1800-272-662
Shopping Cart 0
countryflagAU
Login

small-cap

Independence Group - Road Ahead!

Sep 17, 2015 | Team Kalkine
Independence Group - Road Ahead!

Results for the year ended 30 June 2015

The financial highlights included a 25% increase in revenue to $ 499 million which is a record for the group. The underlying EBITDA increased by 44% to $ 213 million and the net profit after tax by 58% to $ 77 million. Net cash flow grew by 57% to $ 202 million and the fully franked dividends paid during the year went up by 175% to 11 cents per share. The minimum surplus franking credit balance after the final dividend for FY 2015 is $ 42 million which will be available for future dividends. Net cash (cash equivalents and debt) rose to $ 121 million as on 30 June 2015.


 
The business highlights showed significant improvements in financial performance and the strong financial position is a good indication of the robust nature of the diversified resources strategy of the company. Tropicana is performing as a Tier 1 gold project in terms of costs, grades and generation of cash flows. The value enhancing work streams which are progressing have the objective of improving the life of mine performance and include work to increase throughput capacity from the nameplate capacity of 5.8 MTPA to a minimum of 7 to 7.5 MTPA with a minimum of incremental capital expenditure. The successful exploration effort demonstrates the continuing ability to replace reserves and increase mine life at Tropicana, Long and Jaguar. The group is now positioned to transform itself into a leading mid-tier diversified mining company through the announcement of the proposed acquisition of Sirius Resources as part of the growth strategy for its tier 1 asset portfolio. The transaction has strong support including an endorsement from Mark Creasy, the unanimous support of the boards and management of both companies and the merger benefits have already been identified and include reduced cost of funding, the leveraging of the combined balance sheets and business diversification. Managing director and CEO Peter Bradford said that the group had succeeded in meeting or exceeding all the production and cash cost guidance for all its three operating mines. Tropicana continues to operate as one of the best goldmines in Australia in terms of scale, grade, cash flow and cost profile and the value enhancing work stream currently in progress should result in further outperformance of the market expectations.
 

Mining Result and Guidance (Source: Company Reports)

Contributing to the overall good results was a full-year contribution of gold production from Tropicana compared to 9 months in the previous year. Increases in segment contributions came from the 37% increase from Tropicana and the 54% increase from the Jaguar Operations though there was a reduction of 4% from the Long Operation. Payments for exploration expenditure declined by 15% to $ 25.7 million. Cash flow from investing activities fell by 12% mainly because of higher construction and development expenditure at Tropicana in the final stages. Development capital expenditure fell by 42% to $ 44.1 million partly offset by an increase of $ 7.7 million in property and plant and equipment expenditure and the consideration of $ 13.1 million for the acquisition of approximately 33.8 million shares in Gold Road Resources Ltd. Cash flows from financing activities rose considerably from neutral in the previous year to an outflow of $ 54.4 million due to the repayment of $ 25 million in debt on the corporate finance facility with National Australia Bank. The facility matures in December 2015 and is currently undrawn.


Havana and Tropicana Pits (Source: Company Reports)
 

The acquisition of Sirius (Nova Project)

 On 25 May 2015, the company and Sirius announced of a binding SID under which the company will acquire all the issued capital of Sirius by way of an Acquisition Scheme of Arrangement. Under the scheme, Sirius shareholders will receive 0.66 shares of IGO and $ .52 in cash for each Sirius share as well as a pro rata holding in a new company S2 Resources which will hold the Sirius non-Fraser Range assets. The combination of the two companies has a clear strategic objective because it combines the world class Nova Project with the existing IGO portfolio of projects generating cash flows. The transaction remains on track for completion in September 2015.
 
To support the transaction, the company has entered into a syndicated facility agreement with National Australia Bank And New Zealand Banking Group. The agreement covers a five-year amortising term loan of $ 350 million which will be used to refinance the existing finance facility for the Nova Project and provide funding for continuing development, construction and operation. There is also a five-year revolving loan facility of $ 200 million that will partly fund the payment of the cash component of the transaction and provide funding for general corporate purposes.
 

Other assets

The Tropicana joint venture (30% IGO) showed an increase of 59% in revenues reflecting the benefits of the first full year of production. The total assets increased by 46% because of continuing contributions by the company to the operation and cash calls for the year came to $ 142.5 million. The current grade streaming strategy envisages the mining of more ore than is required for the processing plant with the lower grades being stockpiled and the preferential use in processing of the higher grades. The Long operation (100% IGO) mined a total of 258,634 t of ore withthe majority of 70% being mined by long hole sloping and the rest by other methods. Total segment revenue declined by 6% because of volumes with 6% less payable nickel being sold. Net operating profit fell by 12% because of the lower volume of nickel sales and cash costs which were 6% higher. The Jaguar operation (100% IGO) showed an increase of 16% in revenues mainly because of an increase of 48% in zinc revenues owing to a combination of high volumes and higher realised prices. Copper revenues declined by 10% because of lower realised prices.


IGO Daily Chart (Source: Thomson Reuters)
 
In tandem with the rest of the mining sector, share prices fell amidst mounting worries in the market about the effect of the slowing Chinese economy on demand for commodities. However, we believe that the increases in revenues and net profits make this company stand out. At the current stock price, we can see plenty of upside and recommend a Buy at the current price of $3.180.

Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in:  BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
Copyright
Copyright © 2015 Kalkine Pty Ltd ABN 34 154 808 312. No part of this website, or its content, may be reproduced in any form without the prior consent of Kalkine Pty Ltd.
Kalkine is a trading name of Kalkine Pty Ltd ABN 34 154 808 312, which holds Australian Financial Services Licence No. 425376.

Mid-Cap
Technical Analysis on One NYSE-Listed Uranium Stock- UEC
Mar 13, 2026 Team Kalkine
Small-Cap
One NASDAQ- Listed Semiconductor Stock at Resistance Level- HIMX
Mar 13, 2026 Team Kalkine
Blue-Chip
MQG Scales AUM and Private Credit Capabilities to Drive Growth
Mar 13, 2026 Team Kalkine
Small-Cap
Technical Analysis on Two ASX-Listed Stock – RAU, HRN
Mar 13, 2026 Team Kalkine
Mid-Cap
Technical Analysis on One NYSE- Listed Mining Stock- ERO
Mar 12, 2026 Team Kalkine

Past performance is not a reliable indicator of future performance.