IGO 1.08% $6.44 igo limited

from today's 'bulletin'

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    This is taken from todays 'The Speculator' article in The Bulletin...IGO is part of the 'Speclator Portfolio'.

    Price looking strong again.


    A year ago, we bought Independence Gold (B, March 5, 2002) on the strength of the institutional support it received when it floated early last year. Since then, the stock has held a fairly steady if unspectacular course. Oddly, the main attraction early on was the calibre of the management, plus rights to an extensive geological database from WMC and a suite of gold prospects brought to the float. A year on and the company's biggest success has not been in gold but in a nickel mine acquired from WMC.

    Last September, Independence paid $15m for WMC's Long/Victor nickel mine near Kambalda, WA. In its latest quarterly report, the company last week confirmed the Long mine reached full production in late March with an ore throughput for the quarter of 30,593 tonnes of 3.9% nickel. That company also noted that leading mining analyst Keith Goode had valued the Long project at 59¢ a share, based on a six-year mine life, a head grade of 3.8% nickel and current nickel prices. That's a big premium over the current share price of 34¢. Furthermore, the valuation takes no account of the company's remaining gold and nickel exploration projects. Yet the latest quarterly confirms several new nickel finds including a 5.2m intercept of 8.16% nickel on the Victor South prospect plus gold finds in early stages of drilling.

    Independence has 78 million issued shares (50.4 million listed; the rest in escrow until next January). The Goode projection, however, was based on a fully diluted issued capital of 110 million shares, allowing for options yet to be exercised. At the end of March, Independence had $4m cash reserves (up from $2.8m in Decem­ber) plus $3.8m in nickel revenue accrued but yet to be received.

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