Independence swings to H1 profit, warns of Nova ramp-up delay

PERTH (miningweekly.com) – Diversified metals miner Independence Group has swung back to a profit in the six months ended December 31, on the back of higher underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) and revenue.

Profit for the half-year reached A$202-million, compared with a loss of A$77.8-million in the first half of the 2016 financial year.

Revenue for the six months under review increased by 2% to A$223.1-million, resulting from higher realised base metals prices. However, this was partially offset by lower product sales during the three months to December 31.

Independence told shareholders on Tuesday that higher realised zinc and copper prices from its Jaguar operation, had contributed to a 16% increase in revenue from the mine, delivering A$76.5-million, while total revenue from the Long nickel operation increased by 14% on the back of higher realised nickel prices.

Revenue at the Tropicana gold mine decreased by 10%, however, owing to the cessation of grade streaming, which resulted in 10 694 fewer ounces of gold sold during the interim period. The lower sales volumes from Tropicana were offset by a higher average gold price during the half-year.

Further, underlying Ebitda was up 20% year-on-year to A$81.8-million.

Meanwhile, Independence has warned of potential delays in the ramp-up to full production at its Nova nickel project, as underground development rates have been lower than planned, which has deferred access to higher-grade, larger stopes planned to be mined from the fourth quarter of this year.

At full production, Nova is expected to produce 26 000 t/y of contained nickel and 11 500 t/y of contained copper, at an all-in sustaining cost of A$1.83/lb. The project is expected to initially operate for ten years.

Independence told shareholders that the delayed ramp-up is expected to have an impact on the full-year guidance.

Although still under review, the full 2017 metal production guidance for Nova could be reduced by about half, with this production being deferred to 2018.

However, the production guidance for the Tropicana, Long and Jaguar operations remains unchanged.