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Independence Group Exits the Darlot Joint Venture

Independence Group Exits the Darlot Joint Venture
In 2014, Independence Group completed a series of aircore drilling programs over copper, zinc and nickel prospects within the Darlot JV area.
Apr 06, 2016 By Kaivalya Kandarpa Tags: IGO

Independence Group NL (ASX:IGO) announced that it has formally withdrawn from the Darlot Joint Venture agreement with Enterprise Metals Limited (ASX:ENT). Independence Group will not retain any interest except for a 2% Net Smelter Royalty on an Exploration License numbered 37/1031.

In 2014, Independence Group completed a series of aircore drilling programs over copper, zinc and nickel prospects within the Darlot JV area. Subsequent to these results, a second program of aircore drilling was conducted at the Jarrah Well and the results reflected a number of irregular conductive responses coinciding with aircore copper-zinc geochemical anomalies.

Commenting on these results and the company’s withdrawal from the JV, Enterprise’s Managing Director Dermot Ryan said: “The withdrawal from the JV by IGO should be seen in the light of IGO’s January announcement that its 2016 exploration budget has been cut by $20 million, and that its exploration focus will support its interests in the Fraser Range assets which includes the Nova nickel deposit under development.”

Mr. Dermot also stated that the work completed by Independence Group at Jarrah well and Waroonga well is of good quality. Mr. Dermot further added that Independence Group did not fully consider the gold potential of the Darlot project tenements before exiting the JV. Enterprise aims to manage its own tenements and develop for drill testing a number of gold targets that were located by previous explorers in 1990’s.

Tropicana Gold Mine Exploration Update

Independence Group announced in February that the company sees an upside potential to the Tropical Gold mine, a joint venture with AngloGold Ashanti (AGA). The company announced that it has designed a program to understand the project’s mineralised complex. The study will examine options to further exploit the Tropicana Mineralised complex, including parts of the 4 million ounces of mineral resource, outside the current ore reserve. The study will also assess the prospects of significantly extending the projects current seven-year mine life. The company expects this assessment to be complete by late 2016.

1H16 Results

On the 17th of February, Independence Group released financial results for the half-year ended 31 December 2015. The company reported a 20% decline in revenue to $220.2 million, due to a combination of lower product sales and inferior base metal prices realised during the period.

Subsequently, the company also reported a statutory loss of $78 million, from a $49.5 million profit during 1H15. This loss includes the Sirius acquisition and integration costs totalling $66.9 million. Again, results were impacted due to the impairment of the carrying value of exploration assets by $35.5 million due to lower forecast base metal prices. 

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Kaivalya Kandarpa Author: Kaivalya Kandarpa Apr 06, 2016

Kaivalya is an equity analyst and a client advisor at Wise-owl. She specialises in fundamental and technical analysis for large and mid-cap companies. Having completed her bachelor's degree in Business Administration majoring in Finance, Kaivalya has a comprehensive understanding of international stock market movements. She tracks local and overseas markets and compiles analytical reports for various industries.

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