IGO Ltd

ASX:IGO

Earnings Call Transcript 2021-Q1

[Operator]

Thank you for standing by, and welcome to the IGO Limited September 2020 Quarter Investor Webcast. [Operator Instructions] I would now like to hand the conference over to Peter Bradford, Managing Director and CEO. Please go ahead.

[Peter J. L. Bradford, MD, CEO & Executive Director]

Thank you, operator. Good morning, everyone, and welcome to our conference call to discuss our September quarter results, which were released to the ASX this morning. My plan is to lead you through a presentation of the highlights and then to move to a Q&A session, where Matt Dusci, our Chief Operating Officer; and Scott Steinkrug, our Chief Financial Officer, will both be available to answer questions. Slides 2 and 3 set out our cautionary statements, disclaimer and competent person's statement. I note that all currency amounts in the presentation today are in Australian dollars, unless otherwise indicated. Moving to Slide 4, where we highlight our strong start to the 2021 financial year. At Nova, the team has delivered another quarter of strong operational performance, consistent metal production, lower costs and high margins. We also delivered improved copper recoveries and continue to be focused on doing the same for nickel. At Tropicana, the joint venture has achieved another solid quarter with production in line with the mine plan. Notably, commercial production commenced from the new Boston Shaker Underground mine, which is potentially the first of several underground operations at Tropicana. We also recently announced the commencement of a strategic review of IGO's holding in Tropicana, which I will discuss later in this presentation. The continued operational delivery, combined with strong commodity prices, has led to excellent financial outcomes for the quarter, with strong margins generating excellent free cash flows. This has allowed us to pay our existing bank debt during the quarter and to pay a $0.05 per share final dividend for the 2020 financial year while maintaining available cash at $509 million. Moving to Slide 5. The health, safety and well-being of our people is a priority for IGO. We have demonstrated this through our proactive approach during the COVID-19 pandemic and through our ongoing commitment to continuously improve our safety and well-being framework to ensure a safer workplace, fit-for-purpose process and the right safety behaviors and safety culture. The ongoing COVID-19 pandemic remains a significant risk for all of us. We, therefore, hope that wherever you are joining this call today, you and your families are safe and well. At IGO, we remain thankful that the situation here in Western Australia is currently under control, and our business remains relatively unaffected. Moving to Slide 6. More broadly, sustainability and ESG are a priority for IGO. And over the last 6 years, we have proactively progressed continuous improvement to both our practices and reporting. We do this because it is the right thing to do and because we want to be a leader in this space. We released our sixth sustainability report recently, which showcased a number of key achievements for the past year, as highlighted on this slide. We are proud of the work we do in this area and of the transparency with which we report both our achievements and the areas in which we need to improve. I encourage you to take a look at the document, which is available on our website. Moving to Slide 7. Over the next few slides, we will discuss the financial results for the quarter at a high level. Greater detail can be found in our quarterly report. Moving to Slide 8, where we display our key financial results for the quarter. Group revenue of $227 million was in line with the prior quarter. This was due to higher revenue from Tropicana resulting from higher gold sales and prices, offset by slightly lower revenue from Nova resulting from a concentrate shipment being delayed into the December quarter. Underlying EBITDA was higher quarter-on-quarter at $121 million, equating to an underlying EBITDA margin of 54%. Net profit after tax was 14% higher than the prior quarter at $45 million, driven by higher EBITDA and further increases in the mark-to-market value of our listed investments. Net cash at quarter end was $509 million. Moving to Slide 9, where we reconcile quarter-on-quarter net profit after tax. Key drivers of the increase in net profit after tax include higher Nova EBITDA resulting from stronger metal prices and assisted by positive June quarter debtor revaluations as well as higher EBITDA from Tropicana due to higher gold sales and higher gold prices. The result also includes a $14 million increase in the mark-to-market value of investments, shown here on this slide as a negative variance, given the $21 million increase recorded in the fourth quarter. Turning to Slide 10, where we set out the cash flow reconciliation for the quarter. Our cash position has remained stable despite the repayment of $57 million of debt and the payment of $30 million for our final 2020 financial year dividend payment. Together, these payments totaled $87 million. Cash flow from Nova increased substantially driven by higher revenue receipts and lower capital expenditure, while Tropicana cash flow was also higher due to higher sales revenue resulting from both higher gold sales and higher gold prices. As expected, exploration and evaluation expenditures of $22.5 million were marginally higher than the June quarter as we recommenced activity in the Kimberley, the Northern Territory and the Paterson, which were all previously suspended due to COVID-19 restrictions. Payments for investments included $13 million to Mincor Resources, which related to our participation in the capital raising that they announced in late June. We also divested our holding in New Century Resources for net proceeds of approximately $27 million. This followed our strategic decision not to co-invest with New Century in the Goro nickel operation. Moving to Slide 11, where we will discuss the quarterly performance from the Nova operation in greater detail. Moving to Slide 12. Nova performed in line with the mine plan, with metal production more or less in line with the prior quarter and benefiting from higher milled tonnes, marginally offset by lower milled grades. Mill throughput rates increased quarter-on-quarter to 394,000 tonnes of ore, equivalent to a 1.57 million tonne per annum run rate. Cash costs were lower quarter-on-quarter at $2.25 per payable pound of nickel, which is below the bottom end of our 2021 financial year guidance range. Lower costs were primarily driven by improved payabilities, higher by-product metal volumes and prices. In particular, copper prices were higher by 13% quarter-on-quarter. Nickel recoveries remained in line with the prior quarter at 87%, while the team achieved an improvement in copper recoveries to 89.4%. Looking ahead, we expect production in the first half to be towards the top end of guidance and for production in the second half to be lower towards the bottom end of guidance. Moving to Slide 13, where we again highlight the consistent performance from Nova, with metal production in line with the mine plan and costs primarily driven by metal production volume. Underlying EBITDA was strong for the quarter, assisted by positive debtor revaluations from the June quarter as well as stronger commodity prices for the current quarter sales. Nova EBITDA margin was 60% for the quarter with minimal reconciliation differences to operational cash flow of $93 million. Moving to Slide 14, where we set out the consistently strong margins Nova has generated over the 13 quarters since commercial production commenced. During this period, the average EBITDA margin has been 52%, while cumulative free cash flow has totaled over $750 million. Moving to Slide 15, where we now turn to a review of Tropicana operations. Moving to Slide 16. Tropicana has continued to perform well, with higher quarter-on-quarter production attributable to higher milled tonnes, which were offset marginally by lower milled grades. Cash costs were in line with the prior quarter, while the 6% increase in all-in sustaining costs was due to a $157 per ounce increase in noncash inventory charges as we processed more stockpiled ore during the quarter. Higher noncash elements were partially offset by lower open cut mining and processing costs as well as higher gold sold. For the year, we expect gold production in the first half to be at the upper end of guidance and production in the second half to be at the lower end of guidance. Turning to Slide 17, where, on the left-hand chart, we illustrate the impact on production and costs following the end of grade streaming in the December 2019 quarter, with low-grade stockpiled ore supplementing the mill feed since then while we invest in underground development and ramp-up and the cutback of the Havana pit. Higher underlying EBITDA from Tropicana as a result of higher sales and higher prices has pushed EBITDA margins to 59%, while operational free cash flow increased by 50% to just under $23 million. Turning to Slide 18, where, as we did for Nova earlier in the presentation, we have shown historic margin information for Tropicana for the past 13 quarters. Over this period, Tropicana has delivered an average EBITDA margin of 60% and an average free cash flow margin of 31%. Turning to Slide 19. During the quarter, AngloGold Ashanti and IGO announced the commencement of commercial production from the Boston Shaker Underground. Development of this key growth project was completed safely, on time and on budget, and operations are on track to reach nameplate capacity by March 2021. I had the opportunity to visit Tropicana a few weeks ago and spent some time underground at Boston Shaker. I was highly impressed with the progress made and the evident capability of the AngloGold Ashanti and Macmahon underground teams. At the time of my visit, the team were in the process of preparing underground drilling platforms for deeper drilling at Boston Shaker in the coming months. This drilling will test the depth extensions beyond the current inferred resource and the significant opportunity to extend the mine life from Boston Shaker Underground beyond the current 7-year life. In addition, an exploration decline has been established beneath the Tropicana pit, and we have commenced an underground diamond drill program as part of ongoing studies into the potential for an additional underground mine beneath the Tropicana pit. Turning to Slide 20. During the quarter, IGO announced it had commenced a strategic review of the Tropicana asset. Our motivation to conduct this review is due to our belief that Tropicana is not fully valued in the IGO portfolio. The first phase of this review is a technical review using external technical advisers to generate a strategic overlay of the asset. This body of work will consider the potential underground opportunities between the Havana and Tropicana pits, exploration upside and project optimization opportunities that may enable us to better articulate a more compelling value proposition for Tropicana to the market. This work is ongoing, and we will update the market once we reach a conclusion on how IGO will proceed. As part of the strategic review, we intend to consider the potential for the divestment or demerger of Tropicana. However, no decision has been made on this at this time. Ultimately, we will do what we consider to be the most value generative for IGO's shareholders. Moving to Slide 21 and an update on our exploration activities for the quarter. Moving to Slide 22. We have a continuing and strong conviction of the potential for exploration and discovery to unlock transformative value for IGO and its shareholders. Our focus is on the exploration of geological terranes, primarily in Australia, which have the potential to deliver multiple Tier 1 discoveries. The terranes of interest in our portfolio are prospected primarily for high-value magmatic nickel-copper sulfides and sediment-hosted copper deposits. Our exploration team delivers best-in-class geoscience and exploration execution capability to explore terranes that we have targeted using innovative and proprietary prospectivity tools available to IGO. We have consolidated 6 belt-scale terranes in Australia, aligned with our strategic focus on magmatic nickel sulfides and sediment-hosted copper deposits. These belt-scale land positions have been developed through a combination of land pegged in our own right and numerous asset acquisitions and joint ventures with other companies. Many of these joint ventures have involved placements in our partner companies, and the value of these holdings today is approximately $75 million, which is a significant portion of our total listed investment portfolio of $113 million.Turning to Slide 23. Our highest priority project area is the Nova near-mine area, where the discovery of Nova 2.0 would be transformative to Nova mine life and IGO. The team has been actively drilling multiple targets, including Hercules and Double Dipper, where drill holes intersected disseminated and blebby high-tenor magmatic sulfides, exactly the indicator rocks we are exploring for. Looking ahead, a key target in the current quarter is Orion, where a high-tenor nickel-copper sulfide-bearing chonolith, or pipe-like feature, mafic-ultramafic intrusion was previously intersected. This intrusion is interpreted to run into the newly acquired Symons Hill tenement, which we acquired access to through the recent transaction with Boadicea Resources. Moving to Slide 24. On the broader Fraser Range project, we have an ongoing systematic process to drill test numerous high-priority targets. During the quarter, positive results were generated from Ecliptic, which is located near the Creasy Group Silver Knight discovery with a thick interval of variably mineralized mafic and ultramafic intrusions intersected. Further work is planned. In addition, results from Kaon 2 and Chimera demonstrated abundant disseminated to local semi-massive magmatic sulfides, which warrant further work. In one of our recent conference calls, I characterized the Fraser Range as a veritable jewelry box of opportunities. Recent evidence of this are the strong results in the quarter from the Themis gold prospect, which was first identified in 2019. A follow-up aircore drill program in the quarter identified gold at multiple locations, including 16 meters at 6.7 grams per tonne from 42 meters, including 4 meters at 22 grams per tonne gold from 50 meters. It appears that this mineralization is hosted in a paleochannel, so further work is required to define the extent of mineralization and to identify the presence of any basement-hosted gold mineralization associated with this. Moving to Slide 25 for a brief overview of the Paterson Project in Western Australia, where, as shown on the map, numerous gold anomaly -- sorry, copper anomalies were identified by soil geochemical work on the Yeneena JV with Encounter Resources. These will be followed up progressively in future work programs. We also had positive electromagnetic geophysical work completed at the Encounter joint venture. Both the soil and EM targets will be tested with diamond drilling over the coming months. Drilling has also commenced on the Antipa Minerals' Paterson Project tenements, which we have joint ventured, to test 2 key copper-gold mineralized structural corridors. Turning to Slide 26, where I note that in the Kimberley, we completed an airborne geophysical survey consisting of magnetic and radiometric data sets over the Western Kimberley area. We also completed a drilling program at the Merlin prospect, which intersected evidence of deeper sulfide mineralization, albeit weaker than past drilling closer to surface. Turning to Slide 27. Before opening the line to our questions, I will make some concluding remarks on Slide 28. This has been a strong quarter for IGO and a great start to the 2021 financial year. Nova and Tropicana both continued to deliver to their respective mine plans, generating high margins and strong cash flow with helpful tailwinds from stronger nickel, copper and gold prices. Our financial position continues to strengthen with the balance sheet now debt-free and with some $509 million of cash available for disciplined and accretive growth opportunities. Finally, we have a laser focus on unlocking value for shareholders, be that through our ongoing optimization work at Nova, our strategic review of Tropicana, our exciting work to deliver discovery success and our commitment to deliver cash returns to shareholders. Thank you for joining us on the call this morning. We will now open the call for questions. Thank you, operator.

[Operator]

[Operator Instructions] The first phone question comes from Daniel Morgan from UBS.

[Daniel Morgan, Director and Analyst]

I was just wondering if you could follow up on the, I'm not sure if I'm pronouncing this right, but Boadicea JV near Nova. What is attractive about this tenement package? And why was this deal structured this way? And just talk holistically about that opportunity.

[Peter J. L. Bradford, MD, CEO & Executive Director]

Yes. Sure. Boadicea had a number of ground positions across the Fraser Range, all of which have some interest to us. But the tenement that we got access to through the transaction that was most important to us was the one called Symons Hill, which is adjacent to and located east, northeast of Nova. So the boundary is about 4 kilometers from the Nova-Bollinger deposits, and all of the intrusions that we have been testing on the Nova mining lease appear to trend sort of to the northeast. And even a layperson like myself can geologically interpret that the Boadicea concession would be a primary target to continue to test for Nova-style mineralization. And so we've been working with Boadicea to try and put a transaction in place for 5 years. And through that process, we evolved a structure that worked for them and worked for us. And the key part of the structure that works for us is that we have locked in what future payments we might make if we're successful in delivering Nova 2.0 on that concession. And we -- given our strong interest in that concession, we've got work that's started there effectively immediately.

[Daniel Morgan, Director and Analyst]

Okay. And just on the Tropicana options you are looking at regarding ownership, can you just talk through what sort of a process you're running and the timing of that? I mean, is the -- it looks like you've engaged an external partner to look at all the options of what it could be worth. And so I presume that work might take some time. Just wondering about the timing and what might be considered for the process.

[Peter J. L. Bradford, MD, CEO & Executive Director]

Yes. Sure. There's probably not a lot more I can say than what we've said in the materials or through the script. But the technical component here, we did start in August. It's been a body of work to sort of bring all of that work in-house and on a collaborative basis with AngloGold Ashanti, and I think that's a key difference to how this process works versus other processes where all of the data might already be in our control if we were 100% owner and operator of an asset. So we've done the work to bring the work in, adopt it and then to work collaboratively with AngloGold Ashanti to map out what we think might be a more compelling value proposition for Tropicana. That work is at an advanced stage. And as we indicated through the call, our next phase could be testing the market to understand what the value of Tropicana may be in a divestment or demerger scenario.

[Daniel Morgan, Director and Analyst]

And as part of that process looking at the business that would remain if you were to sell it, the nickel business, as it stands, I think it's about a 6-year life or so based on reserves. Does that life need to be extended for IGO to be a stand-alone investment proposition, do you think, before countenancing a sale of Tropicana?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Those strategic elements, Dan, they'll all be taken into account through the process. And first and foremost, it's about understanding what full value is. And then second, it's about realizing full value for the benefit of IGO and its shareholders.

[Daniel Morgan, Director and Analyst]

Okay. And last question here for me. Just the balance sheet is in a very, very strong position, over $500 million of net cash now. Capital management or consideration of dividend policy, et cetera, that's still firmly on the agenda, I imagine, for February. Is that the timing?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Yes. What we've articulated since early 2019, when we put the current capital management framework in place, is that we would do a review by no later than January 2021. So between now and then, we would expect the Board to revisit the capital allocation strategy and potentially to articulate a new cash return framework to the market.

[Operator]

The next question is from Jon Scholtz from Macquarie.

[Jon Scholtz, Analyst]

Just going by your commentary where you're saying that exploration activity is now back up to pre-COVID levels. And reading between the lines, it seems like it's ramping up across the portfolio as well. But just looking at your budget that you released earlier, the $65 million, how are you thinking about that now? And I mean, what, $22 million spent in the first quarter. Is it looking like you're going to extend that budget and bring forward some exploration as well?

[Peter J. L. Bradford, MD, CEO & Executive Director]

The exploration we do tends to have a bit of a cycle, a seasonal cycle. And we have nearly 0 field activity from late November to February each year. So we tend to have very low expenditures in -- or lower expenditures in the December and March quarters and then more fulsome expenditures in the June and September quarters. So we remain on track versus our budget to do approximately $65 million of exploration activity for FY '21.

[Operator]

The next question comes from Sophie Spartalis from Bank of America.

[Sophie Spartalis, Vice President and Senior Resources Analyst]

Just following on from Dan's question just regarding the balance sheet, obviously, very strong, and then you got potentially the proceeds coming in from Tropicana. You talk about inorganic growth as well. What do you believe is the capacity to look at inorganic growth opportunities, i.e., how much cash do you want to keep on the balance sheet? And like how do you see that balance between inorganic capacity versus cash on the balance sheet versus dividends?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Yes. Sure. We have a stated minimum liquidity, which I think is $80 million in our public disclosures. And the reality is that true minimum liquidity for us is probably something upwards of there, maybe around the $150 million, $200 million mark. So that leaves us plenty of horsepower with the cash on the balance sheet to progress inorganic growth. But inorganic growth is more about finding the right opportunity. And if we were to pursue something, it would have to be a compelling value proposition for IGO and its shareholders. And it would need to deliver a Nova-like asset with scale, mine life and high quality. And in the current world of COVID, the field of opportunities is somewhat reduced because travel to places outside West Australia to look at inorganic opportunities is somewhat more problematic, if not impossible, than during normal operations.

[Sophie Spartalis, Vice President and Senior Resources Analyst]

Yes. No, I understand the difficulties in doing DD remotely, absolutely. But just in terms of -- I guess you've highlighted that there's a 6-year mine life at Nova. Would you be willing -- like what's your appetite to make a company-transformational acquisition?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Yes. We certainly have the appetite, but we also have the patience. And it's really about finding the right opportunity. And if we can't see line of sight of that today, then we don't feel compelled to go and do just anything. We're quite comfortable sitting on our hands and waiting for that right opportunity that delivers the right value proposition for the company and the shareholders.

[Sophie Spartalis, Vice President and Senior Resources Analyst]

Okay. And then just in terms of...

[Peter J. L. Bradford, MD, CEO & Executive Director]

My caution there would be, we are disciplined. We've got the cash. Some would characterize it as the war chest, but we don't feel compelled to use it. And we will be disciplined in pursuing the right inorganic opportunity. If we don't find it, then ultimately, we have the opportunity to return cash to shareholders. And our primary growth focus is on exploration, and we think that the transformational value generation from discovery through exploration is a far better long-term outcome for shareholders.

[Sophie Spartalis, Vice President and Senior Resources Analyst]

Sure. And then just in terms of the 1 half-2 half split that you provided in your commentary, is that purely dictated by grades? Or is there something else happening in the second half at both of the assets?

[Peter J. L. Bradford, MD, CEO & Executive Director]

It's primarily grade, yes.

[Operator]

[Operator Instructions] The next phone question comes from Peter O'Connor from Shaw and Partners.

[Peter O'Connor, Senior Analyst of Metals and Mining]

Four for me. To start with, just circling back to the first question about the process at Tropicana. I've listened to your commentary. I've heard your answer to that question. I just wanted to make sure I get it. So the technical review, did you give us a finite time line on that? Or can you give us a more finite time line? And what exactly does that spit out of that review? And then I guess from that, the answer -- next answer is self-evident, which will be when do you go to test the market? That's the first question.

[Peter J. L. Bradford, MD, CEO & Executive Director]

Yes. Sure. We'd love to give you a granular time line, but it's really dictated by the workflows. And all I can do is talk to what's in the rearview mirror. We started the work in August. We're quite well progressed. So at a point in time, not in the distant future, we would be complete -- we would have completed that work. We have what we characterize as a strategic overlay for the asset and what we would think is a more compelling value proposition. And we would expect to communicate that to the market and also use that as a basis for understanding what value may or may not be delivered if we were to consider a divestment process.

[Peter O'Connor, Senior Analyst of Metals and Mining]

To document all this processing needs Board approval of both AngloGold Ashanti and IGO, do I have to think about it in terms of the Board's cycles as to when this plays out?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Say that one again?

[Peter O'Connor, Senior Analyst of Metals and Mining]

Will this require Board approval, the document that you're putting together for Tropicana? So in terms of the timing, is that part of the process?

[Peter J. L. Bradford, MD, CEO & Executive Director]

I wouldn't have thought so.

[Peter O'Connor, Senior Analyst of Metals and Mining]

Okay. Got it. And secondly, just on M&A. Firstly, congratulations to team IGO for showing dispassionate allocation of capital with regards to both Panoramic and also New Century zinc, well done. But your answer about you want a Nova-like asset, and you've articulated over numerous quarterlies and annual results and also at the Analyst Day at the start of this year the compelling Elephant country in the Fraser Range. So is that -- will you -- is it at your doorstep where we should be thinking? And is it consolidation of the Fraser Range and consolidation of equity, which you've got some commonality across that area, that's the way this M&A plays out?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Like with the -- if you look narrowly at the Fraser Range, the field of M&A opportunities at the moment is relatively small. But as you would expect, we -- and because we are shareholders of most of the other exploration companies that are active in the area, we do follow their progress quite carefully. And future growth on the Fraser Range could come by way of our own exploration discoveries or by way of discovery success from others.

[Peter O'Connor, Senior Analyst of Metals and Mining]

Got it. And segueing to offtake, the new agreements with BHP and others, how are they shaping up? I haven't had the chance in the last couple of hours, given other quarterlies, to do the math on what that's translated to. So what's the upstep in terms been and how has it played out this quarter?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Yes. Yes. Because of contractual requirements, we don't talk to the payabilities in our contracts. But if someone were to take our quarterly reports and divide the payable nickel by the contained nickel for the June quarter and the September quarter, they'd see that our -- that, that appears to go from about 72% to 77%.

[Peter O'Connor, Senior Analyst of Metals and Mining]

Got it. Okay. And lastly, Pete, share price performance, you've mentioned in the text as well as in your presentation the dislocation between what you think the value is in your share price performance. It's both a Tropicana thing but also a nickel thing, if I look at it, which you haven't tracked either. You've talked about what you're doing with regards to the Tropicana side, but why aren't you following the nickel price either? Thoughts?

[Peter J. L. Bradford, MD, CEO & Executive Director]

It bewilders as me. And you would have seen that I walk my talk. I believe the company's stock price is undervalued. I've been buying shares. We've been in a trading blackout the last few weeks, and I would expect that if the market is going to continue to deliver this sort of price, I'll continue buying some more shares at a personal level.

[Peter O'Connor, Senior Analyst of Metals and Mining]

Sorry, just one more in. You've raised the question about the value of the shares. Is the best thing you can do regarding that $500 million cash balance buying back your own shares? And is that part of this whole process about external value versus internal value?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Part of the ongoing dialogue with the Board that we would expect to complete between now and the half yearly results in January will be the evolution of our cash return policy and how we might use more of that to potentially buy back shares. It sits in our current policy as an option. We've preferred in the past to return money to shareholders as dividends, but we retain -- continue to have that flexibility to deploy cash returns into share buybacks. And we would expect the Board to make a decision on how we evolve that cash return policy between now and the end of January.

[Operator]

The next question comes from Matthew Frydman from Goldman Sachs.

[Matthew Frydman, Research Analyst]

Just one for me. On your -- at your results call back in August, you highlighted that there was some ongoing work on a new PFS for, I guess, the potential nickel sulfate downstream project. I don't think I've seen that mentioned anywhere here today. So I guess I was just wondering is that work still ongoing? And is there anything to update there in terms of any progress made with discussions from potential partners, et cetera?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Yes. This progress is slow. It's -- you'd characterize it as a victim of COVID-19. And because it's working with a potential offshore partner, COVID-19 has very much limited how quickly that can progress.

[Matthew Frydman, Research Analyst]

Yes. Sure. Understood. And I think you made -- again, made similar comments to that effect back in August. I guess the second point on that then is, if that remains a potential project or a potential investment, does that form part of, I guess, this review of capital allocation in terms of liquidity and how much cash you might want to retain to be able to potentially invest in that kind of project?

[Peter J. L. Bradford, MD, CEO & Executive Director]

Yes. I'd characterize that as although there's lots of work to be done before we get to any sort of decision point, the overall structure or framework that we're working to would involve -- would put very little IGO balance sheet at risk.

[Matthew Frydman, Research Analyst]

Okay. So it's more about IGO bringing potentially the technology to the table and...

[Peter J. L. Bradford, MD, CEO & Executive Director]

Bring the technology, bring the feedstock and some minor contribution towards capital.

[Operator]

At this time, we're showing no further questions. I'll hand the conference back to Mr. Bradford.

[Peter J. L. Bradford, MD, CEO & Executive Director]

Ladies and gentlemen, everyone, once again, we appreciate your participation through this presentation and Q&A. And we look forward to speaking to you again soon. Stay safe, and have a good day.