Costs at IGO’s Nova set to rise

Independence Group has exceeded production guidance at its Nova project, but costs at the operation were also higher than expected and are forecast to increase even further this financial year.

IGO’s nickel production at Nova for the 2019 fiscal year was 30,708 tonnes, outperforming its previous guidance of between 27,000t and 30,000t.

The company’s copper production at Nova was also above guidance, totaling 13,693t, compared to guidance of between 11,000t and 12,500t.

However, costs were also higher than expected at the operation, coming it at $2.07 per pound, versus guidance of between $1.65/lb and $2/lb.

Production at Nova is expected to remain flat this fiscal year, but costs are set to rise, according to IGO.

It said this was due to several factors, including higher expected shipping costs, the absence of up to $1.5 million in diesel hedging gains, and underground development capital expenditure.

Its Tropicana gold mine produced 518,172 ounces at an all-in sustaining cost of $951 per ounce, in line with guidance of between 500,000oz and 550,000oz and an AISC of between $890 and $980.

Chief executive officer Peter Bradford was optimistic about the results at Nova.

“Nova has now been in commercial production for two years and over the last give quarters has delivered metal production at a higher rate than the average metal production rate projected in the feasibility study,” Mr Bradford said.

“Combined with this consistent delivery, Nova is the lowest cost nickel producer in Australia and one of the lowest cost in the world despite by-product credit pricing head winds.”

Shares in IGO were down 4.4 per cent to close trade at $5.38 each.