Independence Group
After celebrating one year since its Nova mine entered commercial production in September, Independence Group has its sights firmly set on key metals used in renewable energy technologies and electric vehicles, with further expansion and exploration proje
INDEPENDENCE Group (IGO) would continue to prioritise exploration work at its Nova operation and the surrounding Fraser Range, following a strong start to FY19.
According to its September quarterly report released on 29 October, IGO increased net cash to $62 million and achieved metal production guidance at Nova, about 160km northeast of Norseman, and at Tropicana gold mine, 330km northeast of Kalgoorlie.
The WA-based miner had a 100 per cent interest in Nova, which began production in June 2017, and a 30 per cent interest in Tropicana, with AngloGold Ashanti holding the remaining 70 per cent.
Mr Bradford said first quarter results for the 2019 financial year demonstrated the quality of the two assets, which underpinned the funding of its exploration program to drive future growth.
“Our ongoing $51 million commitment to discovery in FY19 is targeting metals important for renewable energy and electric vehicles,” Mr Bradford said.
“This work prioritises exploration at Nova and the Fraser Range with the objective of finding additional nickel-copper-cobalt discoveries like Nova.
“Our exploration team has successfully stepped up our activity level in line with increased commitment to exploration in FY19 and the excitement of the team, fanned by the prospect of discovery, is infectious.”
The Nova mining lease has been the subject of the largest 3D seismic program ever undertaken in Australia, with Mr Bradford describing the Fraser Range as “extremely fertile.”
According to IGO, a preliminary review of data earlier this year identified numerous targets that warranted further investigation and drilling at Nova.
More targets were expected to be identified as the data integration and interrogation continued, while two targets were advanced to drill status, with the first of these to be drilled in Q2 FY19.
Further greenfields exploration was carried out across the Fraser Range, including Widowmaker and Andromeda during the quarter, with assay results pending.
The SpectremAir airborne EM survey at Lake Mackay in the NT continued during the quarter, including the ‘ high priority’ Blaze prospect area,
The airborne survey was expected to be completed in Q2 FY19, including an area funded by the NT Government under the geophysics and drilling collaboration program.
On 25 October, IGO and Prodigy Gold announced a farm-in and exploration joint venture for the Lake Mackay project, triggered by IGO completing its initial $6 million earn-in expenditure, with IGO holding a 70 per cent interest.
Prodigy Gold managing director Matt Briggs said the establishment of the JV offered both companies the opportunity to build on an already strong relationship focussed on delivering a significant new mineral discovery.
“This focus is further underlined by an inaugural JV budget of $4.6 million for the remainder of FY19, which provides for our largest-ever commitment to RC drilling on the project,” Mr Briggs said.
“Exploration during the quarter continues to provide encouragement.
“Eight new geochemical anomalies were identified plus 39 airborne EM anomalies for on-ground EM follow up.
“The EM results build on the surface work already undertaken allowing the exploration team to prioritise targets for follow-up investigation which can only increase our chances of making a major discovery.”
Lake Mackay was considered prospective for gold and base metals, as well as nickel sulphide mineralisation.
Adding Value
In addition to its exploration programs, IGO was working to further evolve the downstream processing potential from its broader Nova assets to produce nickel and cobalt sulphates for electric vehicle (EV) batteries.
Speaking at 2018 Australian Nickel Conference in Perth on 23 October, Mr Bradford said the strategy could deliver IGO the potential for higher payability, premier prices and higher concentration recoveries.
“EV lithium ion batteries cathodes with higher nickel content are the key to enabling higher energy density, and that broadens our opportunity for Nova to emerge as a stable supplier of minerals critical to clean energy storage,” Mr Bradford said.
According to IGO’s September quarter report, strong gold production from Tropicana was also expected to continue through upgrades to processing capabilities, which Mr Bradford said were on track to be completed by the end of 2018.
“The value enhancement activities at Nova and Tropicana were progressed broadly in line with plan,” Mr Bradford said.
“This includes the Nova nickel sulphate pre-feasibility study, as well as the installation of the second ball mill at Tropicana and the pre-feasibility study for the Boston Shaker underground at Tropicana, both of which are on track for completion this quarter.
“IGO is a business which can achieve transformational organic growth over the coming years through the potential for both downstream processing and discovery.”
Design and civil works on the second ball mill have been completed and mechanical installation was progressing.
Structural mechanical and piping installation was well underway, with the majority of plant tie-ins completed during the scheduled October shutdown.
The new ball mill would enable processing throughput rate to be increased by about 5 per cent and gold recovery to be improved by up to 3 per cent to about 92 per cent.
Improved gold recovery would be achieved by the additional milling capacity allowing a finer grind, which would result in better liberation, and therefore, a better gold extraction rate.
At Nova, IGO completed a number of trade-off studies during the quarter to determine the final process flowsheet to be carried forward into engineering as part of the pre-feasibility study.
It also completed a plant trial to produce an optimal, high-grade nickel concentrate feed for downstream processing.
According to IGO, the trial was successful, allowing the miner to collect three tonnes of higher-grade nickel concentrate with reduced sulphur content, specifically optimised for the downstream processing project, which would be used for additional pre-feasibility and feasibility metallurgical test work.
The September quarter also saw IGO executing key strategic contracts at Nova, including renewing and extending Barminco’s underground mining contract for four years with a two year extension option.
On 23 October, IGO announced it had finalised an agreement with Zenith Energy to construct a solar photovoltaic (PV) facility at Nova, which Zenith would build, own and operate.
First power supply from the facility was expected in the Q1 FY20.
It would be the first fully integrated commercial hybrid diesel/solar PV facility in Australia.
Mr Bradford said IGO believed in the green energy future and was committed to renewable energy sources as it strove to reduce its carbon footprint.
“The development of this innovative hybrid solution will also improve our cost structure with targeted renewable power insertion of up to 50 per cent demand via the solar PV facility,” Mr Bradford said.
Financial Results
Mr Bradford said while cash costs at Nova had been higher than guidance, this was impacted by lower metal produced and lower by-product metal pricing.
“We expect cash costs to trend lower in subsequent quarters on the back of higher quarterly metal production,” Mr Bradford said.
Nova nickel production for the quarter was 6854 tonnes, while its copper production was 2019 tonnes.
Gold production on a 100 per cent basis at Tropicana was 125,100oz, while gold sold at IGO’s 30 per cent share was 35,143oz.
Despite higher nickel concentrate sales from Nova and higher Tropicana gold sales, total revenue for Q1 FY19 was lower than the previous quarter at $167.4 million due to softer base metal prices and lower copper concentrates sales.
Revenue was also impacted by the Long operation going into care and maintenance in the previous quarter, and the sale of the Jaguar operation.
However, net cash was higher than the prior quarter at $108.1 million, largely as a result of strong cash generation from Nova and Tropicana.
In more good news for IGO, confidence in Australia’s nickel sector was on the up, according PCP Capital Group principal Liam Twigger.
Speaking at the 2018 Australian Nickel Conference, Mr Twigger said there had been a continuation of improvement in sentiment for the Australian nickel sector over the last 12 months, and that value seemed to be building.
“This is in addition to further consolidation opportunities in the Kambalda region and Fraser Range, and a continued strong push into the battery metals space by the likes of Nickel West with its nickel sulphide strategy, Western Areas with its MREP, and Independence Group with nickel sulphate hexahydrate,” Mr Twigger said.
“The Australian nickel sector remains in great shape, not only for today, but also for the future.”
“EV lithium ion batteries cathodes with higher nickel content are the key to enabling higher energy density, and that broadens our opportunity for Nova to emerge as a stable supplier of minerals critical to clean energy storage.”