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Date : 05/04/2022

IGO Ltd. (ASX: IGO) reached an all-time high following Nickel price Surge

IGO is an exploration and mining company with its primary focus being discovering, developing, and operating assets focused on metals crucial to developing clean energy sources. Among IGO’s key businesses are non-operator gold mining (under the Tropicana Gold Mine), nickel mining (under the Long Operation), zinc and by-product mining (under the Jaguar Operations), and uranium mining (under the Jaguar Operations). The company, which is publicly traded on the Australian Securities Exchange, was established in 2000.

Following the increase in nickel prices, the IGO stock price increased dramatically in the market and hit an all-time high, setting a new record. Nickel achieved a price of US$37,325 per tonne, resulting in the IGO stock reaching its highest price.

IGO’s shares currently trade at $13.71 and gained more than 10% in the last 5 days. The trading volume of the stock was around 5.08 million shares. The company has a current market cap of approximately 10.38 Billion AUD.

IGO: 1H22 Key Financials

IGO recently announced its results for the first half of 2022, and the results reflected robust growth in the business. Its revenue and NPAT grew significantly. The main contributor to the positive results was the Nova Operation.

igo limited mining stocks

  1. IGO’s revenue was A$378.5 million in 1H22. It is up 21% from last year’s first-half revenue of A$313.6 million. Higher Nickel and copper sales, as well as higher metal prices, resulted in this increase.
  2. IGO Ltd.’s (ASX: IGO) net profit after tax (NPAT) was A$90.7 million, a 67% increase from A$54.1 million in the first half of last year.
  3. With an underlying EBITDA of A$225.9M, IGO had an impressive EBITDA margin of 60%. In the first half of last year, EBITDA was A$242.3 million with an EBITDA margin of 52%.
  4. IGO’s EPS in 1H22 was $0.12, gaining more than 50% Y-o-Y.
  5. The company’s cash and cash equivalents on 31 December 2021 was A$569.8M.

Reason for the IGO stock price spike

The price of Nickel climbed to $37,325 per tonne last week. The fact that IGO is a mining and exploration firm that deals with Nickel had a direct impact on its stock, which jumped in the market to achieve its all-time high price due to the event.

The value of IGO stock increased by more than 13% last week due to an increase in the price of Nickel in the global market.

The invasion of Ukraine by Russia is the primary reason for the rise in the price of Nickel. The Russian invasion of Ukraine has disrupted the global supply chain, resulting in Nickel being short of supply in the market.

Since the beginning of 2022, the stock price of IGO has increased by 13-14%, and it has gained more than 114% in the last twelve months. The increasing nickel prices would directly affect its value. If the price of Nickel continues to rise, it may experience more spikes in the future. The Russian invasion seems to be there for a while, which will contribute to a global shortage of Nickel and, as a result, an increase in the price of IGO stock.

IGO: Update on the Acquisition of Western Areas

As part of the scheme implementation deed (SID), IGO and Western Areas agreed to a legally binding agreement under which IGO would acquire Western Areas for cash consideration of $3.36 per Western Areas share. On a fully diluted basis, the acquisition of Western Areas Limited (WSA) is valued at A$1,096 million, and the transaction was announced in December 2021. In response to news of the Scheme’s introduction, the Western Areas Board of Directors unanimously advised that Western Areas shareholders vote in favour of the Scheme. The transaction is expected to be completed in the second quarter of 2022.

Conclusion

IGO’s performance was incredible in the first half of 2022, mainly due to the Nova operation. However, the main reason behind the sudden surge in IGO stock was an increase in Nickel prices. In the global market, Nickel supply is short due to the Russian invasion of Ukraine. As a result, nickel prices increased to US$37,325 and caused a surge in the IGO share price.

 

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