IGO puts faith in Nova

The West Australian - - WESTBUSINESS - Josh Chiat

In­de­pen­dence Group boss Peter Brad­ford has promised a big turn­around in the di­ver­si­fied miner’s for­tunes this fi­nan­cial year af­ter it swung from a $59 mil­lion loss to a $17 mil­lion profit in 2016-17.

The ASX-listed miner is tip­ping a big im­prove­ment next fi­nan­cial year on a full-year con­tri­bu­tion from the Nova nickel mine 160km east of Norse­man, where it spent $166 mil­lion in 2016-17 to com­plete the un­der­ground de­vel­op­ment.

The of­fi­cial open­ing of the mine, which was the main prize se­cured in a $1.8 bil­lion takeover of Sir­ius Re­sources two years ago, is im­mi­nent, with the project tipped to pro­duce 26,000 tonnes of nickel and 10,000 tonnes of cop­per a year.

Last year un­der­ly­ing earn­ings rose 9 per cent to $150.5 mil­lion, with rev­enue up one per cent from $417.1 mil­lion to $421.9 mil­lion on higher re­alised metal prices for zinc, cop­per, nickel and gold.

Its 30 per cent stake in An­gloGold Ashanti’s Trop­i­cana gold mine con­trib­uted half of IGO’s rev­enue in the pe­riod.

It ended the year with $35.8 mil­lion in the bank, down 23 per cent on the $46.3 mil­lion on hand a year ear­lier, com­mit­ting to a 1¢ per share fully franked div­i­dend.

IGO will al­most dou­ble its green­fields ex­plo­ration bud­get to $31 mil­lion, largely fo­cused on the sub­stan­tial ground po­si­tion it has built up on the Fraser Range around Nova.

Mr Brad­ford doused talk that the Jaguar base met­als mine near Leonora, which has a shorter life than Trop­i­cana and Nova, and where lower-thanex­pected pro­duc­tion off­set higher zinc prices in 2016-17, would be sold.

“Our guys are con­vinced there are more re­main­ing (re­sources) to dis­cover,” he said.

“We con­stantly re­view our port­fo­lio, all the as­sets, and we’ll con­tinue to do that go­ing for­ward. But at this stage there is no view on Jaguar.”

On the other hand, the out­look re­mains bleak for the Long nickel mine in Kam­balda, de­spite it beat­ing pro­duc­tion and cost guid­ance and gen­er­at­ing $32.1 mil­lion in earn­ings.

With ore re­serves run­ning low, a fourth-quar­ter 2018 date has been set for its clo­sure, with pro­duc­tion guid­ance of 54006000 tonnes this year.

Im­me­di­ate clo­sure costs will come in at about $5-6 mil­lion, while it will cost $1-2 mil­lion to keep on care and main­te­nance while IGO searches for “step change” ex­plo­ration suc­cess.

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