At time of writing, the share price of Independence Group NL [ASX:IGO] is up 2.22%, trading at $6.
The Independence Group share price has come off a 52–week high of $6.64 on 17 September as the nickel price declines:
We look at what’s been happening with the nickel price and examine IGO’s quarterly.
Nickel price falls, dragging Independence Group share price down with it
This is what’s happened to the nickel price in the last year:
Source: Business Insider
You can see a strong run up in the price as news emerged that Indonesia was pushing ahead with a ban on nickel exports.
The nickel price has since cooled, bringing the IGO share price down with it.
Highlights from Independence Group quarterly
Here are the highlights from their quarterly:
- Nova project marginally beating guidance
- Revenue up 29% quarter-on-quarter to $263 million
- EBIDTA up 64% quarter-on-quarter to $154 million
- Net cash of $264 million
So they have a healthy cash balance, and revenue is up significantly with the rising gold and nickel prices.
They’ve also been investing in exploration, dropping $20.3 million on the program.
Will the nickel price continue to slide?
After hitting highs in August and September, the nickel price has fallen.
It is now in a strange moment as Tim Treadgold explains (via Forbes):
‘A glimpse of what’s happening in nickel, which has moved into what metal traders call backwardation (short-term price higher than long-term) can be seen in the LME data which features a sharp fall in stockpiles and a sharp fall in the price–the reverse of what might be expected because a surplus of anything generally drives the price down.’
This could mean that there are short-term risks out there for those interested in nickel stocks.
If you consider the bigger picture however, ASX-listed nickel producers could be set to benefit from the forecasted EV boom.
This is because, as Commonwealth Bank commodities strategist Vivek Dhar notes (via the ABC):
‘The Australian producers like Western Areas, Independence Group, they do significantly well because their nickel is more easily convertible to battery grade nickel.’
Given these factors you could opt to stay on the sidelines to avoid short-term pain, or you could wait out a potential drop in the nickel price.
For Money Morning