IGO : December 2021 Half-Year Financial Report and Appendix 4D

For personal use only

IGO LIMITED AND CONTROLLED ENTITIES

ABN 46 092 786 304

31 January 2022

APPENDIX 4D - 1 JULY 2021 TO 31 DECEMBER 2021

Key Information - Results for Announcement to the Market

This page and the accompanying 32 pages comprise the half-year end financial information given to the Australian Securities Exchange (ASX) under Listing Rule 4.2A. The half-year report should be read in conjunction with the Financial Report for the year ended 30 June 2021.

			% Increase over
	A$'M		Previous
		Corresponding
			Period

Revenue from continuing operations	378.4	21%
Profit from continuing operations after tax	90.7	360%
attributable to members
Net profit attributable to members	90.7	67%

The previous corresponding period is the half-year ended 31 December 2020.

	Dividends			Amount per security			Franked amount per
			(A$ cents)			security (A$ cents)
	Half-year ended 31 December 2021
	- Interim dividend	5.0		5.0
	Financial year ended 30 June 2021
	- Final dividend paid 23 September 2021	10.0		10.0
	Total FY21 dividend	10.0		10.0
	Record date of interim FY22 dividend		4 March 2022
	Payment date of interim FY22 dividend		18 March 2022

The major factors contributing to the above variances are as follows:

The Group generated revenue and profit from ordinary activities during the period of A$378.4 million and A$90.7 million respectively. Revenue from continuing operations increased 21% from the prior year, predominantly due to increased sales revenue from the Nova Operation as a result of higher nickel and copper metal sold, together with higher realised prices.

Key contributing factors to the results are outlined below:

• Revenue generated by the Nova Operation for the half-year was A$377.2 million, a significant improvement over the prior period of A$312.0 million, resulting in segment profit before tax of A$161.8 million. The revenue was derived from sales of payable metal of 10,617 tonnes of nickel, 6,047 tonnes of copper and 212 tonnes of cobalt at average realised prices of A$26,060/t, A$12,730/t and A$78,207/t respectively.
• Cash costs (including royalties) were A$1.86 per payable pound of nickel, an improvement over the prior period of A$2.18 per payable pound, primarily due to higher by-product credits.
• On 30 June 2021, the Group completed the transaction to form a new lithium joint venture, Tianqi Lithium Energy Australia Pty Ltd (TLEA), with Tianqi Lithium Corporation (Tianqi) over its Australian lithium assets, with IGO holding 49% of the shares in TLEA and Tianqi holding the balance of 51%.
• The investment in TLEA is equity accounted and the Group recognised A$14.4 million as its share of net profit in the current period. As a non-controlling shareholder in TLEA, IGO is required to amortise the provisional accounting fair value adjustment that forms part of the carrying value of IGO's

Suite 4, Level 5	PO Box 496	T. [phone]	igo.com.au	Page 1
85 South Perth Esplanade	South Perth WA 6951	F. [phone]	IGO Limited
South Perth WA 6151	Western Australia	E. [e-mail]	ABN 46 092 786 304

For personal use only

ASX RELEASE

investment in the TLEA. IGO has recognised a total of A$13.7M in amortisation charges against its share of net profit from TLEA for the period.

• The prior period included A$39.8M of before tax foreign exchange losses on USD balances held at the end of the period in preparation for the USD denominated purchase of TLEA.
• The Group completed the divestment of its 30% share in the Tropicana Joint Venture to Regis Resources Limited on 31 May 2021. Due to this divestment, Tropicana's operating results for the prior period are reported as discontinued operations.

Further details and analysis can be found in the ASX Release "Half-Year Financial Report - Period Ended 31 December 2021" released on the same day as this Appendix 4D.

The net tangible asset backing per ordinary share is A$4.24 (31 December 2020: A$3.55).

There have been no acquisitions of entities or losses of control of entities during the period.

The accounts have been reviewed by BDO Audit (WA) Pty Ltd and they are not subject to dispute or qualification.

Page 2

HALF-YEARLY REPORT

Period Ended 31 December 2021

For personal use only

CONTINUED DELIVERY ACROSS ALL FACETS OF THE BUSINESS

IGO Limited (ASX: IGO) (IGO or the Company) is pleased to report its interim financial report for the half- year ended 31 December 2021 (1H22). Refer also to IGO's ASX Appendix 4D and Interim Financial Report for the half-year ended 31 December 2021, both released on 31 January 2022.

1H22 Key Points

• Revenue from continuing operations increased 21% to A$378M (1H21: A$314M)
• Underlying EBITDA1 A$226M, resulting in an EBITDA margin of 60%
• Strong cash generation from Nova Operation driving Group Cash Flow from Operating Activities of A$204M, and underlying free cash flow2 of A$183M
• Nova production and cash costs outperform guidance
• A$1,096M acquisition of Western Areas Limited (WSA) via a Board recommended Scheme Implementation Deed announced in December 2021
• Appointment of Mr Michael Nossal to Chair on 1 July 2021
• Interim fully franked dividend declared of 5.0c per share in line with capital allocation framework

Peter Bradford, IGO's Managing Director & CEO said: "The half-year has been an active period for the IGO team with our focus on (i) the safety and wellbeing of our people and those connected with our business, (ii) continued operational delivery at Nova, (iii) embedding ourselves in the lithium joint venture, and (iv) continuing to deliver on our strategy to grow the business through exploration and disciplined M&A.

"We are proud of, and appreciate the active engagement of our people who continue to contribute to better safety and wellbeing outcomes. This collaborative, whole of business approach, can also be seen in our sustained response to the changing COVID environment and the myriad ways we are working together to ensure that people in our workplaces feel safe from sexual or any other form of harassment.

"Nova has safely outperformed production and cash cost guidance for the half-year and Nova's performance continues to underpin our strong financial results. The Silver Knight deposit 30km northeast of Nova was acquired during the half-year and work to progress our development plan for it has commenced.

"Across the lithium joint venture, we saw a number of exciting developments. At Greenbushes, production increased as a result of the contribution from Chemical Grade Plant 2. In parallel, construction for the Tailings Retreatment Plant neared completion, and detailed engineering design was advanced for Chemical Grade Plant 3.

"Post period end, we announced a significant uplift in the Greenbushes Mineral Resource and Ore Reserve.

"At the Kwinana lithium hydroxide refinery, commissioning commenced and first lithium hydroxide was produced on a batch basis in August 2021. Since then, the focus has been on the transition from batch to continuous operations, with first battery grade lithium hydroxide production expected in March 2022.

"In December 2021, we announced the acquisition of Western Areas by way of a Board recommended scheme of arrangement, with the cash consideration to be funded by a combination of existing cash and a new A$900M fully underwritten debt facility. Transaction completion is expected in the June 2022 quarter."

1. EBITDA (Earnings Before Interest, Tax expense, Depreciation expense & Amortisation expense) is a non-IFRS measure, with the following adjustments to arrive at Underlying EBITDA: 1) exclude impairment of capitalised exploration (1H22: A$3.0M, 1H21: A$nil), 2) exclude foreign exchange losses on USD balances held at 31 December 2020 for the purposes of protecting the AUD equivalent of the USD purchase price of the acquisition of TLEA (1H22: A$nil, 1H21: A$39M) and 3) exclude acquisition & transaction costs (1H22: A$5.3M, 1H21: A$3.9M).
2. Free Cash Flow comprises Net Cash Flow from Operating Activities and Net Cash Flow from Investing Activities, with underlying adjustments comprising: 1) exclude payments for mineral interests and financial assets (1H22: A$48.2M, 1H21: A$25.5M), 2) exclude proceeds from sale of investments (1H22: A$nil, 1H21: A$26.9M), 3) exclude deposit paid to an escrow account on acquisition of TLEA (1H22: A$nil, 1H21: A$92.6M and 4) exclude TLEA transaction costs (1H22: A$5.5M, 1H21: A$1.3M).

Suite 4, Level 5	PO Box 496	T. [phone]	igo.com.au
85 South Perth Esplanade	South Perth WA 6951	F. [phone]	IGO Limited
South Perth WA 6151	Western Australia	E. [e-mail]	ABN 46 092 786 304

For personal use only

Financial and Operational Summary Group Financial Overview

	Half-Year ended 31 December (A$M)	1H22		1H21			Inc/(dec)
	Total Revenue from Continuing	378.4		313.6		21%
	Operations
	Total Revenue from Discontinued	-		148.8			n/a
	Operation
	Underlying EBITDA	225.9		242.3		(7%)
	Net Profit After Tax	90.7		54.1		67%
	Net Cash Inflow from Operating Activities	203.5		241.6		(16%)
	Cash Outflow from Investing Activities	(73.8)		(136.8)		(46%)
	Cash Inflow (Outflow) from Financing	(88.1)		600.2			n/a
	Activities
	Interim Dividend - (A$/share)	$0.05		-			n/a
		Dec 2021		June 2021			Inc/(dec)
	Total Assets	3,651.1		3,608.7		1%
	Cash	569.8		528.5		8%
	Total Liabilities	440.4		408.9		8%
	Shareholders' Equity	3,210.7		3,199.9		-%
	Net Tangible Assets ($ per share)	4.24		4.23		-%

Executive Summary

The Group commenced the 2022 Financial Year (FY22) with continued strong operating and financial results, whilst also progressing key growth initiatives across the portfolio.

The strong results include net profit after tax of A$90.7M, underlying earnings before tax, depreciation and amortisation (EBITDA) of A$225.9M and underlying free cash flow of A$183.4M.

On 30 June 2021, IGO completed the transaction to form a new lithium joint venture, Tianqi Lithium Energy Australia Pty Ltd (TLEA), with Tianqi Lithium Corporation (Tianqi) for its Australian lithium assets, with IGO holding 49% of the shares in TLEA and Tianqi holding the balance of 51%. Current operations managed by TLEA include a 51% stake in the world-class Greenbushes Lithium Mine (a joint venture with global lithium company Albemarle Corporation who hold the other 49%) and the 100% owned and operated Kwinana Lithium Hydroxide Refinery. As a non-controlling shareholder in TLEA, IGO's investment in TLEA is equity accounted, and IGO recognises its share of net profit from TLEA in its consolidated financial statements.

The Group completed the divestment of its 30% interest in the Tropicana Joint Venture to Regis Resources Limited on 31 May 2021. Due to the divestment, Tropicana's revenue and operating results for the prior period are reported as discontinued operations in accordance with accounting standards.

Financial Summary

Revenue and other income from continuing operations, which comprises primarily the Nova Operation, was A$378.4M (1H21: A$313.6M), an increase of 21% from the prior year, the result of higher payable nickel and copper sold and higher realised prices across all metals.

Underlying EBITDA for the group was A$225.9M, generating an outstanding underlying EBITDA margin of 60% (1H21: A$242.3M and 52% respectively).

The Nova Operation continued to deliver strong operational performance, with 1H22 production exceeding pro-rata guidance for all metals. Production was slightly lower than the prior period however, a result of

Page 2

For personal use only

guided lower grades and recoveries. Revenue increased 21% during the period due to higher metal prices and sales volumes broadly in line with 1H21. Cash costs reduced 15% during the period to A$1.86/lb (1H21: A$2.18/lb), primarily attributable to higher by-product credits. Underlying EBITDA margin from Nova increased from 62% to 66%, resulting in a 54% increase in Nova profit before tax of A$161.8M (1H21: A$105.2M).

As a non-controlling shareholder in TLEA, IGO recognises its share of net profit from TLEA (Net Profit) in its consolidated financial statements. Management includes this Net Profit within EBITDA. The Group recognised A$14.4M of Net Profit for the first time in the current reporting period. IGO is also required to amortise the provisional accounting fair value adjustment of A$1,147M that forms part of the carrying value of the Group's investment in TLEA. Included within Net Profit of A$14.4M is an amortisation charge against the fair value adjustment of A$13.7M for the period.

Group profit after tax for the period was A$90.7M, compared to A$54.1M in 1H21. The improved result is primarily due to stronger operating results from the Nova Operation together with the inclusion of the Share of Profit from TLEA, offset by earnings from the Tropicana Operation within the 1H21 results that are not available in 1H22 due to the divestment of the operation in May 2021. The prior period also included A$39.8M of before tax foreign exchange losses on USD balances held at the end of the prior period in preparation for the USD denominated purchase of TLEA.

Cash and cash equivalents at 31 December 2021 totalled A$569.8M (30 June 2021: A$528.5M), an increase of A$41.3M. The increase in cash is attributed to the following cash flows:

• Net Cash Inflows from Operating Activities were A$203.5M (1H21: A$241.6M). Operating cash flows were lower due to the A$93.0M contribution from Tropicana in the prior period. Operating cash flows from the Nova Operation increased A$65.0M to A$263.5M (1H21: A$198.5M), reflecting higher metal prices. Also included in 1H22 is A$36.6M of outflows for exploration expenditure and A$5.5M for acquisition and transaction costs.
• Net Cash Outflows from Investing Activities were A$73.8M (1H21: A$136.8M), which includes the payment of A$45.0M for the acquisition of the Silver Knight deposit from the Creasy Group during the period. The Company also made cash contributions to TLEA of A$15.7M during the period by way of equity contributions that were matched on a pro-rata basis by Tianqi. Payments in the corresponding period also included a deposit of US$70.0M (A$92.6M) towards the acquisition of the Company's interest in TLEA and A$35.5M of capital expenditure in relation to the Tropicana Operation.

Page 3