IGO has announced that it has decided to transition its Cosmos nickel project into care and maintenance, following completion of a review into the viability of the project which began in mid-2023.
The review was focused on identifying risks and assessing opportunities to optimise the life of mine plan, capital cost estimates and schedule.
Having thoroughly assessed the project, the outcomes of the review have demonstrated a reduction in the expected life of mine, delays in getting the mine to full capacity to fill the processing plant and further increases in operating and capital costs. In parallel, commodity prices have deteriorated significantly since the review commenced, impacting the economics of Cosmos.
As a result, IGO made the decision to transition Cosmos into care and maintenance.
The transition, which is expected to be concluded by 31 May 2024, will prioritise the safe preservation of the Cosmos assets and the completion of select key work streams including finishing the wet commissioning of the processing plant and processing of existing ore on the ROM pad.
During the transition, IGO will also assess the value of continuing work on select exploration programs to increase the size and definition of the mineral resource, in particular the AM5 and AM6 orebodies, and optimising the mining and materials handling methods.
IGO intends to protect the optionality to restart Cosmos in the future should market conditions improve.
IGO has said that this transition will have an impact on its people and the company is currently working on a resourcing plan for the transition and care and maintenance phases.
While the company expects to be able to offer some redeployment opportunities, there will be roles which will become redundant.
IGO said that it is providing all the necessary support for its people as it works through this process.
IGO’s Managing Director and CEO, Ivan Vella, said that this is not the outcome anyone at IGO wanted.
“We cannot ignore the operational and financial risks involved in continuing to develop Cosmos in the current environment,” Mr Vella said.
“We still believe there is value in Cosmos, however in this nickel environment we need to be disciplined with our allocation of capital, while retaining our optionality to restart if market conditions improve.
“I’d like to thank the team onsite who have done an outstanding job to work through the challenges, and to progress the project to where it is today. Prioritising and minimising the impact on our team through this process is our absolute focus and we will provide every support we can to those people affected.”
IGO expects to record a further impairment against the Cosmos assets in the company’s First Half FY24 Results to be released on 22 February 2024.
While the impairment value has not yet been finalised, IGO estimates the total impairment charge to be in the region of $150 million to $175 million.
Further, the independently conducted Post Investment and Integration Review into the Western Areas acquisition is approaching completion, and IGO will provide further detail on this in the half-year results announcement.
