A nickel, gold and copper-zinc-silver mining, development and exploration company, Independence Group NL (ASX: IGO), on 30th April 2019, released its quarterly results for the quarter ended 31st March 2019.
During the period, the company has delivered another strong quarter. Nova delivered new production records (8,375 tonnes of nickel and 3,731 tonnes of copper was produced) and cash costs, including royalties worth A$1.50 per payable pound of nickel. At Tropicana, the gold production for the quarter was 123,236oz at an AISC of A$990/oz.
Nova and Tropicana remained on track to deliver full-year production guidance. During the period, the net profit after tax was A$45 million, up by 6300% as compared to its previous quarter. The underlying EBITDA during the period was A$117 million, up by 72% as compared to 2H FY2019. The net cash position by the end of the quarter was A$172 million. The net cash generated from the operating activities was up 94% to A$106.3 million. The company paid a fully franked interim dividend of 2 cents per share on 1st March 2019.
As a result of higher Nova grade as well as productivity, there was an increase in sales. Also, the nickel price was up 7%, which resulted in a growth in the Nova EBITDA. The NPAT was also influenced by the lower exploration expenses and lower amortisation at Tropicana and Nova.
Independence Group NL holds 100% interest at Nova. Nova is situated in the Fraser Range, which is approximately 160km east-northeast of Norseman, 360 kilometres south-east of Kalgoorlie as well as 380 kilometres from the Port of Esperance located in Western Australia. The Nova deposit was discovered in 2012, however, the development of deposit actually started in January 2015.
Nova, during the period, delivered a strong EBITDA margin of 56% and FCF margin of 53%. At Nova, the underground development and grade control drilling has been completed. The pre-feasibility study demonstrated that the IGO Process is technically viable. Through the IGO Process, the metal recoveries were extremely high. The rate of extraction surpassed 97% of cobalt as well as nickel in Nova nickel-copper sulphide concentrate feed. The IGO Process helps in the production of battery grade nickel sulphate. Independence Group NL has already lodged a patent application, and the study is expected to complete in late 2019.
Tropicana Gold JV
IGO has a 30% interest in Tropicana, which is situated on the western edge of the Great Victoria Desert. Tropicana reported a strong EBITDA margin of 59% and FCF margin of 31%.
The development of the Boston Shaker will commence in May 2019, after the positive feasibility study. The capital cost is estimated at A$105 million, and the operating cost is estimated at A$95 per tonne. The company expects that the average gold production will be around 100koz per year over seven years.
In the previous six months, the shares of IGO generated a return of 14.07%. IGO is trading at A$4.600 on ASX (as at AEST 12:00PM, 01 May 2019), up by 3.139% as compared to its previous closing price. IGO holds a market capitalisation of A$2.63 billion with approximately 590.48 million outstanding shares.
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