Independence Group (IGO) has operated in the goldfields region of WA since 2002, developing a multi-commodity focus on gold, nickel, copper, zinc and silver. The company expanded its reach in September last year with the acquisition of the world class Nova copper-nickel project.

By Samantha James

IGO’s takeover of junior developer Sirius Resources in a $1.8 billion deal saw the group acquire the world-class Nova-Bollinger nickel-copper development project.

Nova was discovered by Sirius in 2012, labelled a tier 1 asset and immediately fast tracked to feasibility studies, which were completed in July 2014. Construction of a mine capable of producing 26,000 tonnes per annum of nickel and 11,500tpa of copper across an initial life of 10 years began in early 2015.

When IGO and Sirius announced the scheme of arrangement in May 2015, they touted the transaction as creating a $2.7 billion diversified mining company with a focus on the WA goldfields. IGO also holds 30 per cent of the Tropicana gold mine in joint venture with Anglogold Ashanti, where as manager Anglogold is ramping up processing to reach more than 7 million tonnes per annum. The JV celebrated its Tropicana’s 1 million ounces milestone in November 2015.

As well as operating its wholly-owned Long and Jaguar nickel and copper underground mines in WA, IGO has earned into several exploration projects including Alchemy Resources’ Byrah Bay base metals project in WA, ABM Resources’ Lake Mackay project in the Northern Territory and the Salt Creek and Darlot joint ventures in WA.



Construction of Nova, IGO’s next flagship project, was more than 74 per cent complete at the start of March 2016. IGO completed an optimisation study in December 2015 which delivered a 36 per cent improvement to the project net present value compared to the Definitive Feasibility Study (DFS), with a further 10 per cent increase to be assessed during the operational phase.

IGO also reported a 27 per cent reduction in the expected life-of-mine cash costs and a resultant additional 41 per cent of free cash flow in calendar year 2017; 108 per cent increase in 2018; and 83 per cent in 2019 compared to the DFS. Project initial capital remained at $443 million, which included several scope changes such as accelerated underground development.

IGO managing director and chief executive officer Peter Bradford said Nova’s acquisition was in line with the company’s strategy to gain “high quality exposure to different commodity cycles”.
“From a commodity price perspective, 2015 was a terrible year for nickel and a good year for gold,” he said.
“So far in 2016 the trend has been similar, although we have seen meaningful improvements in copper and zinc prices.
“The Nova project is world class and provides shareholders exposure to one of the highest margin nickel mines in the world with an operating life that will hopefully span several market cycles.”

The Nova project sits in the Albany Fraser belt on the edge of the Yilgarn craton. Mr Bradford said the Albany Fraser belt’s relatively unexplored potential and success in delivering “two of WA’s best new gold and base metal projects in the last 10 years” led to IGO’s current focus on the Albany Fraser belt, Tropicana Belt and Yilgarn Craton areas in the goldfields.

“The Nova project ticked a lot of boxes for IGO, in terms of project quality and upside potential,” he said.

“IGO’s ability to replace the original project finance facility that Sirius Resources had put in place and quantify immediate, additional project value through the December optimisation study, is the result of hard work by the IGO team.”

“However this could only be achieved by taking advantage of the opportunity to bring Sirius Resources and IGO together and benefit from each other’s strengths.”

Mr Bradford confirmed that mine development and plant construction remained ahead of schedule in early April with delivery of long lead items and accomplishment of critical path items. Nova was scheduled to produce first concentrates in December 2016.


IGO has had a strong presence in WA for more than 10 years through the acquisition of the Long nickel mine in 2002 and the Jaguar copper and zinc mine in 2011, as well as the development of the Tropicana gold mine in JV with AngloGold Ashanti in 2013.

“These diversified, high margin and long life assets created a unique portfolio that provides high quality exposure to different commodity cycles,” Mr Bradford said.

AngloGold Ashanti and IGO were completing two development projects at the 400,000 ounces per annum Tropicana mine during 2015 and in the first half of 2016. These included expanding the process plant throughput rate from the original nameplate capacity of 5.8 million tonnes per annum to more than 7mtpa by mid-2016 through a program of debottlenecking, and investigating expansion of the resource base below the existing 3 million ounces of gold ore reserves.

“We have an aspirational target of adding more than 10 years of mine life through the extensive drilling program we commenced in mid-2015,” Mr Bradford said.

In early 2016 results from this ongoing drill program linked mineralisation from Havana South in the south through to Tropicana in the north, a strike length of over 4.7km.

“We believe the significance of this continuous planar mineralisation presents unique opportunities to look at different, low cost open pit mining techniques not suitable to many of WA’s existing gold mines,” Mr Bradford said.
“One such potential technique which is under investigation is a strip mining approach with the potential for in-pit dumping of waste.”

Mr Bradford said that although strip mining was more commonly seen in large scale coal mining, with the addition of in-pit dumping of waste an opportunity could be created to materially lower unit mining costs.

“This generates the prospect of mining the deeper mineralisation at a more attractive cost base than if we continued with conventional methods,” he said.

The Long Island study was expected to yield updated mineral resources by mid-2016 with final technical studies to be completed in 2017.
IGO’s Long and Jaguar mines hit financial snags in 2015 due to low nickel and copper prices, and in early 2016 the company rationalised its exploration expenditure by suspending near mine exploration at Long and scaling back regional exploration expenditures at Jaguar. The move was expected to deliver a reduced exploration spend rate for calendar 2016 about $20 million lower relative to the previous guidance. Mr Bradford said despite the reductions exploration would continue.

“The changes we have implemented demonstrate our commitment to actively managing and prioritising the allocation of capital across the business during very challenging commodity markets,” he said.

“Some of the decisions have been difficult ones, given the quality within the portfolio of brownfields and greenfields opportunities, and we deeply regret the impact these changes will have on some of our people.”



Despite low nickel and copper prices, IGO was in a good financial space at the start of 2016. The company announced underlying EBITDA of $70 million and net operating cash flow of $49 million (after expenses) for the 2016 half year, offset by loss after tax of $78 million due to $36 million impairment of exploration assets and $67 million in acquisition costs. Mr Bradford said the exploration asset write down related to historical acquired and capitalised expenditure on tenements purchased in 2011 and no further impairments relating to capitalised expenditure were expected.

“Across the base metals and precious metals sectors, recent price volatility is reflective of the broader uncertainty throughout global markets,” he said.
“Whilst IGO’s high margin diversified portfolio provides more consistent cash flows through market cycles, we have a strong focus on proactive and sustainable action on our controllable costs and operating plans to make sure we can deliver to guidance.”

Mr Bradford said that IGO’s strategic hedging of its metal products to lock in high prices when available reduced future cash flow risks.