Stocks In Focus: IGO, October 29 2025

0:10G'day, I'm Scott Phillips and welcome to another Motley Fool Stocks in Focus, the video and audio that does double duty. Whether you're listening to this on the Motley Fool Money podcast feed or on YouTube at youtube.com forward slash foolau or to search for the Motley Fool on YouTube, you are seeing us. Just take a look under the proverbial bonnet of one company on the ASX. Maybe it's widely owned. Maybe it's in the news. Maybe it's topical or interesting. So we try and do it. We try and kind of do a bit of a deep dive, help you understand a bit more about the business, maybe show some of our analytical chops in the process, hopefully keep you entertained.

0:45By the way, I don't mention it's free. it's free. So you are welcome, viewers and listeners. Thank you for being part of the Motley Fool community and part of this particular journey. And to take us, to drive us on that journey, Motley Fool Director of Research, Ryan Newman. Ryan, hey, g'day. G'day, Scott. Thanks for having me. Pleasure, mate. Glad you could join us. We're going to talk about IGO. We've had a bit of a mining bent recently, and we're going to stay in that space. Now, just so people know, this is general advice only, not personal advice. You know that by now, but I say it every time, because if you're new to the podcast feed, if you're new to the YouTube channel, you might not know.

1:18The Motley Fool can only provide general advice. That is, we can't tell you what's right for you. We give our views on an asset, an investment, an idea, a thought, an issue. We can't say whether what we think is right for you personally. You have to do that work, either yourself or with a personal financial advisor. Also, we're recording this towards the end of October, 2025. Views, circumstances will change. By definition, the price certainly will over time, up or down. So just bear that in mind when you think about what Ryan's going to share with us. the circumstances of the company, new developments, anything can change.

1:47So this was a view at a point in time. Lastly, it's not a formal recommendation. I will ask Ryan to put his neck on the proverbial chopping block at the end and tell us whether he thinks it might be a market beater, but it's not a formal what-lifle recommendation. We're not going to continue to cover it, but we are going to go and do the detail of the business and the investment potential, at least, and let you make that decision for yourself. All right, that's enough preamble, Rino, I-G-O. I reckon a small minority of our viewers and listeners may have heard of the company. Fewer still probably know what it does, so why don't you enlighten us, please?

2:19Scott, a lot of them are probably familiar with what it used to be called, Independence Group. It's now one of those rare occasions, Scott, where I can refer to the company, buy its ticket code and not be scolded by yourself. For listeners, Scott's very much against people using ticket codes to refer to a company. But in this case, IGO is the company name and the ticker code. So, Scott, as I said, previously, Independence Group, it is an Australian mining company. I was going to say a diversified mining company. It still is diversified, but not as diversified as it used to be. It actually used to be quite into gold assets and other, I guess, minerals or metals that it now considers to be non-core.

3:05It actually sold those assets off, and it now focuses almost exclusively on nickel and lithium. Battery metals, more broadly speaking, so also some copper and cobalt, but typically surrounding that battery metals component. So it's really staking its future, I suppose, on the idea that the renewables will be the future. And I do think that that is the case, but it is really, I suppose, staking its future on that. In terms of the nickel and lithium, I just mentioned those, it's two primary focuses. Lithium, I think most people will be aware of the fact that lithium is really the backbone of modern batteries.

3:46We know lithium ion, you know, it's in electric vehicles, it's in smartphones, renewable energy storage as well. Nickel is a key ingredient in the cathode of high performance batteries. I'm no scientist, I'm not going to get into the details there, Scott, but it does help with energy density or so I'm told. Cobalt and copper, these are also really important elements as well, or metals involved in batteries. Copper we know is used very extensively in battery wiring, motors, inverters, charging infrastructure as well. So I guess just diving into IGO a little bit deeper though, key operations, it's got the Nova mine.

4:23It owns 100 % of that. That's an underground nickel, copper, cobalt project based in Western Australia. I should note that that project itself is approaching the end of its life. Management estimate that the end of its life is probably sometime in 2026, probably towards the back end of the year. So there is declining production there. It is coming to the end of its life. It's also a 25 % effective owner in green bushes, a lithium mine. I'm told that that's a very large scale, long life, and low-cost lithium mine in Western Australia. Zooming out a little bit, I guess looking at the company itself, financials, it's about a$4 billion market cap.

5:07We're recording this towards late October 2025, as I think you said earlier, Scott. It's about a$4 billion market cap at the minute. The company has a net cash position with a pretty strong balance sheet. um revenue revenue has declined most recently that's probably uh i guess a component of the fact that you know that that uh nova mine is starting to come towards the end of its life also affected by lower commodity prices through the last year uh and it did it did produce a net loss in fy25 as well it had been profitable in the years prior but did report a net loss in fy25 very nice summary thank you sir big business expensive business not making a profit just at the moment maybe it was before certainly was before maybe it will again let's go through the investment case mate rather than making the case for IGO as we do the stocks in focus we look at the pros and cons uh we're not necessarily arguing for one case or the other we're just trying to supply our viewers and listeners uh with a bit of a not balanced but just say you know both sides of the argument kind of story here so let's go with the pros first because we always do what are some of the reasons you might consider investing in IGO?

6:13Scott, we know that the Australian economy is very mining centric, mining and banks, but very mining centric in particular. A lot of investors do want some exposure to the mines or the miners in their portfolios. I think a company like IGO is probably not a bad bet in that regards. It's a direct, as I mentioned at the outset, said, it's a direct exposure to the electric vehicle battery transition. I think that's a pretty safe bet going forward. The world is very much moving in that direction. And I suppose as well, if you're looking at a miner, you want to go generally, you want to go for a company that is reputable and has the high quality, low cost assets.

6:56I mean, that's not where you're going to make the thousand or 10 ,000 % return on your investment. That's not going to happen with a company like IGO, or at least it's very unlikely to, but it is a safer bet than going with one of those more speculative miners, the ones that have non-proven assets that they're really just drilling and trying to find something and hoping to strike it lucky. IVO does have those established high-quality, low-cost assets that I think investors who are looking for that mining exposure can probably count on for a pretty reliable investment. I mentioned commodity diversification.

7:30This is something that it has reduced over time. As I mentioned, it did have the gold assets in the past. It's gotten rid of those and all of the other assets that it considered to be non-core. It does still have some commodity diversification, though, which is probably a safer bet than going for a miner that is purely looking for one type of metal or mineral. So there is that little element of diversification. And I mentioned as well at the outset, the financial strength, the cash flexibility, those are really important things as well to have for a miner. Very nice. Now, let's go to the other side of the ledge.

8:04Let's look at the cons. Now, these aren't necessarily reasons not to invest, though they might be. There's definitely risks, though. Things you should be aware of if you are going to consider, or maybe you already own shares in IGO. Hopefully, you know these things already. But if not, listen up, because Ryan's going to tell you. What are some of the cons made of investing in IGO? Look, I think, Scott, the big one that comes to mind, and this applies to any mining company, is that the mining companies are really price takers. They don't have any control over the price that they charge because if they're charging more than the competitors, then customers are simply going to go elsewhere.

8:36So it's a price taker. It doesn't have any control over that factor. And when prices drop, that can really hurt a company like this. Now, I mentioned it is a lower cost producer. So it does have some advantages over some of its higher cost producing competitors. So there is that. But generally, these are pretty cyclical kinds of businesses and very capital-intensive as well. And we saw that through FY25 when it did report a loss. As I mentioned, commodity prices dropped. Some of the things didn't quite work out in its favor. And because of the very capital-intensive nature of the business, that did lead to it reporting a net loss for the year.

9:18I suppose as well, there's the project and execution risk. I mentioned the NOVA project is coming towards the end of its life. It does have some exploration projects, so it's looking for those replacement projects, but there's no guarantee that those are going to have excellent yields or really reap the benefits or reap the return on investment that the company is really looking for. So there's absolutely execution and project risk. Technology risk as well, I think that there is a risk of this. I mentioned before, obviously, nickel and lithium, those are the company's two primary focuses. I think those are pretty safe bets in terms of what the future of EV and the future of batteries and all that are looking for.

10:03But if there is some sort of technological advancement, in which case lithium isn't required, or maybe there's something that proves to be an even better commodity, what does that do to a company like this that is heavily focused on those assets? I think that's a really important point, even though it's probably a less likely point. But it is a really important point that nevertheless for investors to consider, that they are going into a business that is staking its future on this EV battery future. And if it doesn't transpire the way that they're sort of expecting it to, then that would hurt a company like IGO.

10:37Right. I'm old enough to remember my first mobile phone had a nickel cadmium battery. So I can tell you that battery technology does change. Maybe lithium is here to stay. Maybe it's not. But yes, things do change. By the way, because you asked, you opened the door, so I'm going to rush straight through it. Why do we bother talking about companies or why don't we want to talk about them as tickers rather than company names? And it's kind of a funny one, right? And I'll share this with our viewers and listeners because they might be wondering. Maybe they know already, in which case that's great.

11:03It's one of the old line, what's your thoughts? They become your words. What's your words? They become your actions. Actions become habits. If you start to think about companies as three-letter codes, if Woolies is a W-O-W or Qantas is Q-A-N, you start to think about the ticker and the chart and the share price and all that stuff. And that's relevant. What's far more relevant for us as long-term business-focused investors at the Motley Fool is the company itself. So Qantas isn't Qan or Q-A-N. Qantas is Qantas Airways. It's the airline itself. And yes, that's a really small difference, right? Why be funny about it?

11:34Why be pedantic about who cares? Because at the end of the day, I, we, Think that by focusing on the business first and making sure you should make that mental choice, the really deliberate choice to be careful about the words we use, the way we use them, how we think about things. Hopefully, it helps us think more about the businesses and not fall into the trap of taking those shortcuts of what's the code, what's the share price, what's the chart say, all that kind of rubbish. We're saying, well, actually talk about Qantas, the business, and then work out whether it's a fair price to pay for the shares that happen to have a three-letter code.

12:02So pedantic, yes, important, arguably not, but I actually think more important than we believe. By the way, I stole that from my US colleagues, Bill Mann at the Motley Fool, who did the same thing with his team. I think it was the right thing to do there. I think it's the right thing to do here. So that's why, if you're wondering, I insist with a little bit of humour, but also kind of serious, that we talk about companies rather than ticky coats. Scott, there is also one more very important reason, and that is for lack of confusion. And I've just written down three companies here that you could very easily get confused over.

12:34There's IDP Education. Yes. There's IPD Group, which trades on a ticket out of IPG. That's right. And then a company that trades on, I think it's IPD on the stock market, is Impedimed. So depending on which way you're looking at it, you could be talking about three completely different companies. So I think it's a pretty safe, a pretty good reason, rather, to refer to the company by its name rather than tick code. There we go. Love it. Thank you, mate. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

13:14By the way, if you are listening to this on the podcast feed, thanks for having a listen. Jump over to the YouTube channel for me. If you're on the YouTube channel right now, go and check out the podcast. But before you do, do me a favour. Do all the things that are YouTubers these days. The cool kids say you should do. And that is like, subscribe, and hit the notification bell. I've said why before, but really quickly, if you like it, it's good for us, but mostly it helps other people find the video. So that's important. If you are liking what we're doing, if you're still here, you probably want to see more great stuff from Ryan and the rest of the team.

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14:08And again, not a formal recommendation, but given the circumstances, given what you've talked through, do you reckon it's a market beater over the next five plus years or is it likely to lag the ASX? This is a company that I've sort of looked at before and thought if I was to ever recommend a miner, it's probably one that I would start by considering. I would consider it over some others. mind you i've never pulled the trigger i've never actually bought shares in this company and uh i've never recommended uh a mining company per se i i think iGO has potential upside over the next five years i think if battery metal sorry if battery metals continue to to grow and i think demand will continue to grow for that technology i think iGO has uh the potential to beat the market but i am cautious i i guess the risks aren't trivial there there is the fact that the factors that i mentioned before the fact that this is a price taker there is the chance of higher volatility it's a higher reward play but there is that higher volatility that comes attached with it uh and there is also that risk i suppose with the sorry the nova mine coming off production as well there's the risk that that company does need to actually fill that void so to speak so i'm gonna say cautiously uh yes, market beater, but not one that I have the conviction yet to pull the trigger on.

15:27There you go, Phil. You've heard it directly from Ryan. And now it's over to you. You make your own decisions. As I said, we've given you the pros and cons. Not a high conviction view, but probabilistically, maybe. Ryan thinks it might be a market beater. If you agree, that's great. If you don't agree, that's cool too. By the way, feel free to let us know in the comments. Again, that's the cool kids say. We do monitor the comments. So if you've got something to say, you want to make a, give us your thoughts, feel free to do that. We'll make sure we have a look at them. If they're, we won't reply to absolutely everything because sometimes it's not worthy of a reply.

15:51You don't need to, but yeah, we'll read them. So make sure if you've got some thoughts, you let us know in the comments of the YouTube channel. Less so. Don't do it in the podcast feed because there are no comments. That's going to be hard to find. All right, that's it from us. Thanks for watching another Motley Fool. Socks in focus or listening on the Motley Fool Money podcast feed. Until next time, fool on. Fool on. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation.

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