Ann: Trading Halt , page-13

according to Fosters.....

Independence Group (IGO, $3.45, Mkt Cap $805M). A mid cap diversified with strategic asset options. Trading Buy.

•IGO recently announced that the MD Chris Bonwick resigned due to ill health, and that the company is considering options for a permanent replacement. IGO is in that unique position of actually being a true diversified producer - with production across gold, nickel, and zinc-copper operations.

•One potential scenario of a new MD may be to either further diversify the company by pursuing an acquisition or merger, potentially in a new commodity, or to narrow the focus by selling or spinning out an asset or assets. Much will depend on the MD’s strategic vision for the company, as well as the metrics and astuteness that may underpin any potential material transaction, if any is proposed at all.

•In the interim, the company is realising the value from its mines which are all quite profitable when many peers are struggling with some or all of their operations in generating sufficient net free cashflow. IGO expects the recently commissioned Tropicana gold mine’s cash costs plus royalties to be in the range A$590-A$630/oz, with attributable production of 141k-147koz pa over next three years. Long is performing well in an unforgiving nickel market, with cash costs plus royalty of $3.54/lb incurred during the September quarter.

•The Jaguar mine’s cash costs plus royalties was A$0.50/lb Zn for the last quarter. We believe Jaguar is a sleeper in terms of value, given that some investment banks and commodity houses see the years of underinvestment in zinc and recent mine closures leading to a marked deficit in the next few years.

•We rate IGO a Trading Buy.