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Independence Group managing director Peter Bradford. Photo: Attila Csaszar

Diversification key for Independence

Holding an even exposure to base metals and gold will be the key to keeping Independence Group’s performance consistent across the commodity cycle, according to managing director Peter Bradford, although the time was not yet right to be looking for new gold projects.

Prices of base metals and gold were generally negatively correlated, he said, and having interest in both had the benefit of reducing cash flow volatility.

That was key in the mining business because it enabled investment in people and new projects, Mr Bradford told journalists during a site visit to the company's Nova nickel mine today.

The criteria for where Independence would look next for opportunities were fairly specific, he said.

Priorities would be an area with minimal political risk, and where there could be a number of mines operated by the company in geographic concentration so as to create a hub.

Mr Bradford was bullish on base metals prices, saying a shortage of around 150,000 tonnes per annum of zinc would drain stockpiles.

“(Nickel and copper) have been down as much as 40 to 50 per cent in the past two years,” Mr Bradford said.

“(But) you've got an insatiable demand for base metals that support our modern way of life.

“You've got increased demand at a sustained level in China and got an infrastructure spend coming in the US.

“Once (the) negative perception goes positive, we expect that'll switch through to higher nickel prices going forward.

“And as we've seen in the past, when the perception switch for nickel goes positive, the price climbs very quickly.”

That could be to as much as $US8 a pound in 12 months, he said, an increase of around 60 per cent from today's level.

Nonetheless, there would be a ceiling on the price because direct shipping operations could easily come back online, Mr Bradford said.

Earlier this week, Independence dispatched its first load of nickel concentrate from the Nova mine to BHP Billiton's Nickel West plant in Kambalda.

That came just more than four years after Sirius Resources first discovered nickel at the deposit.

In 2015, Independence bought Sirius in a $1.8 billion deal Mr Bradford said some at the time had considered a full price.

But the company had a clear line of sight to optimise the project, he said, with net present value now 51 per cent more than at the time of purchase.

A further move was the accelerated development of the connected Bollinger deposit, Mr Bradford said.

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Share Price

Closing price for the last 90 trading days
Source: Morningstar

BN30 Index

Index = 100 as of 4 Jan 2016
Source: Morningstar

Total Shareholder Return as at 31/01/18

1 year TSR5 year TSR
19thOM Holdings909%30%
240thSaracen Mineral Holdings41%31%
257thGold Road Resources38%49%
268thIndependence Group34%4%
584thWestgold Resources-21%0%
709 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

28/11/17
$0 Issued
18/09/17
$106k Bought
06/09/17
$13k Bought
Total value as at the date of the transaction
Source: Morningstar

Revenue

11th↑OM Holdings$474.3m
12th↑Westgold Resources$438.5m
13th↓Independence Group$424.1m
14th↑Saracen Mineral Holdings$423.2m
15th↑Gold Road Resources$326.6m
499 listed resources companies ranked by revenue.
Source: Morningstar

Remuneration from Independence Group

34thPeter Bradford$1.313m
136thBrett Hartmann$676k
181stScott Steinkrug$592k
Ranked by total remuneration from all listed WA companies

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