IGO Ltd shares (ASX: IGO) have broken out to a new 52-week high today, as bulls manage to break through resistance, despite existing challenges.
IGO shares ended the day up by an impressive 11.55% to close at A$7.63 today, after hitting an intraday high of A$7.74. This breakout firmly establishes the stock above the A$7 resistance level, extending year-to-date gains to 57%. This is a welcome turnaround for longer term bulls who had seen significant declines in IGO through 2024.
IGO’s recent Q4 FY2025 earnings report highlighted an 83% increase in underlying EBITDA to A$62 million compared to the previous quarter, primarily due to improved performance at the Nova nickel operation. The company reported a strong cash position of A$280 million, navigating headwinds in the lithium market. Operationally, IGO has made strides in safety, with the Total Recordable Injury Frequency Rate (TRIFR) decreasing from 9.9 to 5.1. In the FY24 results, IGO declared a total dividend of 37 cents per share, exceeding analyst expectations of 20 cents per share.
However, IGO has faced challenges, including an EBITDA loss of A$63 million at the Kwinana lithium hydroxide refinery in Q4 FY2025. The company also announced a non-cash impairment of A$275–A$295 million related to exploration assets.
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Bull Case:
- Strong EBITDA growth driven by Nova nickel operation.
- Rising lithium prices boost IGO’s asset valuation.
- Higher-than-expected dividend reflects financial strength.
Bear Case:
- Kwinana refinery faces operational losses.
- Significant impairments raise concerns about asset values.
- Lithium market volatility creates uncertainty.
Looking ahead, the trajectory of lithium prices and the successful navigation of operational challenges at Kwinana will be crucial. The enhanced alignment between leadership and shareholder interests is expected to improve operational execution. While the recent surge reflects strong market confidence, the company’s ability to sustain this momentum hinges on addressing the operational setbacks and capitalizing on favourable market conditions.
