The Tropicana joint venture in Western Australia is a key asset for Independence Group.
JOHANNESBURG (miningweekly.com) – Although ASX-listed Independence Group (IGO) anticipates continuing commodity price volatility in the coming year and potential margin pressure on some of its producing assets, the company will increase its focus on bringing its Nova nickel project on line, while unlocking value at its Tropicana gold mine, both in Kalgoorlie, Western Australia.
IGO MD and CEO Peter Bradford said on Wednesday the 2016 financial year had focused on the creation of the future platform of growth for the company, with the development at Nova nearing completion.
“We expect to produce first concentrates, on time, and on budget, in December,” he highlighted.
Its 30% holding in the Tropicana joint venture with AngloGold Ashanti continued to be a key asset to the business, delivering strong operating profit before tax of A$64-million. “We are also confident in the potential to drive a step change to the value of the asset with the Long Island study,” Bradford said.
Cash flows from operating activities for the group stood at A$95.2-million for the year ended June 30, on the back of strong gold sales from the Tropicana gold mine combined with sound operating cash flows from the Jaguar operation, near Leonora, and the Long operation, near Kalgoorlie.
However, this was down from the A$201.7-million it recorded in 2015, offset, in part, by lower base metals commodity prices during the year. Payments for exploration expenditure fell by 22% to A$20-million, while the result also includes cash outflows of $6.9-million in relation to the syndicated facility agreement and A$12.4-million in acquisition and other integration costs.
Acquisition costs, coupled with lower metal prices, resulted in IGO posting a net loss of A$58.8-million, compared with a profit of A$76.8-million in 2015.
Cash outflows from investing activities increased to A$423.5-million, primarily owing to the cash payment for the acquisition of Sirius Resources and payments towards the construction of the Nova project since acquisition.
Other movements comprised A$10.6-million for capitalised exploration expenditure and A$10-million associated with acquisition of property, plant and equipment primarily driven by Tropicana improvement work aimed at delivering higher plant throughput. The group also realised A$16-million from the sale of its investment in Gold Road Resources.
Cash flows from financing activities during the financial year mostly comprised drawdowns from the company’s syndicated facility agreement totalling A$271-million.
At the end of the financial year, the group had cash and cash equivalents of A$46.3-million, significantly lower than the A$121.3-million it had in 2015.