The IGO Ltd (ASX: IGO) share price is outperforming this morning after its FY20 results broke a few records.
Shares in the nickel miner jumped 2.1% to $4.57 when the S&P/ASX 200 Index (Index:^AXJO) added 0.6% at the time of writing.
IGO isn't the only one in the sector doing well. The BHP Limited (ASX: BHP) share price, OZ Minerals Limited (ASX: OZL) share price and Rio Tinto Limited (ASX: RIO) share price gained around 1% each.
Breaking records
But the spotlight is on IGO after management reported a 13% jump in FY20 revenue of a record $892 million. Net profit also set a new high as it more than doubled to $155 million, while underlying free cash flow also broke a record at $311 million in the latest financial year past.
What's also pleasing was that the result was achieved on bigger margins and the amount of cash in its coffers swelled to $510.3 million from $348.2 million.
However, management lowered its final dividend to 5 cents a share from FY19's 8 cent payout. The news isn't much of a surprise as its in line with IGO's flagged capital management policy.
Going Nova
Investors can thank the miner's Nova nickel project for the sharp improvement in its financial performance.
The mine produced more than management had previously expected and at a cash cost of $2.41 per payable pound of nickel.
IGO also benefitted from the gold surge through its joint-venture Tropicana mine, which met guidance.
The production numbers from the mines were effectively pre-announced in its latest quarterly update, but that didn't lessen the excitement on IGO's profit figures.
FY21 guidance
The miner reiterated its FY21 production guidance. It is aiming to produce between 27,000 and 29,000 tonnes of nickel and up to 12,500 tonnes of copper concentrate this financial year for Nova.
However, cash cost could rise as management believes this will range between $2.40 and $2.80 per pound of nickel.
Management is also forecasting Tropicana's total gold output to range from 380,000 to 430,000 ounces. IGO owns 30% of Tropicana.
M&A could be a feature this year
There could be further upside for IGO this year too. Management is on the lookout for acquisitions and it has the financial muscle to go shopping for assets.
"Our focus into FY21 is firmly on growing the business through both exploration and disciplined mergers and acquisitions," said IGO's chief executive Peter Bradford.
"We have committed A$65M to exploration and discovery in FY21 to unlock the mines of the future.
"Our established, belt-scale land positions have been strategically selected to maximise success and we have clear and defined work programs for the coming year."
