IGO appeared on one of our scanners late last week. A...

IGO appeared on one of our scanners late last week. A precipitous drop in SP associated with some good fundamentals.

I spent time researching the company over the weekend and yesterday. We put a toe in the water yesterday and bought a holding - nothing huge - with a view to seeing how things play out in the coming weeks.

From what I can see, the SP seems closely linked (unsurprisingly) to the price of Nickel. The company though appears to be in reasonably good shape. There is $161.6m cash and receivables ($1.37 per share), almost no debt, no accounting goodwill and a very good historical return on equity. It appears to be well run, with an experienced management team.

On the downside, the nickel price seems to be weighing the company down. The March quarterly report used an unhedged nickel price of about $32.5k but this has dropped substantially since. We also revalued some of the listed investments which appear to have dropped about $3m in value.

Does anyone have a view on why the SP has dropped so much? Is it purely the nickel price? It seems to have been well oversold. We are also having some trouble getting our heads around the Tropicana JV. Are we expecting another update next month? Has the market attributed any value to this project in the current SP? (It appears to us that maybe it has not). There seems to be a view within the analyst reports that the JV will be a big boost to the company in future years.

If the long-term view is a recovery in the nickel price and the gold JV has some value, this appears to be either a candidate for SP recovery or medium-term takeover. Does anyone have a view on this?