The Independence Group NL (ASX: IGO) share price could find support today after the nickel and gold miner delivered a solid quarterly update with its Nova mine setting a few records.
The IGO share price has fallen around 11% since hitting a nine-month high of $5.08 earlier this month while the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index rallied around 2%.
Independence Group isn't the only miner to have lost favour this month but its fall was deeper than the losses posted by the BHP Group Ltd (ASX: BHP) share price and Rio Tinto Limited (ASX: RIO) share price of between 4% to 5%.
New quarterly records
However, Independence Group has given something for investors to cheer about after it reported that Nova's quarterly production of 8,375 tonnes of nickel and 3,731 tonnes of copper was an all-time high for the mine.
Further, cash cost of $1.50 per pound payable in the March quarter was the lowest on record. This makes Nova one of the world's lowest cost nickel producers.
It's Tropicana gold mine produced 123,236 ounces (on a 100% basis), and posted cash costs and All-In Sustaining Costs (AISC) of $722 an ounce and $990 per ounce, respectively.
The Australian dollar gold price is hovering around $1,800 an ounce, so this leaves the miner with a healthy margin.
The other thing I like about Independence Group is that it gets an added tailwind from the falling Aussie as its cost base is denominated in the local dollar while its sales are done in US dollars. It does have a hedging program in place but the currency trend is favourable.
Strong balance sheet
Independence Group's financials is also looking healthy thanks to Nova and Tropicana with all metrics in the green.
Net profit surged 6,300% to $45.1 million in 3QFY19, while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 72% to $116.6 million and revenue improved 23% to $232.8 million.
The strong cashflow from the period has also allowed management to cut debt by a quarter to $85.7 million, and even then, net cash still increased by 83% to $171.5 million.
A few small cracks
On the downside, gold production at Tropicana dipped slightly to 123,200 ounces from 136,900 ounces quarter-on-quarter due to lower grades and some may have been hoping that management would upgrade full year guidance for Nova and Tropicana instead of saying it was on track to meet forecasts.
Nonetheless, this is a good result and the miner has a very strong balance sheet. That's a big plus in my book given the level of uncertainty in the world economy.
