The IGO Ltd (ASX: IGO) share price is under the spotlight after the ASX resources share gave a lithium update.
IGO said it wants to provide an update on the Kwinana Lithium Hydroxide Refinery, which is held with its 49% interest in Tianqi Lithium Energy Australia (TLEA). TLEA also has a 51% stake in the Greenbushes lithium project.
ASX mining share owns and operates the Nova nickel operation which includes nickel mining and a processing facility.
Kwinana Lithium Hydroxide Refinery impairment
IGO said it’s currently preparing its FY25 first-half result audited figures and it has been assessing the carrying/balance sheet value of Kwinana in line with its accounting standards.
The ASX resources share said that the impairment testing process “remains incomplete” and the company is working to determine the size of the impairment.
IGO also said it expects to recognise an additional share of net losses from TLEA relating to a “substantial pre-tax impairment in its financial results for the half year ended 31 December 2024.”
The ASX resources share also said it will provide full details of the final impairment value when it announces its FY25 first half result on 20 February 2025.
What to make of this for the IGO share price
It’s not good news for the business, but it’s reflective of the situation and doesn’t necessarily affect the company’s operating profit.
IGO’s assets can operate as effectively as they did last week, it’s just that the business is recognising the assets aren’t worth as much as the last report disclosed.
Lithium has gone through a lot of pain in the last few years, with demand not keeping up with supply. I think electric vehicle sales will continue, but it isn’t the boom, at this stage, that investors were hoping for a few years ago.
It’s possible this could be the right time to be investing in IGO shares amid the pain, but that’s difficult to know without a crystal ball. Despite the low price, there are other ASX shares I’d rather look at.
