How do IGO shares compare to Mineral Resources following earnings season?

IGO and Mineral Resources released their FY22 results this week. Let's see how they stack up.

| More on:
A woman holds up hands to compare two things with question marks above her hands.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • There was a stark contrast between the FY22 results for IGO and Mineral Resources
  • Both ASX mining companies appear to be relying on debt 
  • IGO and Mineral Resources managed to distribute fully franked dividends for FY22

IGO Ltd (ASX: IGO) shares closed 3.2% lower today at $13.01 apiece. This comes two days after the company released its FY22 results.

Also posting its earnings this week was ASX mining peer Mineral Resources Limited (ASX: MIN). Its share price also finished in the red today, down 1.84% to $62.79.

But how do these two ASX mineral explorer shares compare? Let's take a look.

IGO FY22 results recap

IGO released a sound set of financial results for FY22, as covered by my colleague Brendon Lau. Revenue rose 34% to $903 million but net profit after tax (NPAT) dropped 40% to $331 million.

The drop in NPAT was due to a tax charge on the sale of the company's Tropicana asset.

Despite the fall in IGO's bottom line, it still declared a fully franked dividend of 5 cents per share.

IGO appears to be in a reasonably steady financial position with a cash balance of $367 million and new debt facilities of $900 million.

Current liabilities for FY22 was in the order of $440 million. So, it would seem IGO needs to rely on debt to stay on top of its short-term liabilities because IGO is not free cash flow positive.

On cash flow, IGO recorded operating cash flow of $357.1 million, which is down from $446.1 million in FY21.

The IGO share price climbed 3.79% on the back of these results on Tuesday, and gained another 2.21% yesterday.

How do IGO shares stack up against Mineral Resources?

The FY22 results for Mineral Resources weren't as good as IGO as revenue fell 8% to $1.02 billion and NPAT declined 72% to $351 million.

My colleague Monica O'Shea covered the results and noted that the fully franked final dividend dropped 42.8% from $1.75 per share in FY21 to $1 per share in FY22.

Net cash from operating activities fell from $1.3 billion in FY21 to $279.8 million in FY22. The big drop was primarily due to an increase in working capital relating to the restart of Wodgina, the ramp-up of Mt Marion production and the conversion of the company's spodumene concentrate into lithium hydroxide.

I find it interesting that IGO managed to record higher operating cash flow with less revenue. However, it appears the rise in operational expenditure may have been higher than historical levels for Mineral Resources.

Similar to IGO, Mineral Resources is not free cash flow positive.

IGO possesses much more short-term debt at $913.6 million and there is nearly $3 billion in long-term debt sitting on the balance sheet.

Mineral Resources does hold $2.4 billion in cash though.

From a financial strength perspective, it seems like IGO is in a slightly better position.

The Minerals Resources share price fell 1.74% on Monday when the results were announced, but climbed 6.2% the following day. However, it gave up most of those gains on Wednesday, losing 5.87%.

IGO share price snapshot

The IGO share price has risen by 35% in the past year and is 20% higher in the last month. As for the Mineral Resources share price, it has jumped 18% in the last year and has gone up 18% in the past month.

IGO has a market capitalisation of around $9.85 billion. The Mineral Resources market cap is sitting at $11.89 billion.

Motley Fool contributor Raymond Jang has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Female miner smiling at a mine site.
Resources Shares

Up 60% this year, this ASX 200 mining stock just smashed production records

Production surge headlines quarterly results.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Resources Shares

After lifting its price target, Macquarie now expects 36% upside from this ASX mining stock

The precious metals producer released better-than-expected production guidance.

Read more »

A miner in a hardhat and high visibility clothing makes a thumbs up symbol.
Resources Shares

4 reasons to buy Rio Tinto shares today

A leading expert forecasts strong growth potential for Rio Tinto shares.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Why Macquarie expects this ASX All Ords copper stock could surge 38%

With costs coming in below expectations, this ASX All Ords copper stock could rocket higher over the coming months.

Read more »

Iron ore price Vale dam collapse ASX shares iron ore, iron ore australia, iron ore price, commodity price,
Resources Shares

Major miners up as China announces new mega project

Can a new mega-dam absorb iron ore oversupply?

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
Broker Notes

Leading broker has just downgraded BHP shares. Is it time to sell?

Macquarie sees little upside. But why?

Read more »

A young woman wearing a blue blouse with white polkadots holds her phone up with an intrigued and happy look on her face as she reads some news.
Resources Shares

3 reasons why the BHP share price could be a buy

Here are my optimistic thoughts on BHP.

Read more »

mining asx shares represented by miner writing report on clipboard
Resources Shares

This ASX 200 miner is ramping up copper output as prices reach all-time highs

Copper production leads quarterly update.

Read more »