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Australia's IGO reports production setback in March quarter 2021

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(Kitco News) - Australia’s IGO (ASX: IGO), an aspiring lithium mining and development company, reported today that March quarter 2021 (fiscal 3Q21) production of nickel (6,816 tonnes) and copper (3,035 tonnes) at its Nova mine was, as expected, lower than the prior quarter, however still on track to achieve the upper end of full year production guidance.

Gold production at Tropicana mine was 26% lower at 82,393oz for the quarter (2Q21: 112,050oz), with focus for the quarter on the Havana open pit cutback.

The company’s revenue and other income for the quarter was down 21% on the prior quarter at A$185.7M (2Q21:A$235.9M) primarily as a result of the lower metal volumes sold.

Underlying EBITDA of A$92.7M (2Q21: A$120.9M) generated a margin of 50% for the quarter and 52% for the year to date, while net profit after tax was higher QoQ at A$41.9M (2Q21: A$8.8M).

Total cash from operating activities was 46% lower at A$71.1M, primarily as a result of reduced revenue receipts from Nova and Tropicana, generating underlying free cash flow of A$51.4M for the quarter (2Q21:A$112.7M).

On 13 April 2021, IGO announced that it had entered into a binding agreement with Regis Resources for the sale of IGO’s 30% interest in the Tropicana gold mine for A$903M in cash consideration payable upon completion.

Following the waiver by AngloGold Ashanti of its right of last refusal the transaction is expected to close on or before 31 May 2021, with proceeds from the sale to be applied to funding IGO’s investment in the lithium transaction with Tianqi.

On 9 December 2020, IGO announced it had entered into a binding agreement with Tianqi Lithium to acquire a 49% non-controlling interest in Tianqi’s Australian lithium assets through a subscription for new shares in Lithium HoldCo for a total consideration of US$1,400M (~A$1,850M).

This lithium transaction will provide IGO with a 24.99% indirect interest in the world-class Greenbushes lithium mine and a 49% indirect interest in the Kwinana lithium hydroxide plant, both located in Western Australia.

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