There are some ASX blue chip shares that could be good to consider at the moment due to the potential growth over time.

Here are those ideas:

Wesfarmers Ltd (ASX: WES)

Wesfarmers is one of the biggest businesses on the ASX, it runs retail companies like Bunnings, Catch, Officeworks, Kmart and Target.

COVID-19 was a really disruptive period for the Australian economy last year, but Officeworks and Bunnings were two of the biggest beneficiaries as people looked to do home improvement projects, whilst also setting up their homes for working and learning.

Catch, as an online retailer, was another business that saw elevated levels of growth during FY20.

That growth has continued into FY21 for the blue chip ASX share. Wesfarmers gave a trading update that said that Bunnings total sales grew by 25.2% in the financial year to date to October 2020, whilst Officeworks sales went up 23.4%. Catch’s gross transaction value sales surged 114.4% over the same time, whilst Kmart sales rose 3.7% and Target sales dropped 2.2%.

There were different measures of online sales growth success. Excluding Catch, total online sales went up by 166%. Excluding online sales in metro Melbourne, online sales growth was 98%. Including Catch, total online sales across the group increased to $1.3 billion in the year to date.

Wesfarmers also said that the industrial divisions made a pleasing start to the year.

At the current Wesfarmers share price, it’s valued at 28x FY21’s estimated earnings.

APA Group (ASX: APA)

APA owns a large network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.

Despite the national impacts of COVID-19, the blue chip ASX share managed to increase its revenue by 4.8% to $2.13 billion, earnings before interest, tax, depreciation and amortisation (EBITDA) grew 5.1%, operating cashflow rose 8.3% and net profit after tax (NPAT) rose 10.1%.

The total FY20 distribution went up by 6.4% to 50 cents per share. The energy infrastructure giant recently increased its interim distribution by another cent, bringing the current annual distribution to 51 cents per share – the yield is 5.3%.

APA continues to invest in new projects, such as a new pipeline in WA, which increases its asset base and aims to unlock more annual cashflow.

A2 Milk Company Ltd (ASX: A2M)

A2 Milk is one of the largest food-related businesses on the ASX. It has a strong market position with infant nutrition and liquid milk in Australia and New Zealand. The company has its sights on a large international market in both Asia and North America.

The blue chip ASX share has suffered difficulties because of the COVID-19 pandemic. It’s seeing lower sales from the important local daigou channel, though the company continues to grow sales and gain market share in mother and baby stores (MBS) in China. It’s going to try to reactivate the daigou channel in 2021. 

In North America, A2 Milk continues to see good performance with its liquid milk sales and it’s starting to generate revenue from Canada thanks to an agreement with Agrifoods.

The A2 Milk share price has fallen by 48% over the past six months, reflecting the COVID-19 difficulties. According to Commsec, the A2 Milk share price is valued at 22x FY22’s estimated earnings.

More reading

• Here are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• Got money to invest for dividends? Here are 3 ASX shares
• Why these ASX shares just stormed to 52-week highs or better
• 3 reasons why the A2 Milk share price could be a buy

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended A2 Milk. The Motley Fool Australia owns shares of APA Group and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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One area of the Australian share market which has generated consistently strong returns for investors over the last 10 years has been the healthcare sector.

Since this time in 2011, the S&P/ASX 200 Health Care index has generated a mouth-watering return of 380% for investors.

This strong gain has been underpinned by increasing demand, better technologies and treatments, and ageing populations.

The good news for investors is that these tailwinds are not going away any time soon. This could make it well worth considering an investment in the healthcare sector. But which healthcare shares should you buy? Here are two highly rated options:

Cochlear Limited (ASX: COH)

One blue chip healthcare share to look at is Cochlear. It looks perfectly positioned to benefit from the growing number of over 65s globally. This is because Cochlear is a global leader in the development, manufacture, and distribution of cochlear implantable devices for the hearing impaired.

As hearing loss is typically a part of the ageing process, a growing number of over 65s globally is expected to lead to an increase in demand for hearing solutions in the next few decades. And thanks to its industry-leading products, significant investment in research and development, and the industry’s high barriers to entry, Cochlear appears well-placed for long term growth.

Macquarie is positive on the company and has an outperform rating and $241.00 price target on its shares. This compares to the latest Cochlear share price of $198.98.

Volpara Health Technologies Ltd (ASX: VHT)

At the small side of the market you will find Volpara Health Technologies. It is a growing healthcare technology company that offers cost-effective, mission-critical software that helps radiologists deliver high quality breast imaging services.

Volpara’s software leverages artificial intelligence imaging algorithms to assist with the early detection of breast cancer. The company estimates that it currently has a US$750 million annual recurring revenue (ARR) opportunity in breast cancer screening. This compares to the ARR of NZ$19.9 million it recorded in the first half of FY 2021.

Morgans is a fan of Volpara. It currently has an add rating and $1.71 price target on the company’s shares. According to the note, the broker has been pleased with its market share gains, growing SaaS revenue, and high gross margins. The Volpara share price is currently trading at $1.50.

More reading

• How to turn $20,000 into $250,000 in 10 years with ASX shares
• 2 exciting small cap ASX shares to buy
• 2 of the best blue chip ASX shares to buy today
• 2 exciting small cap ASX shares to watch
• 3 quality SaaS ASX shares to buy

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends VOLPARA FPO NZ. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia has recommended Cochlear Ltd. and VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Ecograf Ltd (ASX: EGR) are storming higher today after the company announced positive developments regarding a project debt facility application. During the opening minutes of trade, the Ecograf share price reached an intraday high of 42.5 cents.

However, after some profit taking, the company’s shares have retreated to (at the time of writing) 41.5 cents, up 9.2%.

What’s driving the Ecograf share price?

The Ecograf share price on the rise today on the back of the company’s latest news.

Ecograf highlighted that during the recent quarter, it applied for a $45 million project debt facility from Export Finance Australia. The company submitted development reports and an engineering study report to secure funds to construct a new battery graphite facility.

According to its release, Ecograf is compiling additional reports to support its loan application. It expects that final credit approval will be received from Export Finance Australia within the next two months.

As a result, Ecograf has begun finalising plans for the construction of the new state-of-the-art processing facility in Western Australia. Once built, the battery graphite facility will manufacture graphite products for export to Asia, Europe and North America.

The company further revealed it has received considerable interest from anode cell, battery and electric vehicle manufacturers.

Quick take on Ecograf

Based in Australia, Ecograf is engaged in the exploration and development of graphite and nickel projects in Tanzania. The company uses innovative technologies to recover graphite from recycled batteries, thus reducing waste and environmental impact.

Ecograf share price snapshot

Over the past 12 months, the Ecograf share price has accelerated over 425%. These strong gains reflect growing positive sentiment among investors regarding the lithium-ion industry with many of Ecograf’s fellow ASX-listed producers also posting whopping gains over this time.

In January alone, Ecograf shares are up more than 140%, reaching a new multi-year high of 44 cents last week.

Based on the current Ecograf share price, the company has a market capitalisation of around $142 million.

More reading

• Top broker says the South32 (ASX:S32) share price is in the buy zone
• Why the Fortescue (ASX:FMG) share price is storming higher today
• Leading brokers name 3 ASX shares to buy today
• The K2fly (ASX:K2F) share price is soaring today. Here’s why
• Why the Hazer (ASX:HZR) share price is smashing its record high

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The South32 Ltd (ASX: S32) share price has come under pressure on Monday and is dropping lower.

At the time of writing, the mining giant’s shares are down 1.5% to $2.73.

Is this a buying opportunity?

One broker that would see today’s weakness in the South32 share price as a buying opportunity is Goldman Sachs.

At the end of last week, the broker released a positive note which revealed that its analysts have retained their buy rating and lifted the price target on South32’s shares to $3.10.

Based on the latest South32 share price, this price target implies potential upside of 13.5% excluding dividends. Including dividends, this potential return increases to approximately 16% over the next 12 months.

Why does Goldman Sachs think South32 shares can go higher?

According to the note, South32 delivered a reasonably mixed second quarter update last week.

It commented: “S32 reported an 8% drop in Cu Eq production for the Dec Q, 2% below GSe, with lower than expected coal production from both Illawarra and South Africa offsetting a very strong performance from the high margin Worsley alumina, Aus manganese and Cannington lead/zinc assets.”

And while the broker has reduced its FY 2021 earnings estimates to reflect this, it has upgraded its estimates for the medium term enough to warrant remaining positive on the company.

Goldman said: “Our FY21 EPS is down 13% (but just US$59mn) however, our FY22-24 EPS is up 15-50% after incorporating our commodity team’s recent nickel, zinc and aluminium price upgrades, along with a significant upgrade to Cerro Matoso nickel’s production following the development approval of the higher grade Q&P deposit.”

In addition to this, it believes South32’s shares are great value at just 0.85x net asset value. The broker also feels that its free cash flow is recovering and expects a free cash flow yield of 5% over the next two years.

The latter bodes well for dividends, with the broker forecasting ~3.8% dividend yields in both FY 2022 and FY 2023.

This could make the South32 share price one to watch over the coming years.

More reading

• 7 ASX shares to buy for 2021
• Goldman points to commodities super-cycle: Which ASX mining shares will benefit?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Fortescue Metals Group Limited (ASX: FMG) share price has started the week strongly.

In afternoon trade the iron ore producer’s shares are up 5% to $25.51.

This latest gain means the Fortescue share price is now up 120% since this time last year.

Why is the Fortescue share price charging higher today?

Investors have been buying Fortescue shares on Monday after a leading broker responded positively to its update at the end of last week.

That update revealed that Fortescue has been benefiting greatly from the sky high iron ore price.

So much so, the mining giant revealed that, based on unaudited management accounts, its net profit after tax for the month of December came to a whopping US$940 million.

To put that into context, that monthly profit is more than the market capitalisation of fellow iron ore miner Mount Gibson Iron Limited (ASX: MGX).

The company also provided guidance for the first half ahead of the formal release of its results on 18 February.

It advised that its net profit after tax for the six months ended 31 December 2020 on an unaudited basis will be in the range of US$4 billion to US$4.1 billion.

This will be an impressive 60% to 64% increase on the net profit after tax of US$2.5 billion it achieved in the prior corresponding period.

What did the broker say?

According to a note out of Ord Minnett, Fortescue’s guidance was in line with its expectations for the first half.

In light of this, the broker has retained its buy rating and $29.00 price target on the company’s shares.

Based on the current Fortescue share price, this price target implies potential upside of almost 14% over the next 12 months.

In addition to this, the broker is expecting the company to generate significant free cash flow this year. This is likely to be returned to shareholders through generous dividend payments.

More reading

• Leading brokers name 3 ASX shares to buy today
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• 5 things to watch on the ASX 200 on Monday
• Here’s why the Fortescue (ASX:FMG) share price is edging lower
• What a dramatic day in the US could mean for ASX shares in 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Fortescue Metals Group Limited (ASX: FMG)

According to a note out of Ord Minnett, its analysts have retained their buy rating and $29.00 price target on this iron ore producer’s shares. The broker notes that Fortescue is expecting to report a first half net profit of US$4 billion to US$4.1 billion in February. This is in line with what Ord Minnett was forecasting. In addition to this, it notes that the company has plans to build a steel plant and is looking into clean energy opportunities. The Fortescue share price is trading at $25.46 this afternoon.

IDP Education Ltd (ASX: IEL)

Analysts at UBS have retained their buy rating and lifted the price target on this student placement and language testing company’s shares to $23.00. According to the note, the broker believes trading conditions are improving for the company and has lifted its earnings forecasts to reflect this. Looking ahead, the broker believes IDP Education is well-placed for growth thanks to market share gains and its computer-based IELTS offering, which has higher margins. The IDP Education share price is fetching $21.53 on Monday.

Webjet Limited (ASX: WEB)

A note out of UBS reveals that its analysts have retained their buy rating and lifted the price target on this online travel agent’s shares to $5.40. According to the note, UBS acknowledges that the travel sector is still facing COVID headwinds and international travel looks unlikely this year. However, it believes the company is well-positioned to win market share from its rivals and take advantage of the pent-up demand when conditions improve. The Webjet share price is trading at $4.78 this afternoon.

More reading

• Why IDP Education, Lake Resources, Mach7, & Tyro shares are shooting higher
• Here are the 10 most shorted shares on the ASX
• ASX 200 Weekly Wrap: Change in America spurs ASX 200 higher
• 5 things to watch on the ASX 200 on Monday
• Here’s why the Fortescue (ASX:FMG) share price is edging lower

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The K2Fly Ltd (ASX: K2F) share price is climbing higher today after the company announced it has signed a new contract with Alcoa USA Corp (Alcoa).

At the time of writing, the K2fly share price is up 4.6% to an intraday high of 34 cents.

Why is the K2fly share price higher?

In today’s release, K2fly advised that international mining giant Alcoa has entered into a 5-year contact for its RCubed Resource Inventory solution. The agreement will see the Software-as-a-Service (SaaS) offering rolled-out across Alcoa’s 6 international sites from the beginning of February.

Alcoa is based in Pittsburgh, Pennsylvania and specialises in the production of bauxite, alumina, and aluminium. With 7 active mines in Australia, Brazil, Guinea and Saudi Arabia, the company says it’s one of the world’s largest bauxite producers.

K2fly said that the contract’s total value is estimated at around $573,600, depending on exchange rate fluctuations. No other details were given about the terms of the deal or if any support services are included.

What is RCubed Resource Inventory?

Tailored to mining companies, RCubed is a cloud-based platform that accurately reports mineral resources and reserves. This ensures good governance, compliance and reporting among regulators, shareholders, and potential investors.

The SaaS platform can cater to single or multiple commodities, and automates workflow from data capture. In-turn, the software solution reduces time, team overhead costs and gives transparency for data validation and audit trails.

Management commentary

K2fly chief commercial officer Nic Pollock, welcomed the deal, saying:

We are delighted to be working with Alcoa as another NYSE listed user of our governance and reporting software and also an important operator in Western Australia.

K2fly noted that the new contract “validated its position as a market leader” in the mining technical assurance space. The company also advised that other multi-year agreements are currently in negotiations and it will update the market as information becomes available.

More reading

• Here’s why the K2Fly (ASX:K2F) share price is pushing higher

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Hazer Group Ltd (ASX: HZR) share price rocketed 20% higher in morning trade today as the company released its report for the second quarter of FY21.

Shares in the small cap hydrogen technology company surged to a high of $1.88, demolishing its previous record high in the process. The Hazer share price has since retreated to $1.74 at the time of writing, up 11.9%.

The company aims to commercialise its ‘Hazer process’ in order to produce hydrogen more efficiently. The Hazer process is a low emission hydrogen and graphite process. It enables the effective conversion of natural gas and methane using iron ore as a catalyst.

What’s driving the Hazer share price?

In today’s release, the company reported a positive second quarter performance, saying its key focus remains the execution of its commercial development project (CDP). A successful execution of the CDP will demonstrate the benefits of Hazer’s technology to potential clients.

Hazer said it has made significant progress during the quarter, despite challenging conditions due to COVID-19. It has obtained the various permits required for its operations. As a result, site preparation is set to begin in the first quarter of the 2021 calendar year.

Regarding the company’s cash flow, Hazer reported cash reserves of $28.8 million at the end of the quarter. The company generated $8.7 million, with more than $10 million additional money coming in from various grants. This includes the Australian renewable energy agency grant, totalling $9.4 million.

About the Hazer share price

The Hazer share price has seen a phenomenal rise in the last 12 months, lifting from 42 cents to its current price of $1.85. This represents a 270% increase.

As mentioned in its report:

This growth is coming as the global hydrogen market continues to gather pace. The market has a favourable macro environment with national roadmaps and strategies now translating into investment targets, funding programs and regulatory changes.

Hazer is seeing a significant increase in interest in its technology from international companies across a wide range of applications driven by a desire by end-users to de-carbonise operations.

Around the globe other hydrogen technology companies have also been performing well, with the likes of Plug Power Inc (NASDAQ: PLUG) gaining 1,655% in the last year.

More reading

• Here are the US shares ASX investors are buying
• ASX stock of the day: Hazer Group (ASX:HZR) share price surges 14%

Motley Fool contributor Daniel Ewing owns shares of Plug Power. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Amazon.com, Inc‘s (NASDAQ: AMZN) ad business might’ve been overshadowed in 2020 amid the boom in e-commerce that occurred as consumers stayed home and did more shopping online.

But the ads people see on Amazon’s marketplace, Twitch, and its Fire TV platform grew right alongside its retail operations. Through the first 9 months of 2020, Amazon’s other revenue line item, which consists primarily of advertising, increased 45%.

That strength is expected to continue into the middle of the decade. Advertisers expect to spend larger and larger percentages of their ad budgets on Amazon ads over the next couple of years, according to a new survey from Cowen. As a result, Amazon will continue taking market share from competitors like Facebook (NASDAQ: FB) and Alphabet‘s (NASDAQ: GOOG) (NASDAQ: GOOGL) Google.

E-commerce acceleration

One reason for Amazon’s growing appeal among advertisers is the acceleration in e-commerce. Marketers want to put their products in front of people where they’re most likely to make a purchase. That’s increasingly online.

Online sales increased dramatically across the board in 2020, and there are indications that those sales are likely to stay online instead of migrating back into brick-and-mortar stores. Online sales in the US increased an estimated 32.4% last year, according to eMarketer. While growth will likely dip in 2021, it won’t go negative, and growth is expected to return to pre-pandemic levels in 2022.

Amazon gets to double-dip on the acceleration in e-commerce. Not only is it the largest online retailer, it also offers prime real estate for advertisers in consumer-packaged goods, electronics, apparel, and more. Amazon.com is the first stop for online product searches for about half of Americans. And those subscribing to Prime start with Amazon nearly three-quarters of the time. So, even if a consumer doesn’t end up purchasing from Amazon, an advertiser can get value from showing an ad for its product on Amazon’s marketplace.

Less effect from outside influences

Amazon is also in a position of having greater control over its destiny versus Facebook and Google. The competitors are particularly susceptible to Apple (NASDAQ: AAPL), which controls the valuable iOS platform.

Apple’s set to launch an iOS update that will require app developers to ask permission to track user data across the web. That could negatively affect Facebook’s ability to measure ad efficacy and target advertisements. Facebook stopped reporting what percentage of its ad revenue came from mobile after the third quarter of 2019, when 94% of its ad revenue came from mobile devices.

Meanwhile, Alphabet pays Apple a handsome sum every year to make Google the default search engine on Safari, the web browser built into iOS and macOS. Regulators are questioning that relationship’s antitrust implications, which could force some negative changes for Google. Additionally, Apple is reportedly developing its own search engine, which could become the new default. Still, Google is more insulated from changes on Apple’s platform thanks to the growth of YouTube and the appeal of Google search over other options.

Amazon, meanwhile, is largely insulated from changes outside of its ecosystem. It owns the Fire TV platform, so not much can change its data usage behavior on that platform that isn’t in its control. Meanwhile, it doesn’t track much user behavior outside of its own app on mobile, as its advertising products are mostly contained to its marketplace. Amazon has the luxury of tracking ads from impression to conversion all within its own ecosystem, whereas Facebook and Google rely on data coming at least in part from other parties.

Expanding operating margin

Amazon has already shown its potential for high operating margins compared to other retail companies in 2020, as it maximised its warehouse capacity and both shoppers and sellers flocked to its online marketplace. The continued growth of high-margin ad revenue will only expand on that margin potential.

Cowen analysts predict Amazon’s advertising business will generate more than $85 billion in 2026. To put that in perspective, Facebook’s revenue over the last four quarters totalled less than $80 billion. Moreover, Facebook’s operating margin over that period was over 36%. By comparison, Amazon’s operating margin in the same period was less than 6%, although that was negatively affected by massive spending on COVID-19-related expenses.

In other words, Amazon could add a Facebook-rate of revenue to its business over the next six years. That will have a considerable effect on its overall operating margin, generating tremendous profits for investors.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

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• 3 biggest risks to ASX share investors right now
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• Here are the US shares ASX investors are buying

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Adam Levy owns shares of Alphabet (C shares), Amazon, Apple, and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Facebook and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Nickel Mines Ltd (ASX: NIC) share price has started the week very strongly.

In afternoon trade the nickel producer’s shares are up a sizeable 8% to a new record high of $1.39.

When the Nickel Mines share price reached that level, it meant it was up a massive 135% since this time last year.

Why is the Nickel Mines share price surging higher today?

Investors have been buying Nickel Mines shares following the release of its final quarter update for FY 2020.

According to the release, Nickel Mines had a record-breaking quarter in respect to production, sales, and earnings.

During the quarter, the combined production from its Hengjaya Nickel and Ranger Nickel projects (on a 100% basis) came to a record 11,527 tonnes of nickel. Management advised that production levels were consistently around 1,900 tonnes per month of nickel from each project.

Pleasingly, a strong rise in the nickel pig iron (NPI) price across the quarter led to the weighted average contract price received being 23.4% higher than in the September 2020 quarter. This underpinned record sales of US$158.8 million across the Hengjaya Nickel and Ranger Nickel projects.

It was the same story for its earnings, with the company delivering record underlying earnings before interest, depreciation and amortisation (EBITDA) of US$71.6 million and a record underlying net profit of US$67.8 million for the three months.

At the end of December, the company held cash and cash equivalents of US$351.4 million. This is up from US$93.8 million at the end of September.

“Delighted”

Nickel Mines’ Managing Director, Justin Werner, was delighted with the company’s performance during the quarter.

He said: “We are delighted to report to our shareholders on what was a record-breaking quarter for both our RKEF and mine operations. The December quarter marked another period of very strong and consistent production from both Hengjaya Nickel and Ranger Nickel, which combined with a much stronger NPI price, translated into a record financial performance for our RKEF operations.”

“Production from the Hengjaya mine of almost 500,000wmt for the quarter means the mine should meet targeted ramp up from 600,000wmt pa to 1.5 mtpa with further ramp up targets to be implemented. Encouragingly, costs at the Hengjaya mine continue to decline significantly,” he added.

Outlook

Mr Werner appears confident on the company’s prospects in FY 2021.

He said: “With the Company’s RKEF assets now well established, a development project underway and a broadly positive outlook across the global nickel market we look forward to 2021 with great optimism.”

More reading

• These ASX stocks just got a big upgrade on the back of Tesla (NASDAQ:TSLA)
• Leading broker names the ASX resources shares to buy in 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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