INDEPENDENCE GROUP NL (IGO)



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General Information
Company Name: Independence Group NL
Stock Code: IGO
Website: www.igo.com.au
GICS Sub-Industry: Steel
Market Cap ($M): 989
Equiv. Shares (M): 233

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
$ 4.240 $ 4.250 $ 4.310 $ 4.220 $ 4.240 1,705,216 0%

Current Broker Consensus Recommendation more
Recommendation: Hold
Recommendation Date: 2nd Apr 2014
12 Month Target Price (average): $4.26
Brokers Surveyed: 5

Company Overview

Business Description:
Independence Group NL (IGO) is a mineral exploration company focusing on nickel, copper and zinc mining in Australia. IGO has two key mining operations being Long and Jaguar/Bentley in Western Australia. IGO currently focuses on its development Tropicana Gold project as well as Stockman copper-zinc-silver-gold project.

Strategy Analysis:
Independence Group's focus is to achieve long term growth through the discovery and development of high value orebodies with a focus on gold, nickel and copper. Other commodities such as rare earths and tin will be considered. The company believes there are many more ore bodies yet to be discovered in Australia, in areas under barren cover and in previously unrecognised mineralised belts. The preferred focus is within Australia but Independence Group will also consider other jurisdictions. To achieve its goals the company seeks to apply leading edge geological science, invest in technical innovation particularly aimed at the discovery of deposits hidden under thick cover, apply new technology to established and emerging mineral belts, acquire major land positions in frontier belts and to efficiently farm out or relinquish projects not meeting internal technical milestones. Independence Group reported NPAT of $16.5m for the half-year ended 31 December 2012. The return to profitability for the half-year is as a result of a solid performance by the Long Nickel Operation, together with a promising turnaround in the performance of the Jaguar/Bentley Copper and Zinc Operation. The Jaguar/Bentley Operation was impaired in the prior comparative December 2011 half-year by $157.74m. Revenues from ordinary activities were $122.15m, up 15.7% from the same period last year. Diluted EPS was 7.05 cents compared to (70.63) cents last year. Net operating cash flow was $38.18m compared to $9.79m last year. The interim dividend declared was 1.0 cent compared with 2.0 cents last year.


Financial Summary
Year to Jun NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2015  F 98.2 41.6 53.1 10.2 15.0 3.5 100.0
2014  F 63.8 27.2 185.6 15.6 13.0 3.1 100.0
2013  A 22.3 9.5 373.1 40.9 2.0 0.5 100.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F
Arrium (ARI) $1,762 M 1.6728 -0.6547 -0.1343 1.5068 4.3640 5.0410 0.0388 0.0930 0.0775
BlueScope Steel (BSL) $3,649 M -- -- 0.4928 -- 32.3427 21.6656 0.0000 0.0000 0.0207
Fortescue Metals (FMG) $16,347 M 0.2056 0.9441 -0.1732 9.8499 5.0666 6.1282 0.0205 0.0434 0.0559
Independence Group (IGO) $985 M -0.7429 1.4502 0.4886 41.2109 16.8194 11.2985 0.0047 0.0154 0.0299
Mount Gibson Iron (MGX) $872 M -0.4641 0.8488 -0.3684 9.3787 5.0729 8.0321 0.0500 0.0486 0.0486

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
IGO 1.14 18.9 1.52 0.21 4.47
Market 1.07 15.9 1.27 2.05 1.71
Sector 0.87 12.0 0.68 0.73 4.83

Directors
Name Position Start Date
Mr Peter John Luckhurst Bradford Chief Executive Officer,Managing Director 17 March 2014
Mr Peter Ross Bilbe Non-Executive Chairman 31 March 2009
Mr Rodney John Marston Non-Executive Director 25 September 2000
Mr Geoffrey Clifford Non-Executive Director 10 December 2012
Ms Kelly Ross Non-Executive Director 13 September 2002

Management
Name Position
Anthony(Tony) Michael Walsh --
Brett Hartmann Acting Chief Executive Officer
Andrew Eddowes Business Development Manager
Scott Steinkrug Chief Financial Officer
Terry (KT) Bourke Company Secretary/Legal Counsel
Tim Kennedy Exploration Manager
Rodney Jacobs Project Development Manager

Substantial Shareholders
Holding Name
17,745,821 (7.61%) FMR LLC and FIL (formerly FMR Corp and FIL)
14,155,440 (6.07%) Westpac Banking Corp/BT Investment Management Ltd
12,365,668 (5.30%) National Australia Bank Limited
23,407,512 (10.03%) JCP Investment Partners Ltd
15,442,763 (6.62%) Commonwealth Bank of Australia

Calendar of Events
Date Event
26 February 2015 Report (Interim)
29 January 2015 Report (Quarterly)
27 October 2014 Report (Quarterly)
27 October 2014 Report (Annual)
28 August 2014 Report (Prelim)
30 July 2014 Report (Quarterly)
29 April 2014 Report (Quarterly)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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