m, because of lower average nickel sales prices, lower hedging gains and unfavourable debtor revaluations.

Nickel concentrate sales totalled 48,541t for the quarter, up from 47,186t in June, resulting in the sale of 5099t of payable nickel, up from 5039t in the previous quarter.

Nova mined 384,000t of ore in the September quarter at an average nickel grade of 1.98 per cent, down from 427,000t at 1.76 per cent in June.

The Nova processing plant milled 387,000t of ore for the quarter at an average nickel grade of 1.97 per cent, down from 429,000t at 1.75 per cent grade in in June.

Tonnes milled were lower than the previous quarter because of lower runtime and throughput rates.

IGO said nickel production at Nova was expected to be lower this quarter because of lower grade and recovery resulting in marginally higher cash costs.

At Forrestania, nickel production this quarter is expected to trend higher, while Forrestania cash costs are expected to be steady.

Full-year production at Nova is expected to be within guidance, and production at Forrestania is expected to be at the top end of the guidance range.

IGO said since the completion of the acquisition of Western Areas in June the company had been implementing changes to ensure the successful integration of the Western Areas business, systems and people into the IGO business.

“The addition of the Forrestania and Cosmos assets coupled with the expanded exploration portfolio has provided a unique opportunity for IGO to optimise its nickel business and leverage synergies between these assets,” the company said.

“Of note, IGO is working toward embedding a group-wide mining services contract and seeking to consolidate procurement processes.

“IGO is also currently engaging with potential partners with respect to concentrate offtake volumes which are available for contract during (the third quarter of the 2022-23 financial year).

“Fifty per cent of Nova’s nickel concentrate and 100 per cent of Forrestania nickel concentrate become uncontracted in this quarter, with part of IGO’s consideration focused on the potential to generate stronger commercial outcomes through blending of Nova and Forrestania concentrates.

“IGO expects to update the market on this program of work in its half-year result in January 2023.”