A typical trend that emerges during a mining boom, is that of merger and acquisitions. Below are 2 mining stocks that seem to be lensed through the scale for potential they can unveil in the future.
 

Independence Group NL

Strong Third Quarter 2018 Performance: Independence Group NL’s (ASX: IGO) stock has risen 9.66% in three months as on May 03, 2018 as the company in the third quarter 2018 delivered A$57M free cash flow from higher commodity prices and timing of receipts, and has reduced the net debt to A$73M. For 3Q 2018, Nova delivered nameplate 1.5Mtpa mining rate and has increased the nickel grade to 1.85%. Tropicana had achieved its two millionth ounce of gold produced in January 2018. The company has completed substantial preparatory work at Jaguar to access higher volumes of ore at higher grades for mining in 4Q18. Further, IGO has made significant progress with the 3D seismic survey at Nova and the airborne EM survey on the Fraser Range. Based on the foregoing and the potential to perform during favorable commodity environment, we give a “Hold” recommendation on the stock at the current price of $ 5.060.
 

Third Quarter Financial Performance (Source: Company Reports)
 

Syrah Resources Ltd

Outlook for the Second Quarter 2018: Syrah Resources Ltd.’s (ASX: SYR) stock has fallen 4.58% in three months as on May 03, 2018 despite the group having Balama asset with high graphite reserves. In the first quarter 2018, at Balama Graphite Operation, the production is of 11.2kt, which is below plan. However, the current production rates are improving due to increased recoveries, plant throughput and stability to deliver significant increase in the production. The first quarter production was affected due to a slower ramp up in recoveries, due to flotation circuit optimisation works and secondary circuit utilisation, and lower throughput due to fines dryer outage. The company is targeting lower end of 2018 production guidance of 160,000 to 180,000 tonnes, with a planned production ramp up split of 25% H1, 75% H2 for the 2018 calendar year. However, the plant is consistently producing high quality, low impurity graphite products; carbon grade in excess of 95% and particle size distribution within specification. Additionally, SYR expects the global demand for natural flake graphite to reach 780,000 tonnes in 2018, which is up 10% year on year. SYR expects the overall market to move into a deficit in late 2019 to early 2020 as the demand for anode material increases as global electric vehicle penetration approaches 4% to 5% of the total vehicle market. Moreover, for the second quarter 2018, SYR expects the net cash outflow of US$25 million, with cash on hand at 30 June 2018 of US$55 million given significantly lower net cash outflow forecast in Q3 than Q2. The company is targeting positive cash flows from operations at Balama around mid-H2 2018 (previously from early H2 2018). Therefore, based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 3.300.
 

Graphite Reserves (Source: Company Reports)

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