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IGO has reported a significant impairment against its newly-acquired Western Areas assets, dropping the value of two nickel mines by almost $1 billion.

The metals miner purchased the Cosmos project in WA, which includes the Odysseus nickel mine, from Western Areas for $1.3 billion in 2022. However, the new worth estimation of $380 million represents a 75 per cent drop on what IGO paid.

This has seen IGO report a non-cash, pre-tax impairment expense of $880–900 million for the 2022–23 financial year (FY23).

IGO will now undertake a review of the project to better understand the risks and opportunities associated with the current mine plan, including capital cost estimates and development timelines. The review is expected to be completed in the December quarter of 2023.

“Recording a significant impairment against the (Western Areas) assets is disappointing,” IGO acting chief executive officer Matt Dusci said.

“While the project development team has made solid progress to advance Cosmos towards first production, capital and operating cost escalation and unforeseen operational challenges have impacted the value of the project.

“As a long-life nickel asset, Cosmos remains important to our nickel business and provides potential downstream optionality via our aspirations to develop an integrated battery materials facility in Western Australia.”

IGO is set to release further details on the impairment in its June quarterly report on July 31.