The Independence Group NL (ASX: IGO) share price could soon be re-testing its four-year high as FY19 has turned out to be a year of records for the diversified miner.
The IGO share price jumped 1.3% to $5.30 in early trade and is closing in on the $5.75 high from three weeks ago, which is its best since 2015.
This morning's gain puts the stock's gain at over 20% over the past year when the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index only managed to eke out a gain of little more than 2%.
Independence Group isn't the best performing miner on the ASX, but it has outperformed the sector's heavyweights like the Rio Tinto Limited (ASX: RIO) share price and BHP Group Ltd (ASX: BHP) share price over the period.
Going super Nova
Today's profit results could see the stock pull further ahead. Independence Group posted record group revenue of $792.9 million for FY19, or 2% above last year, while underlying earnings before interest, tax, depreciation and amortisation (EBITDA) also hit the highest level ever of $340.7 million, a 1% improvement over FY18.
If that wasn't enough, both net cash from operating activities and underlying free cash flow topped previous highs too, allowing management to declare a final dividend of 8 cents a share, which is the biggest in at least 2004.
Better-than-expected production output from its flagship nickel Nova project, a pleasing performance from the Tropicana gold joint-venture project and high nickel and gold prices (particularly in Australian dollar terms) were the key drivers for the miner's strong results.
More growth expected in FY20
There could be more growth left in the tank too with management reaffirming its FY20 production guidance, which implies increased nickel output at Nova and gold production of 475,000 ounces (the mid-point of its guidance) from Tropicana, which sold 154,402 ounces of gold in FY19.
It feels like the last mining boom in 2007 all over again. We can only hope this time there will be a happier ending although there are several things outside the control of management.
One big question is Indonesia, which is credited for the recent run in the nickel price. There's speculation that our Asian neighbour (a major nickel producer) will reimpose an export ban on the commodity sooner than expected.
While Independence Group is fortunate to be exposed to a range of metals, including copper, cobalt and gold, Nova generates more than 70% of the miner's cash.
However, those with a longer-term investment horizon and willing to stomach the volatility in metal prices could find Independence Group is stock worth watching as its metals (apart from gold) is leveraged to the electric vehicle revolution – and this is a thematic that's likely to persist for a long while yet.
