The Independence Group NL (ASX: IGO) share price rallied to a more than one-year high on Wednesday on the jump in the nickel price and after the miner announced positive exploration results at its Lake Mackay joint venture (JV) project.
The IGO share price jumped 3.6% to $5.18 ahead of the close and is the fifth best performer on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index with the Elders Ltd (ASX: ELD) share price, Austal Limited (ASX: ASB) share price, Western Areas Ltd (ASX: WSA) share price and BlueScope Steel Limited (ASX: BSL) share price taking the top four spots, respectively.
While today’s outperformance in the Independence Group share price will give shareholders something to smile about, it only lifts the stock to around 7% over the past 12 months – the same level as the ASX 200 benchmark and well behind the circa 30% gain by big miners like the BHP Group Ltd (ASX: ASX: BHP) share price.
Can this laggard play catch-up?
This leaves room for Independence Group to run higher in my view and the surge in the nickel price to its highest level in a year and the latest announcement that Lake Mackay holds more copper and cobalt than expected could help it close the gap.
The bout of nickel buying is driven by worries that the commodity, which is used in electric vehicle batteries, could be in short supply.
However, there are mixed views on the outlook for nickel and this is one of the reasons for Independence Group’s underperformance, in my view.
But make no mistake, it’s the nickel price that is driving the stock’s outperformance today more than the exploration announcement. Nonetheless, the drilling results at Lake Mackay could be significant in the longer-term as it will help the miner diversify its minerals base.
Lake Mackay could run deep
Independence Group’s junior partner in the JV who is leading the drilling campaign, Prodigy Gold NL (ASX: PRX), suspects there could be multiple ore bodies across Lake Mackay.
The latest discovery at the Phreaker prospect is well south of the project. This is in addition to an earlier successful drilling campaign at the north of the project.
“Drilling at Phreaker has defined mineralisation over 250m vertically,” said Prodigy Gold’s Managing Director, MattBriggs.
“This is more than double that seen at Grapple and the modelled conductor associated with the EM anomaly is 1km long making this a sizable target. Drilling is planned to test the length of the target on a 200m spacing to confirm continuity of the sulphide and to explore for thicker and/or higher grade zones.”
If you are looking for other ASX stocks outside of mining that are well placed to outperform in FY20, you may want to read this report from the experts at the Motley Fool.
Follow the link below to find out more.
Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.
Stock #1 is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Stock #2 is another high-growth business trading near a 52-week low all while offering a 4.7% grossed-up yield...
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.
- NEW: Free report names top 3 ASX dividend shares to buy for 2019
- Top analysts name their top 3 ASX blue chip shares for 2019
- Richest man alive issues dire warning
- 3 quality dividend shares to boost your income
The Motley Fool Australia has recommended Elders Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019