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Why Western Areas Ltd is among 3 resources shares in the red today

Plenty of mining stocks are in the red on the S&P/ASX 200 today with these three stocks hovering near the top of the declines.

Western Areas Ltd (ASX: WSA)

Shares in nickel sulphide explorer Western Areas Ltd are down 7.4% to $2.43 at the time of writing.

Western Areas handed down its FY18 results on August 22, reporting an underlying and statutory NPAT of $11.8 million – increasing from an underlying loss of $11.5 million in FY17.

Sales revenue came in at $248.3 million, EBITDA at $84 million and a fully-franked final dividend of 2c per share was declared.

While the results showed Western Areas has a strong balance sheet, including $151.6 million cash at bank, the company is susceptible to the downtrend in nickel prices over the last few months, which is likely driving its share price down at present.

Independence Group NL (ASX: IGO)

Shares in the mineral exploration company with a focus on nickel, copper and zinc mining, Independence Group, are down 2.4% to $4.18 at the time of writing, despite it booking stellar results last week.

Independence Group posted its FY18 results on August 29, recording a 210% increase in NPAT to $53 million with revenue up 85% and EBITDA lifting 125%.

Shares pushed higher off the back of these results last week, but began to tumble to close off Friday trade, and opened in the red today.

Both nickel and copper prices are on the way down of late, and Independence Group is not immune to these pressures with miners across the board also battling against rising power and labour costs going forward.

Sandfire Resources NL (ASX: SFR)

Shares in Sandfire Resources NL are stuck in reverse, down 1.9% to $6.96 at the time of writing after hitting the declines even after posting strong 2018 annual results on August 30.

Sandfire attributed higher copper prices over the reporting period to its solid results, including NPAT of $120.8 million – up 59% with record sales revenue, strong cash from operating activities and EPS of 77.85c.

But with copper prices trending down, how will Sandfire maintain its current trajectory?

According to the Financial Review, Sandfire is ready to go shopping – specifically to write a cheque to take full control of the Monty Project – just 10km from its flagship DeGrussa project.

Sandfire managed to keep operating costs low during FY18 which allowed it to achieve exceptional margins and if the demand from China is anything to go by, FY19 could be just as good of a year, if not better.

One commodity stock not struggling at all today is Northern Star Resources Ltd (ASX: NST) sitting firmly at the top of the S&P/ASX 200 gains, with its shares up 14.8% to $7.99 at the time of writing.

The surge can be attributed to news out of Northern Star today that it has successfully completed its $175 million fully-underwritten placement for its Pogo acquisition – closing well over-subscribed.

The placement was completed at $6.70 per share, representing a 3.7% discount to the last closing price of $6.96 as at August 29.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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