Independence Group Share Price Marginally Uplifted After The Release Of September Quarter Activities Reports

On 29 October 2018, Independence Group NL (ASX: IGO) released its September quarter activities reports, following which the share price of the company uplifted by 0.758 percent.

As per IGO’s Managing Director & CEO Mr. Peter Bradford, the first quarter results of FY 2019 demonstrate the quality of company’s two outstanding assets in Nova and Tropicana, which underpin the funding for exciting exploration program to drive the company’s future growth. Although cash costs at Nova were higher than guidance which was impacted by lower metal produced and lower by-product metal pricing. The company is expecting that the cash costs will decline in the upcoming quarters due to higher quarterly metal production. 

Despite the higher nickel concentrate sales from Nova and increased gold sales from Tropicana, the total revenue for the September quarter was A$167.4 million which is lower than the last quarter. The revenues were impacted by the Softer base metal prices and lower copper concentrate sales. The total revenues were also impacted by no effective sales contribution from Jaguar and Long.

The Underlying unaudited EBITDA decreased as compared to the last quarter to AUD$62.9 million, mainly due to the lower product revenue from Nova. The unaudited net profit after tax was AUD$0.2 million in the first quarter of FY 2019. As a result of strong cash generation from Nova and Tropicana, and the receipt of proceeds of A$11.5 million from the June 2018 sale of a gold royalty, the Net cash from IGO Operating activities was A$108.1 million in Q1 FY 2019 which was higher than the last quarter.

In the first quarter of FY 2019, the Net cash inflow was A$37.3 million, which included outflows of A$28.6 million for debt repayments, A$11.8 million in final FY 2018 dividends. The company also paid A$5.3 million for an investment in the Southern Hills tenements on the Albany Fraser Range in Western Australia. In September quarter, the strategic agreements were finalized at Nova which includes the renewal of the underground mining contract for a 4-year term and the commitment to the construction of a solar farm.  At Nova, the pre-feasibility study for downstream nickel sulphate processing was Started in September quarter and at Tropicana, the pre-feasibility work on Boston Shaker Underground is progressing to schedule and an update on the Boston Shaker Underground is expected in the second quarter of FY 2019. Also, at Tropicana, the construction of the second ball mill was initiated and it is expected that it will start commissioning before the end of December 2018.

The company’s ongoing AUD$51 million commitment to discovery in FY 2019 is focusing on metals which are important for renewable energy and electric vehicles. The exploration team of the company has increased the activity level, which is in line with the increased commitment to exploration in FY 2019.

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In the last six months, the share price of the company decreased by 24.57 percent as on 26 October 2018. IGO’s shares traded at $3.970 with a market capitalization of circa $2.34 billion as on 29 October 2018 (AEST 04:00 PM).


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