Sinclair Currie, Principal and Co-Portfolio Manager
Independence Group is an Australian listed gold and base metals producer and explorer. The company has a diverse portfolio of high quality operations mining gold, nickel, zinc and copper. It also recently merged with Sirius Resources which added the large, high grade Nova Bollinger Nickel mine to the portfolio.
Following the merge with Sirius, Independence Group’s share price has fallen significantly. To our minds this offers an attractive investment opportunity. Our investment rational for Independence Group is based upon the following three reasons.
- Operational performance and management track record
Independence management have proven themselves as sound operators of mining assets. Initially with the Long Nickel and then at Jaguar/Bentley the company has established an enviable track record for maintaining cost discipline and maintained strong production. Furthermore the company has continued to grow the resource base organically via an ongoing disciplined exploration programme.
- Quality assets with growth potential
Independence’s operating mines display strong grades and robust longevity. As such the company has been able to operate profitably despite weaker commodity prices and still have sufficient resources to be exposed to any future upswing in the cycle. The newly acquired Nova Nickel project appears to offer similar attributes. The Nova Nickel mine is expected to deliver strong production growth as it ramps up to production within the next three years.
- Leveraged to potential nickel price upside
As highlighted in our quarterly review, we see current nickel prices as unsustainably low and predict that these will recover within three years prompted by substantial supply curtailments. With the well established Long mine as well as new nickel production commencing from the Nova project, Independence group is well placed to benefit from this.